EXECUTIVE SUMMARY Insurance sector in India is one of the booming sectors of the economy and is growing at the rate

of 15-20 per cent annum. Together with banking services, it contributes to about .! per cent to the country"s #$%. Insurance is a federa& sub'ect in India and Insurance industry in India is governed by Insurance (ct, 1)*!, the +ife Insurance ,orporation (ct, 1)5- and #enera& Insurance .usiness /0ationa&i1ation2 (ct, 1) 2, Insurance 3egu&atory and $eve&opment (uthority /I3$(2 (ct, 1))) and other re&ated (cts. The tota& &ife insurance premium in India is pro'ected to grow 3s 1,2*0,000 ,rore by 2010-11.Tota& non-&ife insurance premium is e4pected to increase at a ,(#3 of 255 for the period spanning from 200!-0) to 201011.6ome insurance segment is set to achieve a 1005 growth as financia& institutions have made home insurance ob&igatory for housing &oan approva&s. 6ea&th insurance is poised to become the second &argest business for non-&ife insurers after motor insurance in ne4t three years. ( booming &ife insurance market has prope&&ed the Indian &ife insurance agents into the "top 10 country &ist" in terms of membership to the 7i&&ion $o&&ar 3ound Tab&e /7$3T2 - an e4c&usive c&ub for the highest performing &ife insurance agent. This study focuses on fundamenta& ana&ysis and it wi&& he&p me to fo&&ow insurance market c&ose&y. 8undamenta& ana&ysis is the process of &ooking at a business at the basic or fundamenta& financia& &eve&. This type of ana&ysis e4amines the key ratios of business &ike 9%:, $ebt-e;uity, interest coverage etc., to determine its financia& hea&th.

The ma'or ob'ectives of the study were to find out the factors affecting insurance industry and to study the performance of various insurance companies. (nother ma'or ob'ective was to study the movement of stock prices of insurance companies with respect to present economic and government po&ices. The ma'or findings of the study that emerged after studying the insurance sector for se&ecting appropriate company through ana&y1ing economy, industry and companies are the g&oba& economies are getting interre&ated< the Indian market wi&& no &onger be &imited to domestic economic situation. (gricu&tura& growth rate and the monsoon both have direct inf&uence on insurance and is responsib&e for the economy to become prosperous. 6ea&th insurance is poised to become the second &argest business for non-&ife insurers after motor insurance in ne4t three years. 8ina&&y, the conc&usion drawn was that fundamenta& ana&ysis a&ways ho&ds good on&y if the company statement are revea&ed c&ear&y and ana&y1ed proper&y. Investment is serious business and not making decision on vague and fundamenta& ana&ysis has a direct impact on insurance market and my important suggestions are that Insurance companies have &ot of opportunities to grow. :o investing in these types of industries he&p the investors in the &ong run and before investing in any company, it=s re;uired to imp&ement a&& the data and financia& resu&ts.

CHAPTER-1 INTRODUCTION

INTRODUCTION

Insurance is defined as the contract between Insurance co. /Insurer2 and the customer /Insured2. In this &ega& contract, the insurer agrees to indemnify /compensate2 the insured in &ieu of payment of premium, for any financia& &oss due to risks covered in the %o&icy.

Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 per cent per annum. Together with banking services, it contributes to about per cent to the country"s #$%. Insurance is a federa& sub'ect in India and Insurance industry in India is governed by Insurance (ct, 1)*!, the +ife Insurance ,orporation (ct, 1)5- and #enera& Insurance .usiness /0ationa&i1ation2 (ct, 1) 2, Insurance 3egu&atory and $eve&opment (uthority /I3$(2 (ct, 1))) and other re&ated (cts. The origin of &ife insurance in India can be traced back to 1!1! with the estab&ishment of the >rienta& +ife Insurance ,ompany in ,a&cutta. It was conceived as a means to provide for 9ng&ish ?idows. In those days a higher premium was charged for Indian &ives than the non-Indian &ives as Indian &ives were considered riskier for coverage. The .ombay 7utua& +ife Insurance :ociety that started its business in 1! 0 was the first company to charge same premium for both Indian and non-Indian &ives. In 1)12, insurance regu&ation forma&&y began with the passing of +ife Insurance ,ompanies (ct and the %rovident 8und (ct. .y 1)*!, there were 1 - insurance companies in India. .ut a number of frauds during 1)20s and 1)*0s tainted the image of insurance industry in India. In 1)*!, the first comprehensive &egis&ation regarding insurance was introduced with the passing of Insurance (ct of 1)*! that provided strict :tate ,ontro& over insurance business. Insurance sector in India grew at a faster pace after independence. In 1)5-, #overnment of India brought together 2@5 Indian and foreign insurers and provident societies under one nationa&i1ed monopo&y corporation and formed +ife Insurance ,orporation /+I,2 by an (ct of %ar&iament, vi1. +I, (ct, 1)5-, with a capita& contribution of 3s.5 crore. The /non-&ife2 insurance businessAgenera& insurance remained with the private sector ti&& 1) 2. There were 10 private companies invo&ved in the business of genera& operations and their operations were restricted to organi1ed

trade and industry in &arge cities. The #enera& Insurance .usiness /0ationa&i1ations2 (ct, 1) 2

nationa&i1ed the genera& insurance business in India with effect from Banuary 1, 1) *. The 10 private insurance companies were ama&gamated and grouped into four companiesC 0ationa& Insurance ,ompany, 0ew India (ssurance ,ompany, >rienta& Insurance ,ompany and Dnited India Insurance ,ompany. These were subsidiaries of the #enera& Insurance ,ompany /#I,2. In 1))*, the first step towards insurance sector reforms was initiated with the formation of 7a&hotra ,ommittee, headed by former 8inance :ecretary and 3.I #overnor 3.0. 7a&hotra. The committee was formed to eva&uate the Indian insurance industry and recommend its future direction with the ob'ective of comp&ementing the reforms initiated in the financia& sector. :ince 1)5-, with the nationa&i1ation of insurance industry, the state-run +ife Insurance ,orporation of India /+I,2 has he&d the monopo&y in that country"s &ife insurance sector. #enera& Insurance ,orporation of India /#I,2, with its four subsidiaries, was its counterpart in the genera& insurance sector. In 1))), the government passed the I3$( .i&& to open up the insurance sector in India.

In the &ast years, the country saw a &arge number of Indian and foreign p&ayers rushing to enter this &ucrative and untapped insurance market of India. The Indian Insurance sector is thus at the beginning of a new era. It has been on&y a year since the new p&ayers became active and it is difficu&t to say whether the reforms were successfu&. .ut it is be&ieved that the country has a vast untapped potentia& and the new p&ayers wi&& sure&y use this to their best advantage. The insurance sector in India has comp&eted a&& the facets of competition Efrom being an open competitive market to being nationa&i1ed and then getting back to the form of a &ibera&i1ed market once again. The history of the insurance

sector in India revea&s that it has witnessed comp&ete dynamism for the past two centuries appro4imate&y. INTRODUCTION OF FUNDAMENTAL ANALYSIS 8undamenta& ana&ysis is an important part of &earning to understand the markets. In the short run, the resu&ts are not a&ways straightforward, they can even seem backwards. In the &ong run, currencies wi&& a&ways move a&ong with fundamenta&s. +earning to use fundamenta& ana&ysis wi&& he&p you to understand the reasons behind trends and give you insight into currency movements. There are different cyc&es and causing for movements in the economy such as Boom, Depress o!, Re"ess o!# etc., the performance of the economy depends basica&&y on the monsoon and the growth rate of agricu&ture. The most important factor is the F8isca& %o&icyG, which incorporates government e4penditure, ta4ation, borrowing, deficit financing and which inf&uences both pub&ic and private sector in the economy. The industria& growth in genera& and of infrastructura& industries in particu&ar inf&uences the corporate performance.

( method of eva&uating a security by attempting to measure its intrinsic va&ue by e4amining re&ated economic, financia& and other ;ua&itative and ;uantitative factors. 8undamenta& ana&ysts attempt to study everything that can affect the security"s va&ue, inc&uding macroeconomic factors /&ike the overa&& economy and industry conditions2 and individua&&y specific factors /&ike the financia& condition and management of companies2.we can do fundamenta& ana&ysis in * steps, 1. 9conomic (na&ysis 2. Industry (na&ysis *. ,ompany (na&ysis ECONOMIC ANALYSIS 9conomic ana&ysis is a process whereby strengths and weaknesses of an economy are ana&y1ed. 9conomic ana&ysis is important in order to understand e4act condition of an economy. It can cover a number of important economic issues that keep cropping up within a particu&ar economy, which is being ana&y1ed. 7any countries of wor&d are p&agued by a rising rate of inf&ation. 9conomic ana&ysis he&ps in providing an e4p&anation of why inf&ation has taken p&ace. It a&so suggests ways in which rate of inf&ation cou&d be brought down, so that economic deve&opment cou&d continue. The Indian economy is one of the fastest growing economies in the wor&d. The economic survey has pro'ected for the year 2010-11 our growth rate wou&d be !.5 percent p&us, minus 0.25 percent. The study high&ights some of the ma'or economic factors that inf&uence corporate earnings and hence insurance industry in Indian conte4t. D&timate&y, investor must make inte&&igent 'udgment about the current state of the market and possib&e changes in the future. ( &ogica& starting point in assessing the market is to understand the economic factor that determines the stock price. Dnderstanding the current and future state of the economy is the first step in

understanding what is happening and what is &ike&y to happen to the market. 9conomic po&iciesC This is the ma'or variab&e affecting the stock market, especia&&y in the conte4t of the high&y regu&ated environment &ike India. ?hi&e some po&icies affect specific industries, some have genera& positive or negative impact on the entire market the recent moves towards economic &ibera&i1ation have noticeab&y affect the market sentiments. ,hanges in credit po&icies announced by 3eserve .ank of India are seen to affect corporate performance. 8isca& po&iciesC 7easures emp&oyed by governments to stabi&i1e the economy, specifica&&y by ad'usting the &eve&s and a&&ocations of ta4es and government e4penditures. %reparation of nationa& budget is a ma'or event in the insurance market. ?hi&e changes in ta4 structure introduce in the budget may affect specific industries, companies some provision affect the entire corporate sector. INDUSTRY ANALYSIS ( market assessment too& designed to provide a business with an idea of the comp&e4ity of a particu&ar industry. Industry ana&ysis invo&ves reviewing the economic, po&itica& and market factors that inf&uence the way the industry deve&ops. 7a'or factors can inc&ude the power wie&ded by supp&iers and buyers, the condition of competitors, and the &ike&ihood of new market entrants. The porter=s five-force mode& wi&& he&p the industry ana&ysis. 8ive 8orces (na&ysis assumes that there are five important forces that determine competitive power in a situation. These areC 1. :upp&ier %ower 2. .uyer %ower *. ,ompetitive 3iva&ry @. Threat of :ubstitution 5. Threat of 0ew 9ntry S$r%$e& " Co!s 'er%$ o! ! I!'(s$r) A!%*)s s

Imp&ication of pro'ected growth in gross nationa& product for various industries

Imp&ications of p&an priorities and p&an e4penditures for various industries.

Imp&ication of industria& and fisca& po&icies of the government for an industry.

$egree of dependence on scarce non-renewab&e or imported materia&s and energy intensity.

Hu&nerabi&ity of industry to business cyc&e. +inkage between the sectors vu&nerab&e to business cyc&e and the industry.

+ife cyc&e position of industry. %rice and income e&asticity of end product of industry. (n ana&ysis of competitive conditions is ref&ected in barriers to entry.

COMPANY ANALYSIS (fter understanding the &inkages between 9conomy and Industry (na&ysis, detai&ed company ana&ysis gives us more c&arity about the company. ?e need to se&ect a sing&e company in a&ready se&ected industry. Dnderstanding business mode& wi&& he&p us how the company generates revenue and how much it converts into profit. The ana&ysis focuses on understanding of operating, financia& and capita& market performance of the company. These strategies wi&& have ma'or impact on the future top-&ine and bottom-&ine. The industry ana&ysis enab&es us to short&ist industries for the purpose of insurance investment. The ne4t step is to identify the superior performers in the industry. 9ven though an industry might be doing we&&, some companies in the industries can be in

do&drums S$r%$e& " "o!s 'er%$ o! o+ Comp%!) A!%*)s s ( trend ana&ysis of company=s market share. (n ana&ysis of cost structure and .9% ana&ysis. (n ana&ysis of turnover of assets, operating and production efficiencies through ratio ana&ysis. +everage and coverage ratio ana&ysis. 8und f&ow ana&ysis. %rofitabi&ity ana&ysis. ( trend ana&ysis of book va&ue per share. (n assessment of the ;ua&ity of the asset. (n assessment of the ;ua&ity of management.

CHAPTER-, RESEARCH DESI-N

RESEARCH DESI-N ,.1 TITLE OF THE STUDY A STUDY O0 FUNDAMENTAL ANALYSIS AND ITS IMPACT ON INSURANCE SECTOR ,., REVIE/ OF LITERATURE 1.A s$(') 'o!e 0) THE -ENEVA ASSOCIATION 1SYSTEMIC RIS2 IN INSURANCE3 The #eneva (ssociation is the &eading internationa& insurance Fthink tankG for strategica&&y important insurance and risk management issues. The financia& crisis has e4posed f&aws in the supervisory system and engendered ca&&s to further regu&ate the financia& sector. (mong the many proposa&s under more onerous regu&ation to Fsystemica&&y recent&y consideration or imp&ementation is the idea of app&ying more stringent supervision and, perhaps, re&evant institutionsG. This proposa& is usua&&y banks. 6owever, some institutions and conceived as app&ying to have

governments

suggested that a simi&ar approach be taken performance of the insurance app&ication of the 8:.=s proposa& industry risk

to insurers. This report e4amines the

industry during the crisis, assesses the on systemic risk to insurance, and deve&ops and strengthen

initia& recommendations to address current regu&atory gaps management practices.

,. A s$(') 'o!e 0) Dr.B.V 4%)*%5s6m . Imp%"$ o+ -*o0%* 7%$ o!8 O9er9 e: O+ I!s(r%!"e I!'(s$r es I! I!' %. Vo*(me III, N(m0er8 1,;%!(%r), ,<<=. ( g&oba& risk e4posure, a cha&&enging business environment re;uires insurance companies to rethink the fundamenta&s of their business. The insurance industry has a&so succumbed to the genera& trend towards g&oba&i1ed market and the risk which is evident by more rapid growth in g&oba& trade, direct investment and portfo&io insurance mere&y restricted to the production of goods and services. These g&oba& firms face a number of uni;ue kind of &oss e4posures that arises as a resu&t of conducting business in mu&tip&e countries. This inc&ude risk such as terrorism, po&itica& instabi&ity, uncertain &ega& environment, currency risk, import e4port restriction, techno&ogica& and communicationa& prob&ems, financia& market weakness, and substandard infrastructure. The inabi&ity to assess the accurate risk by the g&oba& firm may a&so be due to improper information retrieva& in the under deve&oped and deve&oping countries. 7u&tinationa& insurance are keen&y watching the transformation of Indian insurance sector, main&y because the domestic markets have become saturated for the indigenous insurer, the other reason for the g&oba& insurer to show their interest in Indian market is based on the princip&e of spreading the area of operations over a wide geographica& area that wou&d e&iminate sudden dips in earnings due to the une4pected risk. >. A s$(') 'o!e 0) ;AN FREDERI2 SLI;2ERMAN 1AE-ON Asse$ M%!%&eme!$3 o! I!s(r%!"e Se"$or R s5, ;(*) ,<<?,Tinbergen Institute Discussion Paper No. 06-062/2. ?e mode& and measure simu&taneous &arge &osses of the market va&ue of insurers to understand the impact of shocks on the insurance sector. The downside risk of insurers is e4p&icit&y mode&ed by common

and idiosyncratic risk factors. :ince reinsurance is important for the capacity of insurers, we measure risk dependence among 9uropean insurers and reinsurers. The resu&ts point to a re&ative&y &ow insurance sector wide risk. $ependence among insurers is higher than among reinsurers. ,.> STATEMENT OF THE PROBLEM The study entit&ed G ( study on fundamenta& ana&ysis and its impact on insurance sectorG is undertaken with an intention to study the fundamenta&s ana&ysis on insurance sector and wi&& find the prob&ems in insurance sector and performance of insurance sector

,.@ OB;ECTIVES OF THE STUDY To find out the factors affecting insurance industry To study the performance of various insurance company To study the movement of stock prices of insurance companies with respect to present economic and government po&ices ,.A SCOPE OF THE STUDY The present study is carried to know the fo&&owing aspects. The study aims to understand the fundamenta& ana&ysis and its impact on insurance sector. This study wi&& provide the re&evant information about the economy, industry, and different companies in insurance sector ,.? OPERATIONAL DEFINITION OF THE CONCEPT I!s(r%!"e Prem (m The periodic payment made on an insurance po&icy is ca&&ed premium I!s(r%!"e Po* ") ( contract of insurance describing the term coverage, premium, and deductib&es

is ca&&ed po&icy Pro$e"$ o! po* " es %o&ices designed to provide a benefit in the event of specified event, typica&&y a &ump sum payment. ( common form of this design is term insurance. I!9es$me!$ po* " es %o&ices where the main ob'ective is to faci&itate the growth of capita& by regu&ar or sing&e premiums. ,ommon forms /in the D: anyway2 are who&e &ife universa& &ife and variab&e &ife po&icies. E"o!om " A!%*)s s 9conomic ana&ysis refers to the ana&ysis of the factors or indicators of the economy that affects the insurance market E"o!om " !$e&r%$ o! The merging to various degrees of the economies and economic po&icies of two or more countries in a given region. :ee a&so common market, customs union, and free-trade area, trade creation, and trade diversion. E"o!om " po* ") ( statement of ob'ectives and the methods of achieving these ob'ectives /po&icy instruments2 by government, po&itica& party, business concern, etc. I!'(s$r) %!%*)s s Industry ana&ysis refers to ana&y1e the p&an , priorities and vu&nerabi&ity of an industry for government regu&ation. The competitive conditions as ref&ected in any barriers to industry a&so taken into consideration. Comp%!) %!%*)s s ,ompany ana&ysis inc&udes ana&ysis the company as potentia&ity for growth, present performance of insurance sector L +e I!s(r%!"e

+ife insurance or &ife assurance is a contract between the po&icy owner and the insurer where the insurer agrees to pay a designated beneficiary a sum of money upon the occurrence of the insured individua&"s or individua&s" death or other event, such as termina& i&&ness or critica& i&&ness. In return, the po&icy owner agrees to pay a stipu&ated amount at regu&ar interva&s or in &ump sums.

,.B METHODOLO-Y TYPES OF DATA >n&y secondary data SECONDARY DATA8 :econdary data refers to those data that has a&ready been co&&ected and ana&y1ed by someone e&se. In other words secondary data is the information that a&ready e4ists somewhere having been co&&ected for another purpose. SAMPLE SICE ( study on four companies was done. (na&y1ed a&& the four companies by different methods. 9;uations areC

1.,(#(3 :(+9: I/sa&es of 200)Asa&es of 200-2J/1A*2-1 2.,(#(3 9%:I /9ps of 200)A9ps of 200-2J/1A*2-1 *.,D3390T 3(TI> I,urrent (ssets A,urrent +iabi&ities @.$ebt to 9;uity ITota& $ebt /:hort Term K+ong Term2A9;uity K%reference 5.Interest ,overageI9arnings .efore Interest (nd Ta4AInterest

,.D LIMITATIONS OF THE STUDY (n in depth study cou&d not be done because of time constraints The study is &imited to the e4tent of avai&ab&e data The findings and conc&usions made during the study might not be app&icab&e for a &ong period of time. ,.= CHAPTER SCHEME 1. INTRODUCTION It inc&udes introduction to the study about the specific area chosen. ,. RESEARCH DESI-N This chapter provides a p&an of the study, which inc&ude statement of the

prob&em, need for study, review of the previous studies, ob'ectives, definition of concepts, scope, methodo&ogy, samp&e design, sources of data, too& and techni;ues for data co&&ection, &imitations and an overview of chapter scheme. >. PROFILE OF THE INDUSTRY AND COMPANIES This chapter contains a comp&ete profi&e of the industry and companies that is history, nature of business, product and services etc.. @. ANALYSIS AND INTERPRETATION OF THE DATA It provides an ana&ysis of the data with re;uired interpretation with the he&p of tab&es. A. SUMMARY OF FINDIN-S, CONCLUSIONS AND SU--ESTIONS This chapter must start with an overview of the dissertation, summari1e the findings under each ob'ective, provide conc&usions and recommendations based on the findings. It is to be noted that the recommendations are practica&,

acceptab&e and comprehensive. BIBLIO-RAPHY It inc&udes the &ist of the artic&es, books, websites that are referred and usefu& for research of the topic. ANNEXURE

CHAPTER > INDUSTRY PROFILE

INSURANCE INDUSTRY In India, insurance has a deep-rooted history. It finds mention in the writings of 7anu /7anusmrithi2, Lagnava&kya /$harma Astra 2 and Mauti&ya / Arthasastra 2. The writings ta&k in terms of poo&ing of resources that cou&d be re-distributed in times of ca&amities such as fire, f&oods, epidemics and famine. This was probab&y a pre-cursor to modern day insurance. (ncient Indian history has preserved the ear&iest traces of insurance in the form of marine trade &oans and carriers= contracts. Insurance in India has evo&ved over time heavi&y drawing from other countries, 9ng&and in particu&ar. 1!1! saw the %'9e!$ o+ * +e !s(r%!"e 0(s !ess ! I!' % with the estab&ishment of the >rienta& +ife Insurance ,ompany in ,a&cutta. This ,ompany however fai&ed in 1!*@. In 1!2), the 7adras 9;uitab&e had begun transacting &ife insurance business in the 7adras %residency. 1! 0 saw the enactment of the .ritish Insurance (ct and in the &ast three decades of the nineteenth century, the .ombay 7utua& /1! 12, >rienta& /1! @2 and 9mpire of India /1!) 2 were started in the .ombay 3esidency. This era, however, was dominated by foreign insurance offices which did good business in India, name&y (&bert +ife (ssurance, 3oya& Insurance, +iverpoo& and +ondon #&obe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1)1@, the #overnment of India started pub&ishing returns of Insurance ,ompanies in India. The Indian +ife (ssurance ,ompanies (ct, 1)12 was the first statutory measure to regu&ate &ife business. In 1)2!, the Indian Insurance ,ompanies (ct was enacted to enab&e the #overnment to co&&ect statistica& information about both &ife and non-&ife business transacted in India by Indian and foreign insurers inc&uding provident insurance societies. In 1)*!, with a

view to protecting the interest of the Insurance pub&ic, the ear&ier &egis&ation was conso&idated and amended by the Insurance (ct, 1)*! with comprehensive provisions for effective contro& over the activities of insurers. The Insurance (mendment (ct of 1)50 abo&ished %rincipa& (gencies. 6owever, there were a &arge number of insurance companies and the &eve& of competition was high. There were a&so a&&egations of unfair trade practices. The #overnment of India, therefore, decided to nationa&i1e insurance business. (n >rdinance was issued on 1)th Banuary, 1)5- nationa&i1ing the +ife Insurance sector and +ife Insurance ,orporation came into e4istence in the same year. The +I, absorbed 15@ Indian, 1- non-Indian insurers as a&so 5 provident societiesN2@5 Indian and foreign insurers in a&&. The +I, had monopo&y ti&& the &ate )0s when the Insurance sector was reopened to the private sector. The 6 s$or) o+ &e!er%* !s(r%!"e '%$es back to the Industria& 3evo&ution in the west and the conse;uent growth of sea-faring trade and commerce in the 1 th century. It came to India as a &egacy of .ritish occupation. #enera& Insurance in India has its roots in the estab&ishment of Triton Insurance ,ompany +td., in the year 1!50 in ,a&cutta by the .ritish. In 1)0 , the Indian 7ercanti&e Insurance +td, was set up. This was the first company to transact a&& c&asses of genera& insurance business. 1)5 saw the formation of the #enera& Insurance ,ounci&, a wing of the Insurance (ssociation of India. The #enera& Insurance ,ounci& framed a code of conduct for ensuring fair conduct and sound business practices. In 1)-!, the Insurance (ct was amended to regu&ate investments and set minimum so&vency margins. The Tariff (dvisory ,ommittee was a&so set up then. In 1) 2 with the passing of the #enera& Insurance .usiness /0ationa&i1ation2 (ct, genera& insurance business was nationa&i1ed with effect from 1st Banuary, 1) *. 10 insurers were ama&gamated and grouped into four companies, name&y 0ationa& Insurance ,ompany +td., the 0ew India (ssurance

,ompany +td., the >rienta& Insurance ,ompany +td and the Dnited India Insurance ,ompany +td. The #enera& Insurance ,orporation of India was incorporated as a company in 1) 1 and it commence business on Banuary 1sst 1) *. This mi&&ennium has seen insurance come a fu&& circ&e in a 'ourney e4tending to near&y 200 years. The process of re-ope! !& o+ $6e se"$or had begun in the ear&y 1))0s and the &ast decade and more has seen it been opened up substantia&&y. In 1))*, the #overnment set up a committee under the chairmanship of 30 7a&hotra, former #overnor of 3.I, to propose recommendations for reforms in the insurance sector. The ob'ective was to comp&ement the reforms initiated in the financia& sector. The committee submitted its report in 1))@ wherein, among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be a&&owed to enter by f&oating Indian companies, preferab&y a 'oint venture with Indian partners. A 0r e+ 6 s$or) o+ $6e I!s(r%!"e se"$or The business of &ife insurance in India in its e4isting form started in India in the year 1!1! with the estab&ishment of the >rienta& +ife Insurance ,ompany in ,a&cutta.

Some o+ $6e mpor$%!$ m *es$o!es ! $6e * +e !s(r%!"e 0(s !ess ! I!' % %re8

1)12C The Indian +ife (ssurance ,ompanies (ct enacted as the first statute to regu&ate the &ife insurance business.

1)2!C The Indian Insurance ,ompanies (ct enacted to enab&e the government to co&&ect statistica& information about both &ife and non-&ife

insurance businesses.

1)*!C 9ar&ier &egis&ation conso&idated and amended to by the Insurance (ct with the ob'ective of protecting the interests of the insuring pub&ic.

1)5-C 2@5 Indian and foreign insurers and provident societies taken over by the centra& government and nationa&i1ed. +I, formed by an (ct of %ar&iament, vi1. +I, (ct, 1)5-, with a capita& contribution of 3s.5 crore from the #overnment of India. The #enera& insurance business in India, on the other hand, can trace its

roots to the Triton Insurance ,ompany +td., the first genera& insurance company estab&ished in the year 1!50 in ,a&cutta by the .ritish. :ome of the important mi&estones in the genera& insurance business in India areC

1)0 C The Indian 7ercanti&e Insurance +td. set up, the first company to transact a&& c&asses of genera& insurance business.

1)5 C #enera& Insurance ,ounci&, a wing of the Insurance (ssociation of India, frames a code of conduct for ensuring fair conduct and sound business practices.

1)-!C The Insurance (ct amended to regu&ate investments and set minimum so&vency margins and the Tariff (dvisory ,ommittee set up.

1) 2C The #enera& Insurance .usiness /0ationa&i1ation2 (ct, 1) 2 nationa&i1ed the genera& insurance business in India with effect from 1st Banuary 1) *.

10

insurers ama&gamated and grouped into four companies vi1. the

0ationa& Insurance ,ompany +td., the 0ew India (ssurance ,ompany +td., the >rienta& Insurance ,ompany +td. and the Dnited India Insurance ,ompany +td. #I, incorporated as a company. LIFE INSURERS

P(0* " se"$or 1.+ife Insurance ,orporation >f India Pr 9%$e se"$or 1..a'a' 2. *. @. 5. -. . !. ). 10. 11. 12. 1*. 1@. 15. 1-. 1 . 1). 20. (&&ian1 .ir&a 6$8, I,I,I I0# 7a4 7et Motak :.I Tata 3e&iance (viva :ahara :hriram .harti 8uture I$.I (9#>0 $+8 (O( #enera&i 8ortis 3e&igare %ramerica +ife India +ife +ife +ife +ife +ife +ife (I# :un :tandard %rudentia& Hysya 0ew +ife 7ahindra +ife +ife +ife +ife Lork India >&d +ife +ife +ife +ife +ife 7utua& Insurance Insurance Insurance Insurance +ife ,o. Insurance Insurance Insurance Insurance Insurance Insurance ,ompany ,o. ,o. ,o. ,ompany ,o. ,ompany Insurance ,o. ,ompany ,ompany India ,o, ,ompany ,ompany ,ompany ,ompany ,o. Insurance ,o, %vt. Insurance Insurance Insurance Insurance +ife Insurance +imited +td +td +td. +td. +td +td. +imited +td +imited +imited. +td. +td. +td. +td. +td. +td. +imited. +td.

Insurance

1!. ,anara 6:., >rienta& .ank of ,ommerce +ife Insurance ,o. +td Insurance

21. :tar Dnion $ai-ichi +ife Insurance ,omp. +td.

-ENERAL INSURERS P(0* " se"$or 1.0ationa& Insurance ,ompany +imited

2.0ew India (ssurance ,ompany +imited *.>rienta& Insurance ,ompany +imited @.Dnited India Insurance ,ompany +imited Pr 9%$e Se"$or 1..a'a' (&&ian1 #enera& Insurance ,o. +imited 2.I,I,I +ombard #enera& Insurance ,o. +td. *.I88,>-Tokio #enera& Insurance ,o. +td. @.3e&iance #enera& Insurance ,o. +imited 5.3oya& :undaram (&&iance Insurance ,o. +td. -.T(T( (I# #enera& Insurance ,o. +imited .94port ,redit #uarantee ,orporation !.,ho&amanda&am #enera& Insurance ,o. +td. REINSURER 1.#enera& Insurance ,orporation of India

PRESENT SCENARIO OF INSURANCE INDUSTRY India with about 200 mi&&ion midd&e c&ass househo&d shows a huge untapped potentia& for p&ayers in the insurance industry. :aturation of markets in many deve&oped economies has made the Indian market even more attractive for g&oba& insurance ma'ors. The insurance sector in India has come to a position of very high potentia& and competitiveness in the market. Indians, have a&ways seen &ife insurance as a ta4 saving device, are now sudden&y turning to the private sector that are providing them new products and variety for their choice.

,onsumers remain the most important centre of the insurance sector. (fter the entry of the foreign p&ayers the industry is seeing a &ot of competition and thus improvement of the customer service in the industry. ,omputeri1ation of operations and updating of techno&ogy has become imperative in the current scenario. 8oreign p&ayers are bringing in internationa& best practices in service through use of &atest techno&ogies The insurance agents sti&& remain the main source through which insurance products are so&d. The concept is very we&& estab&ished in the country &ike India but sti&& the increasing use of other sources is imperative. (t present the distribution channe&s that are avai&ab&e in the market are &isted be&ow. $irect se&&ing ,orporate agents #roup se&&ing .rokers and cooperative societies .anc assurance

,ustomers have tremendous choice from a &arge variety of products from pure term /risk2 insurance to unit-&inked investment products. ,ustomers are offered unbund&ed products with a variety of benefits as riders from which they can choose. 7ore customers are buying products and services based on their true needs and not 'ust traditiona& money back po&icies, which is not considered very appropriate for &ong-term protection and savings. There is &ots of saving and investment p&ans in the market. 6owever, there are sti&& some key new products yet to be introduced - e.g. hea&th products. The rura& consumer is now e4hibiting an increasing propensity for insurance products. ( research conducted e4hibited that the rura& consumers are wi&&ing to do&e out anything between 3s.*,500 and 3s.2,)00 as premium each

year. In the insurance the awareness &eve& for &ife insurance is the highest in rura& India, but the consumers are a&so aware about motor, accidents and catt&e insurance. In a study conducted by 7(3T the resu&ts showed that near&y one third said that they had purchased some kind of insurance with the ma4imum penetration skewed in favor of &ife insurance. The study a&so pointed out the private companies have huge task to p&ay in creating awareness and credibi&ity among the rura& popu&ace. The perceived benefits of buying a &ife po&icy range from security of income bu&k return in future, daughter"s marriage, chi&dren"s education and good return on savings, in that order, the study adds.

FEATURES OF INSURANCE INDUSTRY Insurance %o&icy India provides the c&ients with the detai&s re;uired for the coverage in the po&icy, date of commencement of the po&icy and their adopting organi1ations. It p&ays a important ro&e in the Indian insurance sector. The Insurance %o&icy India is regu&ated by certain acts &ike the Insurance (ct /1)*!2, the +ife Insurance ,orporation (ct /1)5-2, #enera& Insurance .usiness 0ationa&i1ation2 (ct /1) 22, Insurance 3egu&atory and $eve&opment (uthority I3$(2 (ct /1)))2. The insurance po&icy determines the covers against risks, sometime opens investment options with insurance companies setting high returns and a&so informs about the ta4 benefits &ike the +I, in India. There are two types of insurance coversC 1. +ife insurance 2. #enera& insurance

L +e !s(r%!"e E this sector dea&s with the risks and the accidents affecting the &ife of the customer. (&ongside, this insurance po&icy a&so offers ta4 p&anning and investment returns. There are various types of &ife Insurance %o&icy IndiaC a. 9ndowment %o&icy b. ?ho&e +ife %o&icy c. Term +ife %o&icy d. 7oney-back %o&icy e. Boint +ife %o&icy f. #roup Insurance %o&icy -e!er%* I!s(r%!"e E this sector covers a&most everything re&ated to property, vehic&e, cash, househo&d goods, hea&th and a&so one"s &iabi&ity towards others. The ma'or segments covered under genera& Insurance %o&icy India areC a. 6ome Insurance b. 6ea&th Insurance c. 7otor Insurance d. Trave& Insurance Some o+ $6e :e**-5!o:! I!s(r%!"e Po* ") I!' % %re8 So" %* Se"(r $) -ro(p S"6eme E a scheme covering the age group of 1!--0 years and an insurance of 3s.5000 for natura& death and of 3s.25000 on due to accidenta& death. S6 5s6% S%6)o& Yo4%!% E a scheme providing an educationa& scho&arship of 3s.*00 per ;uarter per chi&d is given for a period of four years. ;%! Aro&)% B m% Po* ") E a scheme for the adu&t=s up to the age of @5 years is 3s. 0 and for chi&dren it is 3s.50. The &imit coverage is fi4ed at 3s.5000 per annum. Me' "*% m I!s(r%!"e Po* ") E a scheme covering the age group from 5-!0

years with a ta4 benefit of up to 3s.10,000. ;%!% S6ree B m% Yo4%!% E this is coverage of 3s.2,000 on natura& death and 3s.50,000 for accidenta& death. The premium amount is fi4ed at 3s.200 for sing&e member. V 'es6 Y%$r% M $r% Po* ") E a scheme-covering medica& e4penses during the period of overseas trave&. B6%&)% S6ree C6 *' /e*+%re B m% Yo4%!% E a scheme covering one gir& chi&d in a fami&y up to the age of 1! whose parents age does not e4ceed -0 years, with a premium of 3s.15 per annum. R%4 R%4es6:%r M%6 *% 2%*)%! Yo4%!% E a scheme providing protection to woman in the age group of 10 to 5 years with an insurance of 3s.25,000 and premium 3s.15 per annum. As6r%) B m% Yo4%!% E scheme-covering workers in case of &oss of 'obs. %ersona& (ccident Insurance :cheme for Missan ,redit ,ard E a scheme covering a&& the M,, ho&ders up to an age of 0 years. Insurance coverage inc&udes 50,000 for accidenta& death and 25,000 for partia& disabi&ity. T6e +(!"$ o!s o+ I!s(r%!"e "%! 0e 0 +(r"%$e' !$o $:o p%r$s8 1. %rimary 8unctions 2. :econdary 8unctions *. >ther 8unctions T6e pr m%r) +(!"$ o!s o+ !s(r%!"e !"*('e $6e +o**o: !&8 Pro9 'e Pro$e"$ o! - The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certain&y provide for the &osses of risk. Insurance is actua&&y a protection against economic &oss, by sharing the risk with others. Co**e"$ 9e 0e%r !& o+ r s5 - Insurance is a device to share the financia& &oss of

few among many others. Insurance is a mean by which few &osses are shared among &arger number of peop&e. (&& the insured contribute the premiums towards a fund and out of which the persons e4posed to a particu&ar risk is paid. Assessme!$ o+ r s5 - Insurance determines the probab&e vo&ume of risk by eva&uating various factors that give rise to risk. 3isk is the basis for determining the premium rate a&so. Pro9 'e Cer$% !$) - Insurance is a device, which he&ps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain. T6e se"o!'%r) +(!"$ o!s o+ !s(r%!"e !"*('e $6e +o**o: !&8 Pre9e!$ o! o+ Losses - Insurance cautions individua&s and businessmen to adopt suitab&e device to prevent unfortunate conse;uences of risk by observing safety instructions< insta&&ation of automatic spark&er or a&arm systems, etc. %revention of &osses cause &esser payment to the assured by the insurer and this wi&& encourage for more savings by way of premium. 3educed rate of premiums stimu&ate for more business and better protection to the insured. Sm%** "%p $%* $o "o9er *%r&er r s5s - Insurance re&ieves the businessmen from security investments, by paying sma&& amount of premium against &arger risks and uncertainty. Co!$r 0($es $o:%r's $6e 'e9e*opme!$ o+ *%r&er !'(s$r es - Insurance provides deve&opment opportunity to those &arger industries having more risks in their setting up. 9ven the financia& institutions may be prepared to give credit to sick industria& units which have insured their assets inc&uding p&ant and machinery. T6e o$6er +(!"$ o!s o+ !s(r%!"e !"*('e $6e +o**o: !&8 Me%!s o+ s%9 !&s %!' !9es$me!$ - Insurance serves as savings and investment, insurance is a compu&sory way of savings and it restricts the unnecessary e4penses by the insured"s 8or the purpose of avai&ing income-ta4 e4emptions

a&so, peop&e invest in insurance. So(r"e o+ e%r! !& +ore &! eF"6%!&e - Insurance is an internationa& business. The country can earn foreign e4change by way of issue of marine insurance po&icies and various other ways. R s5 Free $r%'e - Insurance promotes e4ports insurance, which makes the foreign trade risk free with the he&p of different types of po&icies under marine insurance cover. DEMAND DRIVERS Be+ore I!'epe!'e!"e The insurance industry originated in India in the year 1!1! with the formation of +ife Insurance ,orporation in ,a&cutta. The idea behind starting +I, was to provide insurance coverage for 9ng&ish widows and different premium was charged for the 9ng&ish and for the Indians. In 1! 0 .ombay 7utua& +ife Insurance :ociety estab&ished its Insurance business and the same premium was charged for both Indians and 9ng&ish. In 1)12 the Insurance sector came under the purview of regu&ations when the government passed the +ife Insurance ,ompanies (ct. .ut it was in the year 1)*! when the government came up with the first &egis&ation to bring the insurance sector under state contro&. Pos$ I!'epe!'e!"e In 1)5-, the #overnment of India nationa&i1ed insurance companies bringing Indian Insurance sector under the purview of the #overnment. These state owned Insurance companies became high&y inefficient and bureaucratic, had e4cess manpower and count&ess de&ay in sett&ement of c&aims but the nation did not have an a&ternative. (ny effort by the government to privati1e the industry met with stiff resistance from the trade unions. Pos$ L 0er%* 7%$ o! Po* " es re&%r' !& I!s(r%!"e

Dnder the recommendation of 7a&hotra ,ommittee the Insurance 3egu&atory (nd $eve&opment (uthority was set up to monitor and contro& the Insurance industry some of the initiatives taken by the government after Insurance sector reforms areC

#overnment to have not more than 50 per cent stake in insurance companies.

Insurance sector to be opened up for private companies and any number of insurance enterprises can operate.

%rivate p&ayers with minimum paid up capita& of 3s.1 bi&&ion shou&d be given opportunity to do business.

8oreign companies can enter Indian market through 'oint ventures with Indian companies.

The state contro&&ed Insurance companies &ike +I, and #I, faced stiff competition from private insurance companies post reforms. The monopo&y of the nationa& Insurance companies came to an end. The private Insurance companies were ab&e to e4p&oit the shortcomings in the state run Insurance companies. The private insurance companies &aunched a variety of new insurance products &ike hea&th care, pension p&ans, annuity p&ans, income protection, market &inked products, which were we&comed by the end customers. The business for the private sector boomed in both urban and rura& sector a&ike. FDI Po* ") Re&%r' !& I!s(r%!"e Se"$or T69 8inance 7inister, whi&e presenting the first .udget of the D%( government, has proposed to raise the 8$I cap in three sectors. 9&aborating upon the decision he said, FThe 0,7% dec&ares that 8$I wi&& continue to be encouraged and active&y sought, particu&ar&y in areas of infrastructure, high techno&ogy and e4ports. Three sectors of the economy fu&&y meet this description. They are te&ecommunications, civi& aviation and insurance.G The specific proposa& for the insurance sector is to raise the 8$I cap from 2- to @)

per cent. ?e argue be&ow that this move is un'ustifiab&e on severa& grounds.

Bo' es $6%$ re&(*%$e $6e se"$or8 8or better regu&ation purpose of the insurance sector the government has estab&ished fo&&owing bodies< 1. I3(C Insurance 3egu&atory (uthority. 2. I3$(C Insurance 3egu&atory and $eve&opment (uthority. *. T(,C Tariff (dvisory ,ommittee. 1.IRA8 INSURANCE RE-ULATORY AUTHORITYC The I3(, under the chairmanship of 3angachary, was set-up in Banuary 1))-. The I3( .i&& has to be passed by par&iament to make the I3( a statutory body. ,omprehensive &egis&ation aimed at reviewing the insurance (ct of 1)*! and repea&ing the &ife insurance corporation (ct of 1)5- have to be passed. The I3( is a&so preparing an interna& rating system to screen a&& app&ications, as entry wi&& be in phases. The 'oint venture status of &ife insurance companies /with ma'ority ho&ding of the domestic partner2 is &ike&y to be approved by the par&iament. ,onsensus a&so seems to be emerging on the minimum of 3s.1 bn capita& stipu&ations for new insurance companies. The I3( has stipu&ated a minimum rura& presence for a&& companies. The e4haustive guide&ines have been issued for the appointment of intermediaries /brokers, agents, surveyors and actuaries2. Fe%$(re o+ IRA8 1. The .i&& a&&owed for up to 2-5 foreign e;uity participation in the insurance sector.

2. The current India monopo&y companies were re;uired to bring down their e;uity ho&ding to 2-5 within a period of 10 years. -o9er!me!$ pro!o(!"eme!$8 1. I3( wi&& be so&e (uthority, which wi&& be responsib&e for awarding of, &icenses i.e. &itt&e or no government or po&itica& interference in &icensing process. 2. 0o restriction on the number of &icenses. *. 0o composite &icense for &ife insurance business. @. +icensing to be on&y on nationa& basis /no city by city approach2 5. I3( a&&owed for up to 2-5 foreign e;uity participation in the &ife insurance sector. -. The current Indian monopo&ies companies are re;uired to bring down their e;uity ho&ding to 2-5 within a period of 10 years. IRA propos%*s8 1. 0ew p&ayer shou&d start their business within 15-1! months. 2. Trafficking of &icenses not to be permitted. *. I3( to seek business p&an with 5-year protection for a&& app&icants. @. ( system of direct brokers to be introduced. 5. I3( to vet top management appointments.

2.

IRDA8

INSURANCE

RE-ULATORY

AND

DEVELOPMENT

AUTHORITY8The Insurance 3egu&atory and $eve&opment (uthority, constituted under the I3$( (ct, 1))), provide for the estab&ishment of an authority to protect the interest po&icyho&ders, to regu&ate, promote and ensure order&y growth of the &ife insurance industry.

B(s !ess ReG( reme!$8( company wi&& not be issued a &icense un&ess the I3$( is satisfied with the sound financia& condition, the genera& character of management, the vo&ume of business, the capita& structure, earning prospects for the insurers and that the interests of the genera& pub&ic wi&& be served if registration is granted to the insurer. 8oreign insurance companies have been a&&owed to have a ma4imum 2-5 share ho&ding. 0o &ife insurance company can be registered under the (ct un&ess they have a paid up capita& of 3s.100 crores. 9very &ife insurer sha&& deposit with the reserve bank of India one percent of the tota& gross premium written in India in any financia& year, not e4ceeding 3s.10 crores. This amount wou&d not be susceptib&e to any assignment or charge nor wou&d it be avai&ab&e for the discharge of any &iabi&ities other than &iabi&ities arising out of po&icies issued, so &ong as any such &iabi&ities remain undercharged. I!9es$me!$ o+ Asse$s89very insurer is re;uired to invest, and keep invested, assets e;uiva&ent to not &ess than the net &iabi&ities as fo&&owsC a. 25 5 in government securities, b. a &east 255 of the said sum in government securities or other approved securities and c. the ba&ance in any approved investment rated as Fvery stronG or more by reputed rating agencies, which inc&ude various debt instruments on which dividend on its ordinary shared for the five years immediate&y preceding or for at &east five out of the si4 or seven years immediate&y preceding have been paid and which have priority in payment over ordinary shares

of the company in winding up. The I3$( may in the interest of the po&icyho&der=s directions re&ation the time, manner and other conditions and investments of assets to be he&d by an insurer. The I3$( may a&so direct the insurer to rea&i1e the investment, if it sees the investments to be unsuitab&e or undesirab&e. The (ct prohibits an insurer from direct&y or indirect&y investing po&icyho&der funds outside India. 8urther, every insurer has to a&ways maintain an e4cess of the va&ue of his assets over the amount of his &iabi&ities of not &ess than 3s.50 crores in the case of an insurer carrying of &ife insurance business. If at any time an insurer does not maintain the re;uired so&vency margin, he is re;uired to submit a financia& p&an, as per directions issued by the I3$(, indicating a p&an of action to correct the deficiency within three months. In order to ensure that the company does not risk the money of the po&icyho&der=s, the (ct provides that an insurer who does not comp&y with the aforesaid provisions may be deemed to be inso&vent and may be wou&d up by the court. Insurers are re;uired to get an actuary to investigate the financia& conditions of the &ife insurance business inc&uding a va&uation of &iabi&ities every year in order to ensure continua& comp&iance In order to maintain transparency in its dea&ings, insurers wou&d have to keep separate account re&ating to funds of shareho&ders and po&icyho&ders. >. TARIFF ADVISORY COMMITTEE8 The tariff advisory committee estab&ished under the (ct is empowered to contro& and regu&ate the rates, terms, and etc. that may be offered by insurers in respect of any risk or of any category of risks. It is provided that in fi4ing, amending or modifying such rates etc. the committee sha&& try to ensure as far as possib&e that there is no unfair discrimination between risk of essentia&&y the same ha1ard and a&so that consideration is given to past and prospective &oss

e4perience. 9very insurer is re;uired to make payment to the T(, of the prescribed annua& fees. TAX POLICY AND INSURANCE SECTOR8 (nother factor, which affects the insurance sector, is the ta4 po&icy. The ta4 reforms in India are such that it encourages the citi1ens to invest in the insurance sector. The ta4 po&icy of the government is particu&ar re&evant for &ife insurance which is a &ong-term contract and incu&cates among the po&icyho&ders the habit of saving. Ta4ation of returns on investment inf&uences, investment decisions and high rates of ta4ation wi&& discourage the desire to save. (&ready in India there are comp&aints that the rates of return on &ife po&icies are not what they cou&d be. Therefore ta4 incentives p&ay a vita& ro&e in determining the attractiveness of such po&icies. :uch ta4 breaks are avai&ab&e in many countries and have he&ped in the deve&opment of their &ife sector. In western countries the gain from the proceeds of a &ife insurance po&icy is paid free of ta4. %rovided the po&icy satisfies certain ;ua&ifying conditions. 0on-;ua&ifying po&icies get basic rate ta4 re&ief, though higher rate ta4payers may sti&& have to pay ta4 on the gain, a&though at a reduced rate. The insurance companies can use such ta4 concessions rate. The insurance companies can use such ta4 concessions to design products for different categories of ta4payers. The other factors, which affect the insurance sector, are the emp&oyment &aw, and government stabi&ity. These are the factors, which affect the insurance industry

CHAPTER-@ DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION @.1 ECONOMIC ANALYSIS O9er9 e: o+ I!' %! E"o!om) India, an emerging economy, has witnessed unprecedented &eve&s of economic e4pansion, a&ong with countries &ike ,hina, 3ussia, 7e4ico and .ra1i&. India, being a cost effective and &abor-intensive economy, has benefited immense&y from outsourcing of work from deve&oped countries, and a strong manufacturing and e4port oriented industria& framework. ?ith the economic pace picking up, g&oba& commodity price have staged a comeback from their &ows and g&oba& trade has a&so seen hea&thy growth over the &ast two years.

(s per the advance estimates of #$% for 200)-10 re&eased by the ,entra& :tatistica& >rgani1ation /,:>2, the economy is e4pected to grow at .2 per cent in 200)-10, with the industria& and the service sectors growing at !.2 and !. per cent respective&y. India=s gross domestic product /#$%2 grew by - per cent during >ctober to $ecember 200), over the corresponding ;uarter of the previous year, as per data re&eased by the ,:>. The economic activities which registered significant growth in the third ;uarter of 200)-10 over the corresponding period in 200!-0) are "mining and ;uarrying" at ).- per cent, "manufacturing" at 1@.* per cent, "construction" at !. per cent, "trade, hote&s, transport and communication" at 10 per cent and "financing, insurance, rea& estate and business services" at .! per cent. (ccording to the &atest estimates avai&ab&e on the Inde4 of Industria& %roduction /II%2, the inde4 of mining, manufacturing and e&ectricity, registered growth rates of ).- per cent, 1@.* per cent and @ per cent, respective&y in P* of 200)-10, as compared to the growth rates of 2 per cent, 0.5 per cent and 2.) per cent in these industries in same period in 200!-0). The key indicators of construction sector, name&y, cement and finished stee& registered growth rates of !.5 per cent and . per cent, respective&y in P* of 200)-10. T6e E"o!om " s"e!%r o 8oreign institutiona& investors /8IIs2 were net investors of D:Q @.* bi&&ion in e;uity and D:Q 2.0) bi&&ion in debt instruments in the month of 7arch 2010, according to the data re&eased by :ecurities and 94change .oard of India /:9.I2. The number of registered 8IIs was 1 1* as on 7arch *1, 2010 and the tota& 8II inf&ow in e;uity during Banuary to 7arch 2010 was D:Q @.5@ bi&&ion whi&e it was D:Q @. 1 bi&&ion in debt. (s on 7arch 2-, 2010, India"s foreign e4change reserves tota&ed D:Q 2 .0@ bi&&ion, an increase of D:Q 2@. 1 bi&&ion over the same period &ast year, according to the 3eserve .ank of India"s ?eek&y :tatistica& :upp&ement. 7oreover, India received 8$I worth D:Q 20.)2 bi&&ion during (pri&-$ecember 200), taking the cumu&ative amount of 8$I inf&ows from (ugust 1))1 to

$ecember 200) to D:Q 12 .@- bi&&ion, according to the $epartment of Industria& %o&icy and %romotion. :i4-core infrastructure industries grew at @.5 per cent in 8ebruary 2010 against 1.) per cent during the corresponding month &ast year, primari&y due to increased output in e&ectricity. The si4 infrastructure sectorsNcrude, petro&eum refinery products, coa&, e&ectricity, cement and finished stee&Nthat constitute 2-.-! per cent in II%, recorded a growth of 5.* per cent in the period (pri&8ebruary 200)-10, as against 2.) per cent in the same period &ast year. 7oreover, according to &atest data from 3.I, &oan disbursement by schedu&ed commercia& banks, inc&uding regiona& rura& banks, recorded 1-.0@ per cent growth at the end of 7arch 12, 2010, on a year-on-year basis. This is above 3.I"s pro'ection of 1- per cent credit growth in this financia& year. >f the more than 200 companies from over 50 countries that form part of the ?or&d 9conomic 8orum"s #&oba& #rowth ,ompanies /##,2 ,ommunity, India today has the second &argest representation, with a tota& of 1! ##,s. Indian ##,s come from every sector, with a strong representation in information techno&ogy and e&ectronics, retai&, consumer goods and banking. The ##, ,ommunity was formed to engage high-growth companies with the potentia& to be tomorrow"s industry &eaders and drive economic and socia& change.

INDIA -DP -RO/TH RATE

The #ross $omestic %roduct /#$%2 in India e4panded at an annua& rate of .20 percent in the &ast ;uarter. India #ross $omestic %roduct is worth 121 bi&&ion do&&ars or 1.)-5 of the wor&d economy, according to the ?or&d .ank. India"s diverse economy encompasses traditiona& vi&&age farming, modern agricu&ture, handicrafts, a wide range of modern industries, and a mu&titude of services. :ervices are the ma'or source of economic growth, accounting for more than ha&f of India"s output with &ess than one third of its &abor force. The economy has posted an average growth rate of more than 5 in the decade since 1)) , reducing poverty by about 10 percentage points.

-RAPH NO-@.1 I!' % -DP &ro:$6 r%$e

I!$eres$ R%$e Interest rates might soon be on an upward move. .ut if one is p&anning to break that &ower-paying fi4ed deposit /8$2 to get higher rates, it wi&& cost . The 3eserve .ank of India /3.I2 current&y e4pects banks to convert 8$=s without pena&i1ing or reducing the interest rate as &ong as the money is rotated into a new 8$. F.anks can formu&ate their own po&icies towards conversion of deposits,G the 3.I said. This means banks can pena&i1e for aborting e4isting 8$=s. The 3.I raised repo rates by 0.255 and the cash reserve ratio /,332 by the same amount. The &atter change wi&& immobi&i1e 3s.12,500 crore of bank funds.

TABLE NO-@.1 C%s6 Reser9e R%$ o %!' I!$eres$ R%$es ,<1< Apr. , 1 ,<1< Apr. = ,

I$em H /ee5 E!'e'

Apr. 1? >

,ash 3eserve 3atio /per cent2/12 5. 5 5. 5 5. 5 .ank 3ate -.00 -.00 -.00 I.$...I./22 10.25 10.25 10.25 /*2 %rime +ending 3ate 11.00-12.00 11.00-12.00 11.00-12.00 $eposit 3ate/@2 -.00- .50 -.00- .50 -.00- .50 ,a&& 7oney 3ate /+ow A 6igh2/52 - .orrowings 1. 5A5. 5 1.25A*. 5 2.00A*.)0 - +endings 1. 5A5. 5 1.25A*. 5 2.00A*.)0 /12 ,ash 3eserve 3atio re&ates to :chedu&ed ,ommercia& .anks /e4c&uding 3egiona& 3ura& .anks2. /22 7inimum Term +ending 3ate /7T+32. /*2 %rime +ending 3ate re&ates to five ma'or .anks. /@2 $eposit 3ate re&ates to ma'or .anks for term deposits of more than one year maturity. /52 $ata cover )0-)5 per cent of tota& transactions reported by participants.

I!+*%$ o! >n 7arch 1), 2010, the 3eserve bank of India raised its benchmark reverse repurchase rate to *.55 percent, after this rate touched record &ows of *.255. The repurchase rate was raised to 55 from @. 55 as we&&, in an attempt to curb Indian inf&ation. India=s 200)-10 9conomic :urvey 3eport suggests a high doub&e-digit increase in food inf&ation, with signs of inf&ation spreading to various other sectors as we&&. The $eputy #overnor of the 3eserve .ank of India, however, e4pressed his optimism in 7arch 2010 about an imminent easing of Indian who&esa&e price inde4-based inf&ation, on the back of fa&&ing oi& and food prices.

8or 200), Indian inf&ation stood at 11.@)5 L-o-L. This rate ref&ects the genera& increase in prices, taking into account the purchasing power of the common man. (ccording to the 9conomic :urvey 3eport for 200)-10, economic growth dece&erated to -. 5 in 200!-0), from )5 in 200 -0!. The economy is e4pected to grow by !. 5 in 2010-11, with a return to a growth rate of )5 in 2011-12. Foo' I!+*%$ o! Up 1?.?1I

India"s annua& food price inf&ation eased in mid-(pri&, but fue& price inf&ation ;uickened maintaining an upside pressure on the who&esa&e price inde4 that cou&d prompt further monetary tightening by the centra& bank. The food price inde4 rose 1-.-1 percent in the 12 months to (pri& 1 , &ower than an annua& rise of 1 .-5 percent in the previous week, government data showed on Thursday. The fue& price inde4 rose an annua& 12.-) percent, higher than the previous week"s reading of 12.@5 percent. ?ho&esa&e price inf&ation in 7arch touched a 1 -month high of ).) percent,

prompting the 3eserve .ank of India /3.I2 to raise rates in (pri& for the second time in as many months. 3eserve .ank of India #overnor $uvvuri :ubbarao said rising prices for food, fue& and wages have made inf&ation more of a genera&i1ed and demand-side prob&em. 7uch of the country"s inf&ationary pressures were initia&&y on the supp&y-side as a resu&t of the 200) monsoon fai&ure that pushed up food prices. .ut summer monsoon is &ike&y to be norma& this year, with rainfa&& e4pected to be )! percent of the &ong-term average, the government said &ast 8riday. The 3.I has forecast the head&ine inf&ation to ease to 5.5 percent at end-7arch 2011 on norma& monsoon. EF"6%!&e R%$e R(pees are used in a number of countries inc&uding India and %akistan. The 3eserve .ank of India /3.I2 issues the Indian currency. The Indian rupee e4change rate measured against si4-currency trade weighted indices. These currencies be&ong to countries that have a strong trade re&ationship with India. The e4change rate of the Indian rupee /or I032 is determined by market conditions. 6owever, in order to maintain effective e4change rates, the 3.I active&y trades in the D:$AI03 ,urrency market. The rupee currency is not pegged to any particu&ar foreign currency at a specific e4change rate. The 3.I intervenes in the currency markets to maintain &ow vo&ati&ity in e4change rates and remove e4cess &i;uidity from the economy. TABLE NO-@., 94change rates /using values from Friday, April 30, 2010) 1 I03 0.0225@* 0.0!!2520.02@1) 2 0.0*!! 0) 0.01@ *@0.0**112 In I03 @@.*5) 11.**11 @1.*2 1 25. 2-2 - .!- * *0.1)))

(merican $o&&ar (rgentine %eso (ustra&ian $o&&ar .ra1i&ian 3ea& .ritish %ound .u&garian +ev

,anadian $o&&ar ,hi&ean %eso ,hinese Luan ,o&ombian %eso ,roatian Muna $anish Mrone 9stonian Mroon 9uro 6ong Mong $o&&ar 6ungarian 8orint Ice&and Mrona Israe&i 0ew :heke& Bapanese Len +atvian +at +ithuanian +itas 7a&aysian 3inggit 7e4ican %eso 0ew Rea&and $o&&ar 0orwegian Mroner %akistan 3upee 3omanian +eu 3ussian 3ub&e :ingapore $o&&ar :outh (frican 3and :outh Morean ?on :ri +anka 3upee :wedish Mrona :wiss 8ranc Taiwan $o&&ar Thai .aht TrinidadATobago $o&&ar Turkish +ira Hene1ue&an .o&ivar

0.022-51@ 11.-52! 0.15*!-1 @*.)*)2 0.122 ) 0.12-005 0.2-@)05 0.01-)*05 0.1 500@.51 @1 2.!!2-@ 0.0!*)012.1*00* 0.011) 0.05!@5 ! 0.0 1 !!! 0.2 505@ 0.0*0)051 0.1*2!12 1.!)@00.0-))22) 0.-5 5-5 0.0*0!@2@ 0.1-52!) 2@.)!0* 2.5-!-0.1-2) 0.02@2!01 0. 0-@5) 0. 2)*!* 0.1@*2@@ 0.0**@@) 0.0)-!*@*

@@.1@ @ 0.0!5!1-@ -.@))* 0.022 5! !.1@*52 .)*-1 *. @)@ 5).0-@) 5. 1@1 0.221*-0.*@-)0@ 11.)1! 0.@-)@ !*.@)5 1 .10-@ 1*.)2) *.-*5-5 *2.*5 1 .52)@ 0.52 )1@.*015 1.520 *2.@22) -.05 0.0@00*15 0.*!)*0! -.1*! 2 @1.1!5) 1.@1551 1.* 102 -.)!10) 2).!)510.*2-)

A&r "(*$(r%* o($ p($ 1mo!soo! mp%"$3 The share of agricu&ture to the gross domestic product /#$%2 has dropped from 255 in 2002 to 1 5 current&y. Let, agricu&ture contributes a huge

chunk to the #$%, making it a very important sector for India"s growth. The performance of this sector is very crucia& to the Indian economy not on&y with regard to #$% but a&so as a huge chunk of the Indian popu&ation is dependant on agricu&ture. 3ainfa&& in India so far this year is 2!5 be&ow par and this is a ma'or cause of concern as the impact cou&d be devastating. 7onsoon in the northwestern region of India, the main growing area, is @05 be&ow average. If agricu&tura& production goes down in India then the direct impact wou&d be a dec&ine in the income of peop&e. The economy as a who&e and the #$% wi&& get affected. This factor cou&d &ower production of food but raise the prices. 6ence, the significance of the monsoon for the economic system cannot be underestimated. The monsoon can direct&y affect government savings, pub&ic investment and foreign e4change reserves. It is not on&y important for the monsoon to commence, but the time of commencement is a&so important. 8or farmers, it is high&y critica& to know when the onset wi&& occur as this affects the timing of the p&anting of crops. If rainfa&& is deficient then more than two-thirds of the seed&ings can die. To prevent this, the prediction systems p&ay a very important ro&e. -05 of Indian (gricu&ture is monsoon dependent. ?ith rainfa&& this time being deficient by @55, the agricu&ture sector has been hit hard. (&so, post-economic disaster, rura& India has become the focus for many organi1ations. .ut with monsoon showing no sign of rain, the rura& income is bound to decrease, which eventua&&y wi&& affect the organi1ation"s p&ans and economic conditions. (part from this, a severe prob&em that bad monsoon is to bring is the rise in the price of cash crops, vegetab&es and fruits. This is the most dreading conse;uence of deficient rainfa&& as the basic needs of peop&e might have to be compromised. This increase in the price of food wi&& cause inf&ation to go up.

E"o!om " Po* " es (s per &atest reports from %ress Trust of India, 3eserve .ank of India has come up with a new India economic po&icy whereby it wou&d be re&a4ing its money supp&y activities. It has a&so said that its economic po&icy of India wou&d be successfu& to he&p this country recover fisca&&y by 2011 on&y. 6owever, there is a pre-condition for this situation to be rea&i1ed. This economic po&icy in India wou&d be ab&e to bear fruit provided other advanced economies of wor&d are ab&e to recover from aftereffects of g&oba& financia& me&tdown. In recent times many a Indian economic po&icy have been formu&ated whereby three back to back economic stimu&us packages have been provided to weaker sections of Indian economy. 6owever, such India economic po&icies have on&y &ed to increasing of financia& deficit. (n important part of India economic po&icy of nationa& government is bringing back confidence of business estab&ishments in India financia& system. (s per &atest India economic po&icy, economy wou&d be moving towards a sing&e goods and service ta4 by doing away with differences between rates of service ta4 and ,90H(T. In interim budget for fisca&s 200)-10 service ta4es and e4cise duties have been reduced. (ccording to this India economic po&icy a significant amount of money wou&d be &ost as a resu&t of these ta4 benefits E &osses are e4pected to amount to I03 2),000 crores. 7a4imum amount of &osses to tune of I03 1@,000 crores wou&d be incurred in services ta4 se&ection. ,ustoms duties sector wou&d face &osses of I03 -,-00 crores and for e4cise duties it wou&d be I03 !,500 crores. MONETARY POLICY 3.I came out with its annua& monetary po&icy for 2010-11, which was more or &ess in &ine with market e4pectations. 3.I hiked repo, reverse repo and ,33 by 25 bps each. The po&icy rates are with immediate effect, whi&e the ,33 hike wi&& be effective from (pri& 2@. The increase in ,33 is e4pected to absorb

about 3s.12500cr from the system. 7>09T(3L 79(:D39: 1. 3epo 3ate hiked from 5.05 to 5.255 /with immediate effect2. 2. 3everse 3epo 3ate hiked from *.55 to *. 55 /with immediate effect2. *. ,ash 3eserve 3atio hiked from 5. 55 to -.05 /effective from (pri& 2@2. (s a resu&t of the hike in ,33, 3s.12500cr /appro4.2 of e4cess &i;uidity wi&& be absorbed from the system. @. .ank 3ate unchanged at -.05. 5. :tatutory +i;uidity 3atio unchanged at 255. 7>09T(3L %3>B9,TI>0 . The pro'ection of money supp&y growth for 2010-11 is p&aced at 1 5. . ,onsistent with this, aggregate deposits of :chedu&ed ,ommercia& banks /:,.s2 are pro'ected to grow by 1!5. . The growth in non-food credit of :,.s is p&aced at 205. . Introduction of a reporting p&atform for a&& secondary market transactions in ,ertificate of $eposits /,$s2 and ,orporate %apers /,%s2 . 8I77$( has been re;uested to start work on deve&oping a p&atform for ,$s and ,%s simi&ar to its e4isting p&atform for corporate bonds. . To a&&ow banks to c&assify their investments in non :+3 bonds issued by companies engaged in infrastructure activities and having a minimum residua& maturity of seven years under the he&d to maturity /6T72 category . The much awaited paper on bank &icenses for the private companies wi&& be p&aced on 3.I website by end Bu&y 2010. . .y end of Bune, the bank proposes to prepare the draft for ,redit $efau&t :waps /,$:2 introduction. (round the same time, it wi&& fina&i1e >T, fore4 derivatives norms. The hike in po&icy rates and ,33 is broad&y in &ine with e4pectations. The we&&-ba&anced measures taken by the 3.I is aimed at contro&&ing inf&ation

and promoting sustainab&e growth. .ut it considers tempering of &i;uidity e;ua&&y important. There are specu&ations of the &ending getting more e4pensive but the system sti&& possess a &ot of &i;uidity and (pri&-Bune ;uarter is a &ean period for credit off takes and hence the interest rates shou&d not move sharp&y on an upward trend. 3.I has given indications to act on rates again if Inf&ation wi&& not curtai& by the current rate hike. ,onsumer finance &oans may rise margina&&y but it wi&& not affect much of the growth, as demand for consumer goods is very strong and may not be impacted by a 25 basis point hike in key po&icy rates. ,entra& bank has remained cautious in increasing rates to ensure that the growth is not hampered whi&e checking inf&ationary pressures.

@., INDUSTRY ANALYSIS

The forgoing section in this report had a perspective of overa&& 9conomy in India. The ne4t step is to ana&y1e the particu&ar industry. >nce the economic ana&ysis is over< getting the prospects of the &ike&y trend in the economy, ana&y1ing the industry wou&d be taken importance, knowing which group are promising in the year makes possib&e better entry in to the company. There is however, no perfect corre&ation between the economy and the industry on one hand and of industry and companies on the other. India has mi4ed economy, where private and pub&ic sector p&ay a comp&ementary ro&e and promote a p&anned deve&opment. :ince from 1))1 reforms, even foreign enterprises and 70,=s given an important ro&e to p&ay in the deve&opment of the

economy. INDIAN INSURANCE INDUSTRY #&oba&i1ation is the key source, which is bringing about an Sirreversib&e transformationS in the (sian insurance market. India and ,hina are Sdynamica&&yS driving the growth of insurance markets in (sia and the out&ook for this industry in the region is SsanguineS despite short-term uncertainties. (sia is becoming an important growth engine for g&oba& insurers. The changing socioeconomic dynamics present attractive opportunities. (ccording to a &atest research report from 6:.,, in order to be &ong-term winners, &ife insurance companies in (sia need to diversify their income streams such that at &east 255 of earnings are sourced overseas, whi&e maintaining a dominant position in the domestic market.

The Indian insurance market in spite of having a history covering a&most two centuries took a turn after the estab&ishment of the +ife insurance corporation in India in 1)5-. 8rom being an open competitive market to being nationa&i1ed and then back to a &ibera&i1ed market again, the insurance sector has witnessed a&& aspects of contest. The Indian insurance market conventiona&&y focused around &ife insurance unti& recent&y, a various range of other insurance po&icies covering sectors &ike medica&, automobi&e, hea&th and other c&asses fa&&ing under genera& insurance came up, genera&&y provided by the private companies. The &ife insurance of India added @.15 to the #$% of the economy in 200), an immense growth since 1))), when the gates were opened for the private company in the market. 7a'or $riving 8actors

#&oba&i1ation $eregu&ation which is opening up the markets

,heaper and more effective distribution channe&s >ngoing industry conso&idation Increment in the po&icy ho&der firms .oost in 7erger and (c;uisitions activities ,hanging socio-economic dynamics 7arket offering wider margins Dni;ue combination of si1e, age profi&e and growth prospects

7a'or Issues, Trends and >pportunities

,ontinuous increment in intra-(sian trade 0eed for diversification in the income streams 3ise in se&&ing investment type products &ike annuities ,hance to compete direct&y with financia& services companies 8ocus on paying out more in c&aims $rastic increment in marine and cargo insurance sectors $eve&opments in countries, who were c&ose&y regu&ated by their government +ack of proper agent ;ua&ity ,hange in the distribution method $ifficu&ties in bui&ding networks and brands 6indrance in e4pansion in some of the emerging markets 3isk management concerns in insurance companies #&oba& 94pansion Transformation in the organi1ationa& system to win customer &oya&ty ?eak e;uity markets Impact of sub-prime 3egu&atory and market obstac&es in the emerging markets

L +e I!s(r%!"e

The D:Q @1-bi&&ion Indian &ife insurance industry is considered the fifth &argest &ife insurance market, and growing at a rapid pace of *2-*@ per cent annua&&y, according to the +ife Insurance ,ounci&. :ince the opening up of the insurance sector in India, the industry has received 8$I to the tune of D:Q 525.mi&&ion. The government is &ike&y to reintroduce the Insurance .i&&, which proposes to increase the 8$I cap in private sector insurance companies from 2per cent to @) per cent. The tota& number of &ife insurers registered with the Insurance 3egu&atory $eve&opment (uthority /I3$(2 has gone up to 2*, with registration of the India 8irst +ife Insurance ,ompany +imited, a 'oint venture &ife insurance company promoted by .ank of .aroda and (ndhra .ank, India and +ega& T #enera& 7idd&e 9ast +imited, DM. The +ife Insurance ,orporation /+I,2 posted a 50 per cent growth in new premium co&&ection in the first nine months of the 2010 fisca&, increasing its market share to -5 per cent from 5- per cent a year ago. +I,=s new premium co&&ection touched D:Q ).5! bi&&ion in the (pri&$ecember 200) period whi&e the combined business of the 22 private insurers grew to D:Q 5.0 bi&&ion from the previous year, as per data co&&ated by the Insurance 3egu&atory and $eve&opment (uthority /I3$(2. >vera&& the industry grew at 2) per cent in the (pri&-$ecember period of the fisca& year 2010. The &ife insurance industry had ear&ier been e4pected to grow by 15 per cent in the 2010 fisca& year and cross the D:Q 5@.1 bi&&ion mark in tota& premium income by the end of 7arch 2010, according to industry body, +ife Insurance ,ounci&. 6owever, industry e4perts now be&ieve that India"s &ife insurance industry is &ike&y to grow by around 10 per cent in 2010 over the previous year, main&y due to increased efficiency but a&so due to e4pansion in sma&& towns and vi&&ages. In order to support the aggressive growth in premium income in the current financia& year, 8uture #enera&i India +ife Insurance /a 'oint venture between the 8uture #roup and the Ita&y-based #enera&i #roup2 has proposed to infuse an additiona& e;uity of D:Q *2.55 mi&&ion before the end of 7arch 2010.

-e!er%* I!s(r%!"e The tota& number of genera& insurers registered with I3$( has gone up to 22, with the registration of :.I #enera& Insurance ,ompany +imited, a 'oint venture genera& insurance company promoted by :tate .ank of India and Insurance (ustra&ia #roup, (ustra&ia, as a genera& insurer in $ecember 200). 7oreover, +TT #enera& Insurance is readying to &aunch its operations in the ne4t three to five months. The #ross %remium underwritten by pub&ic sector non-&ife insurers for the (pri&-$ecember 200) period posted year-on-year growth of 11.* per cent as compared to the year-on-year growth of .)* per cent posted by private sector non-&ife insurers. >vera&&, the non-&ife insurance sector grew ).)5 per cent in (pri&-$ecember 200), compared to the corresponding period &ast year. (ccording to I3$( data, out of the D:Q 5.@- bi&&ion premium underwritten by the industry during the (pri&-$ecember 200) period, D:Q *.2@ bi&&ion came from the four pub&ic sector companies as compared to D:Q 2.)1 bi&&ion during the same period in 200!. 7oreover, in the 2010-11 budget, 8inance 7inister, 7r. %ranab 7ukher'ee, has decided to ro&& back the government=s decision to ta4 the unrea&i1ed gains of non-&ife insurance companies. FThe appreciation in the va&ue of investments, being in the nature of unrea&i1ed gain is not taken into account for determining profit or &oss of non-&ife insurance business as per the I3$( regu&ations. It is, therefore, proposed that the unrea&i1ed gains due to appreciation in the va&ue of investments wi&& not be inc&uded in the tota& income,G according to the budget documents. (ccording to data from the I3$( /:ummary 3eports of 7otor $ata of %ub&ic and %rivate :ector Insurers - 200!-0)2, in 200!-0), near&y *0 mi&&ion vehic&es were registered and a tota& premium worth D:Q 2.0* bi&&ion was co&&ected.

Pro4e"$ I!s(r%!"e Insurance companies are a&so witnessing increasing demand for pro'ect insurance in the &ast few months. ,orporate are beginning to demand pro'ect insurance across sectors such as power generation with the cover beginning right from the start of the pro'ect ti&& it is dec&ared ready for commercia& use. :ome of the big pro'ects a&so take cover for financia& &oss arising out of de&ay in comp&etion. Industry p&ayers estimate that premiums co&&ected from pro'ect insurance wi&& be around D:Q 21-.2 mi&&ion for the industry as a who&e and is e4pected to increase significant&y.

>rienta& Insurance ,ompany +td wi&& be offering comprehensive pro'ect insurance for the Tata %ower %ro'ect at 7undra in #u'arat.

He%*$6 I!s(r%!"e The hea&th insurance market stood at around D:Q 1.5 bi&&ion in 200!-0) and is e4pected to grow to D:Q ) bi&&ion by 201--1 . ?hi&e hea&th insurance po&icies are most&y provided by genera& insurance companies, &ife insurers contribute about five per cent to the overa&& hea&th insurance business.

(po&&o $MH 6ea&th Insurance has renamed itse&f (po&&o 7unich 6ea&th Insurance as a part of its five-year strategic p&an to gain a five per cent market share. (po&&o 7unich is a 'oint venture between (sia=s &argest integrated hea&thcare provider, The (po&&o 6ospita&s #roup, and #ermany-based 7unich 3e"s segment, 7unich 6ea&th.

7a4 India is p&anning to invest D:Q @*.25 mi&&ion in its hea&th insurance 'oint venture /7a4 .upa 2 and wi&& &aunch a product over the BanuaryE Bune 2010 period.

:tar 6ea&th and (&&ied Insurance e4pects to invest D:Q *!.) mi&&ion during the current financia& year to grow its hea&th insurance business, taking the tota& invested capita& to D:Q - mi&&ion.

D:-based hea&th insurer ,I#0( is &ooking at entering the Indian market.

Re !s(r%!"e

3einsurance is a contract between the insurance company /insurer2 and a third party /re-insurer2, wherein the &atter wi&& protect the former by paying &osses sustained by it under the origina& contract of insurance. 3e-insurers from +ondon, as we&& as other parts of 9urope, see significant potentia& in the re-insurance market in India. Top four g&oba& re-insurers, +&oyds, :wiss 3e, 7unich 3e and .erkshire 6athaway are amongst those eyeing India. B%!"%sss(r%!"e %rivate insurers have adopted bancassurance in a much bigger way than the state-owned +ife Insurance ,orporation /+I,2 in the recent years. .ancassurance is distribution of insurance products through a bank"s network. In 200)-10, private insurers forked out D:Q @@.@ mi&&ion as commission for banassurance, whi&e the payout by +I, for this distribution mode& was D:Q 25,)@!. I!9es$me!$ Po* ")

The 8$I &imit in the insurance space for foreign p&ayers is capped at 2per centNpermissib&e under the automatic route sub'ect to a &icence from the officia& regu&ator, I3$(Nbut the government is p&anning to raise it to @) per cent and a bi&& to give effect to the proposa& is pending in the 3a'ya :abha.

I3$( has stipu&ated that the mandatory ceding by every genera& insurer in the country to the nationa& reinsurer E #enera& Insurance ,orporation /#I,2, wou&d continue to remain at 10 per cent as under current regu&ations.

I3$( has a&so a&&owed insurance companies to offer "6ea&th p&us +ife ,ombi %roduct", a po&icy that wou&d provide &ife cover a&ong with hea&th insurance to subscribers.

%ension 8und 3egu&atory and $eve&opment (uthority /%83$(2 wou&d &aunch a &ow-cost pension scheme on (pri& 1, 2010, to provide socia& security cover to economica&&y weaker sections &ike rickshaw pu&&ers, barbers and dai&y-wage &abourers.

T6e Ro%' A6e%' :aturation of insurance markets in many deve&oped economies has made the Indian market more attractive for internationa& insurance p&ayers, according to ".ooming Insurance 7arket in India /200!-20112G. 8urther, according to the report,

Tota& &ife insurance premium in India is pro'ected to grow D:Q 2-bi&&ion by 2010-11 Tota& non-&ife insurance premium is e4pected to increase at a compound annua& growth rate /,(#32 of 25 per cent for the period spanning from 200!-0) to 2010-11

The home insurance segment is set to achieve a 100 per cent growth as financia& institutions have made home insurance ob&igatory for housing &oan approva&s

In the ne4t three years, hea&th insurance is poised to become the second &argest business for non-&ife insurers after motor insurance

?ith a huge popu&ation base and &arge untapped market, insurance industry is a big opportunity area in India for nationa& as we&& as foreign investors. India is the fifth &argest &ife insurance market in the emerging insurance economies g&oba&&y and is growing at *2-*@5 annua&&y. This impressive growth in the market has been driven by &ibera&i1ation, with new p&ayers significant&y enhancing product awareness and promoting consumer education and information. The strong growth potentia& of the country has a&so made internationa& p&ayers to &ook at the Indian insurance market. 7oreover, saturation of insurance markets in many deve&oped economies has made the Indian market more attractive for internationa& insurance p&ayers, according to S.ooming Insurance 7arket in India /200!-20112S. 2e) P*%)ers The ma'or p&ayers discussed in the report inc&ude +I,, .a'a' (&&ian1 and 6$8,

:tandard under &ife insurance segments, and 0ew India, Dnited India and I,I,I +ombard under non-&ife insurance segments. Por$ers F 9e For"e Mo'e* I! I!s(r%!"e Se"$or 1. T6re%$ o+ Ne: E!$r%!$s. The average entrepreneur can"t come a&ong and start a &arge insurance company. The threat of new entrants &ies within the insurance industry itse&f. :ome companies have carved out niche areas in which they underwrite insurance. These insurance companies are fearfu& of being s;uee1ed out by the big p&ayers. (nother threat for many insurance companies is other financia& services companies entering the market. ?hat wou&d it take for a bank or investment bank to start offering insurance productsU In some countries, on&y regu&ations that prevent banks and other financia& firms from entering the industry. If those barriers were ever broken down, &ike they were in the D.:. with the #ramm-+each-.&i&ey (ct of 1))), you can be sure that the f&oodgates wi&& open. 2. Po:er o+ S(pp* ers. The supp&iers of capita& might not pose a big threat, but the threat of supp&iers &uring away human capita& does. If a ta&ented insurance underwriter is working for a sma&&er insurance company /or one in a niche industry2, there is the chance that person wi&& be enticed away by &arger companies &ooking to move into a particu&ar market.

*. Po:er o+ B()ers. The individua& doesn"t pose much of a threat to the insurance industry. +arge corporate c&ients have a &ot more bargaining power with insurance companies. +arge corporate c&ients &ike air&ines and pharmaceutica& companies pay mi&&ions of do&&ars a year in premiums. Insurance companies try e4treme&y hard to get high-margin corporate c&ients. @. A9% *%0 * $) o+ S(0s$ $($es. This one is pretty straight forward, for there

are p&enty of substitutes in the insurance industry. 7ost &arge insurance companies offer simi&ar suites of services. ?hether it is auto, home, commercia&, hea&th or &ife insurance, chances are there are competitors that can offer simi&ar services. In some areas of insurance, however, the avai&abi&ity of substitutes are few and far between. ,ompanies focusing on niche areas usua&&y have a competitive advantage, but this advantage depends entire&y on the si1e of the niche and on whether there are any barriers preventing other firms from entering. 5. Compe$ $ 9e R 9%*r). The insurance industry is becoming high&y competitive. The difference between one insurance company and another is usua&&y not that great. (s a resu&t, insurance has become more &ike a commodity - an area in which the insurance company with the &ow cost structure, greater efficiency and better customer service wi&& beat out competitors. Insurance companies a&so use higher investment returns and a variety of insurance investment products to try to &ure in customers. In the &ong run, we"re &ike&y to see more conso&idation in the insurance industry. +arger companies prefer to take over or merge with other companies rather than spend the money to market and advertise to peop&e.

PROSPECTS Tota& &ife insurance premium in India is pro'ected to grow 3s 1,2*0,000 ,rore by 2010-11. Tota& non-&ife insurance premium is e4pected to increase at a ,(#3 of

255 for the period spanning from 200!-0) to 2010-11. ?ith the entry of severa& &ow-cost air&ines, a&ong with f&eet e4pansion by e4isting ones and increasing corporate aircraft ownership, the Indian aviation insurance market is a&& set to boom in a big way in coming years. 6ome insurance segment is set to achieve a 1005 growth as financia& institutions have made home insurance ob&igatory for housing &oan approva&s. 6ea&th insurance is poised to become the second &argest business for non&ife insurers after motor insurance in ne4t three years. ( booming &ife insurance market has prope&&ed the Indian &ife insurance agents into the "top 10 country &ist" in terms of membership to the 7i&&ion $o&&ar 3ound Tab&e /7$3T2 - an e4c&usive c&ub for the highest performing &ife insurance agents.

@.> COMPANY ANALYSIS (fter ana&y1ing the economy and the respondent industry that are taken into consideration now its term of the companies in the insurance industry and their performance and the environment they are operating into. 6ere I have taken @ companies in insurance industry and ana&y1ing it. The companies are,

1. I,I,I %rudentia& +ife Insurance ,ompany

2. .a'a' (&&ian1 +ife Insurance ,ompany +imited *. 0ew India (ssurance ,ompany +imited @. .ir&a :un +ife Insurance ,ompany +imited ?hi&e ana&y1ing the company the factor considered are :(+9: (0$ 9%: of each company. :ome va&uation ratios a&so used in some cases. VALUATION RATIOS ,D3390T 3(TI> I,urrent (ssets A,urrent +iabi&ities $ebt to 9;uity ITota& $ebt /:hort Term K+ong Term2A9;uity K%reference Interest ,overageI9arnings .efore Interest (nd Ta4AInterest

@.>.1. ICICI Pr('e!$ %* L +e I!s(r%!"e Comp%!)

Incorporation Lear ,hairperson 7anaging $irector 3egistered >ffice

2000 7s.,handa $. Mochhar 7r.H. Haidyanathan, I,I,I %ru +ife Towers, 10!) (ppasaheb 7arathe 7arg, %rabhadevi, 7umbai @00025.

9mai& ?ebsite www.icicipru&ife.com

T6e Comp%!) I,I,I %rudentia& +ife Insurance ,ompany is a 'oint venture between I,I,I .ank, a premier financia& powerhouse, and %rudentia& p&c, a &eading internationa& financia& services group head;uartered in the Dnited Mingdom. I,I,I %rudentia& was amongst the first private sector insurance companies to begin operations in $ecember 2000 after receiving approva& from Insurance 3egu&atory $eve&opment (uthority /I3$(2. I,I,I %rudentia& +ife"s capita& stands at 3s.@, !0 crores /as of $ecember *1, 200)2 with I,I,I .ank and %rudentia& p&c ho&ding @5 and 2-5 stake respective&y. 8or the period (pri& 1, 200) to :eptember *0, 200), the company has garnered tota& received premium new business premium of 3s 2,12! crores and has underwritten over 10 mi&&ion po&icies since inception. The company has assets he&d over 3s.5*,000 crores as on $ecember *1, 200). 8or the past nine years, I,I,I %rudentia& +ife has retained its &eadership position in the &ife insurance industry with a wide range of f&e4ib&e products that meet the needs of the Indian customer at every step in &ife. $istribution

I,I,I %rudentia& +ife has one of the &argest distribution networks amongst private &ife insurers in India. It has a strong presence across India with 1,)-0 branches /inc&uding 1,0)- micro-offices2 and an advisor base of over 2*0,000 /as on $ecember *1, 200)2 .The company has - bancassurance partners having tieups with I,I,I .ank, Ba&gaon %eop&es ,o-op .ank, 3atanagiri $istrict ,entra& ,o-op .ank, .a&&ia Mshetriya ,o-operative .ank, 3enuka 0agrik :ahakari .ank, .handara Drban ,o-operative .ank A0o($ $6e Promo$ers ICICI BAN2 (bout I,I,I .ankC I,I,I .ank +td /0L:9CI.02 is India"s &argest private sector bank and the second &argest bank in the country with conso&idated tota& assets of about D:Q 102 bi&&ion as of Bune *0, 200). I,I,I .ank=s subsidiaries inc&ude India=s &eading private sector insurance companies and among its &argest securities brokerage firms, mutua& funds and private e;uity firms. I,I,I .ank=s presence current&y spans 1) countries, inc&uding India. Pr('e!$ %* P*" 9stab&ished in +ondon in 1!@!, %rudentia& p&c, through its businesses in the DM, 9urope, D:, (sia and the 7idd&e 9ast, provides retai& financia& services products and services to more than 21 mi&&ion customers, po&icyho&der and unit ho&ders and manages over V2@) bi&&ion of funds wor&dwide /as of 7arch, 200)2. In (sia, %rudentia& is the &eading 9urope-based &ife insurer with &ife operations in ,hina, 6ong Mong, India, Indonesia, Bapan, Morea, 7a&aysia, the %hi&ippines, :ingapore, Taiwan, Thai&and, and Hietnam. %rudentia& is one of the &argest asset management companies in terms of overa&& assets sourced in (sia e4-Bapan, with V*-.! bi&&ion funds under management /as of 7arch, 200)2 and operations in ten markets inc&uding ,hina, 6ong Mong, India, Bapan, Morea, 7a&aysia, :ingapore, Taiwan, Hietnam and Dnited (rab 9mirates. TABLE NO-@.>

CA-R SALES OF ICICI PRUDENTIAL 3s=000

L9(3

200)

200!

200

200-

:(+9:

*,*@,@@0

21,1-!

*@-,0-2

5,!-2

,(#3 :(+9: I -*.) 5 INTERPRETATION The above tab&e shows the :(+9: of I,I,I %3D$90TI(+ in 200) is 3:.**,@@,@0,000, in 200! it was 3:.2,11,-!,000 ,in 200 it was 3:.*@,-0,-2,000 and in 200- it was 3:. ,5!,-2,000 INFERENCE In terms of :(+9: of I,I,I %3D$90TI(+ the higher sa&es was in 200 and &ower sa&es was in 200! and the ,(#3 :(+9: is -*.) 5

-RAPH NO-@.,

TABLE NO-@.@ CA-R EPS OF ICICI PRUDENTIAL

L9(3

200)

200!

200

200-

9%:

-5.5

-10.2!

-5.2!

-1.!2

,(#3 9%: I @@.5 5 INTERPRETATION The above tab&e shows the 9%: of I,I,I %3D$90TI(+ in 200) is -5.5 in 200! it was-10.2!,in 200 it was -5.2!and in 200- it was -1.!2

INFERENCE

In terms of 9%: of I,I,I %3D$90TI(+ the high 9%: 200- was in 200 and &ow 9%: was in 200! and the ,(#3 9%: is @@.5 5

-RAPH NO -@.>

TABLE NO-@.A

CURRENT RATIO

L9(3 ,( ,+ ,3

200) ,1 @,2-5 11,*0*, 1* 0.-*@-!21-2

200! 10, 11,--2 1-,0!1,! * 0.---0 055

200 ,1!*,1010,0-1,0!* 0. 1*)@)5!2

200*,5!0,0@5,)*@,)1 0.-0*21 5*@

INTERPRETATION The above tab&e shows the ,urrent 3atio of I,I,I %3D$90TI(+ in 200) is 0.-*@-, in 200! it was 0.---0,in 200 it was 0. 1*) and in 200- it was 0.-0*2 INFERENCE In terms of ,urrent 3atio, I,I,I %3D$90TI(+ is high in 200 and &ower in 200-

-RAPH NO-@.@

TABLE NO-@.? DEBT EJUITY RATIO L9(3 $9.T 9PDITL $9.TA 9PDITL 200) 5@0*5 @ !01 5! 0.0011*0*! 200! * )*5 * 2@21* 0.0010055!! 200 @0*)* 20 1-!2! 0.001)@) -! 2001@2@ 11!50000 0.0012022 !

INTERPRETATION The $9.T 9PDITL 3(TI> in 200) was 0.0011*0*,in 200! it was 0.0010055, in 200 it was 0.001)@) , and in 200- it was 0.0012022

INFERENCE The high $A9 3atio is in 200 and &ower is in 200!

-RAPH NO-@.A

TABLE NO-@.B INTEREST COVERA-E RATIO

L9(3 %.IT I0T939:T %.ITA I0T939:T

200) -@ 25! -* 25-)2@ -1!*.)@0-*

200! -@-0@2 *@ 11 1*@ -*)*.0 @@

200 -2*-115 @ 2- 100 -!!.*)) 5

200-11!@0@*1-5 !- 1.@1)))

INTERPRETATION The Interest coverage ratio in 200) was -1!*.)@,in 200! it was -*)*.0 it was -!!.*)) and in 200- it was -1 .@1) INFERENCE +ow Interest ,overage ratio /W22 is perceived to have a high degree of financia& risk. Therefore I,I,I %3D$90TI(+ is at a high financia& risk in a&& the four years -RAPH NO-@.? , in 200

@.>.,.BA;A; ALLIANC L +e I!s(r%!"e Comp%!) L m $e'

Incorporation Lear

2001

,hairman ,ompany :ecretary 3egistered >ffice

7r.3ahu& .a'a' :ameer .akshi .a'a' (&&ian1 +ife Insurance ,ompany +imited #rnd f&oor, #.9 %&a1a, (irport 3oad Lerawada,%une-@1100-

9mai& ?ebsite

&ifeXba'a'a&&ian1.co.in www.ba'a'a&&ian1.co.in

.a'a' (&&ian1 +ife Insurance ,ompany +imited engages in &ife insurance business in India. It offers unit &inked insurance products, inc&uding regu&ar and sing&e premium< pension products, such as annuity and retirement< endowment and money back products< protector, term care, and risk care term p&ans< women insurance< hea&th insurance< non emp&oyer emp&oyee and emp&oyer emp&oyee insurance products< and other products, such as chi&dren p&ans, fami&y assure, fortune p&us, capita& shie&d, and micro insurance. The company was founded in 2001 and is head;uartered in %une, India. .a'a' (&&ian1 +ife Insurance ,ompany +imited is a subsidiary of .a'a' 6o&dings and Investment +imited. .a'a' (&&ian1 Insurance started its 'ourney on 7ay 2, 2001 when it received the certificate of 3egistration from Insurance 3egu&atory and $eve&opment (uthority /I3$(2 for conducting #enera& Insurance business in India inc&uding 6ea&th Insurance. (s on the end of 7arch 200), the income of .a'a' (&&ian1 Insurance went up to 3s.2,!-- crores with a growth of 115 over the previous year. It a&so registered a net profit of 3s.)5 crore, highest by any private insurer, in the &ast financia& year. .a'a' (&&ian1 +ife Insurance is a union between (&&ian1 :9, one of the &argest Insurance ,ompany and .a'a' 8inserv. (&&ian1 :9 is a &eading insurance cong&omerate g&oba&&y and one of the &argest asset managers in the wor&d, managing assets worth over a Tri&&ion />ver

I03. 55, 00,000 ,rores2. (&&ian1 :9 has over 115 years of financia& e4perience and is present in over 0 countries around the wor&d. (t .a'a' (&&ian1 +ife Insurance, customer de&ight is our guiding princip&e. >ur business phi&osophy is to ensure e4ce&&ent insurance and investment so&utions by offering customi1ed products, supported by the best techno&ogy. (ccording to the company"s annua& report 200 -0!, the company tops in co&&ection of new business premium as we&& as the po&icies so&d. It wrote a new business of 3s.--, @5 mi&&ion as against 3s.@*,02 mi&&ion in 200-. The insurer has a market share of per cent as against 5. per cent in 200-.

TABLE NO-@.D

A""e*er%$e' -ro:$6 o+ B%4%4 A** %!7 F s"%* Ye%r No. o+ po* " es so*' 0ew .usiness in 8L 3s. cr. 3s.-*.* cr. 3s.1!0 cr.

2001-2002/-mths2 21,* 2002-200* 200*-200@ 1,15,)-5 1,!-,@@*

200@-2005 2005-200200--200 200 -200!

2,!!,1!) ,!1,-!5 20, ),21 * ,@@, @2

3s.!5 cr. 3s.2, 1 cr. 3s.@,*02 cr. 3s.-,- @ cr.

TABLE NO -@.= CA-R SALES OF BA;A; ALLIANC 3s.=000 L9(3 200) 200! 200 200-

:(+9:

)-@,050

1,2*),@!-

)2),*!)

--!,2*)

,(#3 :(+9: I 12.))5 INTERPRETATION The above tab&e shows the sa&es of .(B(B (++I(0R in 200) was 3:.)-,@0,50,000 ,in 200! it was 3:.1,2*,)@,!-,000, in 200 3:.)2,)*,!),000 and in 200- it was 3:.--,!2,*),000 INFERENCE In terms of sa&es of .(B(B (++I(0R, the higher sa&es was in 200! and &ower sa&es was in 200- and the ,(#(3 :(+9: is 12.))5 it was

-RAPH NO- @.B

TABLE NO-@.1< CA-R EPS FOR BA;A; ALLIANC L9(3 200) 200! 200 200-

9%:

!.-*

).5)

-.!5

@.-)

,(#3 9%: I22.5@5 INTERPRETATION

The above tab&e shows the 9%: of .(B(B (++I(0R in 200) was !.-*,in 200! it was ).5), in 200 it was -.!5 and in 200- it was @.-) INFERENCE In terms of 9%: of .(B(B (++I(0R, the high 9%: was in 200! and &ower 9%: was in 200- and the ,(#(3 9%: is 22.5@5 -RAPH NO-@.D

TABLE NO-@.11 CURRENT RATIO

Lear ,urrent assets ,urrent &iabi&ities ,urrent ratio

200) !,2)5,2)5 1@,@)5,2-1 0.5 22 -*@-

200! 5,2!!,*50 10,10@,--1 0.52**5 @!!

200 *,*5!, 11 ,01-,)0* 0.@ !--00*

2002,-@-,0) @,0!1,0 @ 0.-@!*!250)

INTERPRETATION The above tab&e shows the ,urrent 3atio of .(B(B (++I(0R in 200) was 0.5 22,in 200! it was 0.52**, in 200 it was 0.@ !- and in 200- it was 0.-@!* INFERENCE In terms of ,urrent 3atio of .(B(B (++I(0R, the higher is in 200- and &ower is in 200

-RAPH NO-@.=

TABLE NO -@.1, DEBT EJUITY RATIO

L9(3 $9.T 9PDITL $9.TA9PDITL

200) 0 - 2@ 1) -

200! 0 5 *150 -

200 0 @0*@1-5 -

2000 2- 0 20 -

INFERENCE There is no debt Ee;uity ratio, therefore the company has no financia& prob&em.

TABLE NO-@.1> INTEREST COVERA-E RATIO L9(3 200) 200! 200 200-

%.IT I0T939:T %.ITA I0T939:T

*)11-1! @)2**@ .)@50@)@)

2)-5@05 **555) !.!* 20!)

1)*55-5 205122 ).@*-1-@!

11!@2! )!0-1 12.0 0@*

INTERPRETATION The Interest coverage ratio in 200) was .)@,in 200! it was !.!*, in 200 it was ).@* and in 200- it was 12.0 INFERENCE +ow Interest ,overage ratio /W22 is perceived to have a high degree of financia& risk. Therefore in .(B(B (++I(0R a&& the four years it was Y2 therefore the company is in a good financia& condition -RAPH NO-1<

@.>.>.NE/ INDIA ASSURANCE COMPANY LIMITED Incorporation Lear ,hairman 1)1) 7.3amadoss

,ompany :ecretary 3egistered >ffice

( 3 :ekar 0ew India (ssurance ,ompany bui&ding ! , 7ahatma #andhi 3oad ,8ort 7umbai-@00001

9mai& ?ebsite

nia25Xvsn&.com www.newindia.co.in

9stab&ished by :ir $orab Tata in 1)1), 0ew India is the first fu&&y Indian owned insurance company in India. 0ew India is a pioneer among the Indian ,ompanies on various fronts, right from insuring the first domestic air&ines in 1)@- to sate&&ite insurance in 1)!0. ?ith a wide range of po&icies 0ew India has become one of the &argest non-&ife insurance companies, not on&y in India, but a&so in the (fro-(sian region. #ross %remium /in India2 of 3s.550!.20 cores in the year 200!-200), as against 3s. 52 -.)1 in the year 200 -200!. (ssets 3s.2 @@@.5 crores as on *1st 7arch 200 . 0etwork of >ffices-2- 3egiona& >ffices, *)* $ivisiona& >ffices, -1@ .ranches and *@ $irect (gent .ranches. 3ank 0o.1 in the Indian market. +argest 0on-+ife insurer in (fro-(sia e4c&uding Bapan. 8irst Indian 0on-&ife ,ompany to cross 3s.5000crores #ross %remium. #&oba& 3e-insurance faci&ities. >ver-seas presence in countries &ike Bapan, D.M, 7idd&e 9ast, 8i'i and (ustra&ia. #ross $irect %remium has increased from 3s.-151.@-crs. /0 -0!2 to 3s.-@55. !crs./0!-0)2 registering a growth of @.)55 /0!-0)2 as against *.-25 growth registered during 0 -0!. FOREI-N OPERATIONS The #ross %remium is a 3s.1* -.)0 core in 200!-0) as against 3s.11@*.-* crores in 200 -0! showing an accretion of 20.@5. The 0et %remium is 3s.11-@.2! crores in 200!-0) as against 3s.)*2.0 cores in 200 -0! showing

an increase of 2@.)5. >ur operations in :audi (rabia show premium income up to (ugust 200! on&y as we had stopped functioning as an (gency and are operating as an (ssociate ,ompany in :audi (rabia. 8oreign operations show underwriting profit of 3s. !.0!crores in 200!-0) as against underwriting &oss of 3s. 0.0 crores in 200 -0!. The underwriting profit is after a provision of 3eserve :train of 3s.121.1 crores in 200!-0) in respect of une4pired risks. 0o ma'or c&aims were reported during the year. The foreign e4change earning during the year 200!-0) amounted to 3s!.-2 crores towards dividend and repatriation of management fees from our (ssociate and :ubsidiary companies. >verseas operationa& resu&t for the year ended *1st 7arch 200) is as underC /3upees in ,rores2

TABLE NO-@.1@ CA-R SALES OF NE/ INDIA ASSAURANCE COMPANY 3s.=000

L9(3

200)

200!

200

200-

:(+9:

)2

2)2*25

1-1@5)

1521-1

,(#3 :(+9: I ).*55 INTERPRETATION The above tab&e shows the sa&es of 09? I0$I( (::D3(0,9 in 200) was 3:.! , ),2 ,000,in 200! it was 3:.2),2*,25,000, in 200 3:.1-,1@,5),000 and in 200- it was 3:.15,21,-1,000 INFERENCE In terms of sa&es of 09? I0$I( (::D3(0,9, the higher sa&es was in 200) and &ower sa&es was in 200- and the ,(#(3 :(+9: is ).*55 it was

-RAPH NO-@.11

TABLE NO-@.1A CA-R EPS FOR NE/ INDIA ASSAURANCE COMPANY

L9(3

200)

200!

200

200-

9%:

11.21

0.0-

*5.!2

,(#3 9%: I *2.105

INTERPRETATION The above tab&e shows the 9%: of 09? I0$I( (::D3(0,9 in 200) was 11.21,in 200! it was 0.0-, in 200 it was * and in 200- it was *5.!2

INFERENCE In terms of 9%: of 09? I0$I( (::D3(0,9 ,the high 9%: was in 200 and

&ower 9%: was in 200) and the ,(#(3 9%: is *2.105 -RAPH NO-@.1,

TABLE NO-@.1? CURRENT RATIO

L9(3

200)

200!

200

200-

,(

!*! !5@0

-52!105)

5@0!2*)1

52!)!*0*

,+

!) -10!*

-20!@*

-0@ !-5

1*@ @2@

,3

0.)*@@-@@*!

0.!@102@!-5

0. 111-251-

0. @1@1!5@1

INTERPRETATION The above tab&e shows the ,urrent 3atio of 09? I0$I( (::D3(0,9 in 200) was 0.)*.@@,in 200! it was 0.!@10, in 200 it was 0. 111 and in 200- it was 0. @1@ INFERENCE In terms of ,urrent 3atio of 09? I0$I( (::D3(0,9, the higher is in 200) and &ower is in 200

-RAPH NO-@.1>

TABLE NO-@.1B DEBT EJUITY RATIO L9(3 $9.T 9PDITL $9.TA 9PDITL 200) 5)*!-2@ *22151) 0.0!110@) 200! -5 -@ -) 2!0*5 0.0)@**2! 200 @5@5** -020155! 0.12*!2-2 200!-51!@!0!0*0! 0.1-*5!@*

INTERPRETATION The above tab&e shows the $A9 3atio of 09? I0$I( (::D3(0,9 in 200) was 0.0!11,in 200! it was 0.0)@*, in 200 it was 0.12*! and in 200- it was 0.1-*5 INFERENCE The high $A9 3atio of 09? I0$I( (::D3(0,9 was in 200- and &ow $A9 3atio was in 200) -RAPH NO -@.1@

TABLE NO-@.1D INTEREST COVERA-E RATIO L9(3 %.IT I0T939:T %.ITA I0T939:T 0.!*50)0-1 2.!0)!0 ! 2.-55-* *2 1.@)!@201* 200) @5*1)1) 5@2-!5) 200! 1@0112!1 @)!-5-2 200 111 -5 1 @20!-21 2005@5 !5* *-@2@05

INTERPRETATION The Interest coverage ratio in 200) was 0.!*50,in 200! it was 2.!0), in 200 it was 2.-55 and in 200- it was 1.@)! INFERENCE +ow Interest ,overage ratio /W22 is perceived to have a high degree of financia& risk. Therefore 09? I0$I( (::D3(0,9 faced a financia& risk in 200) and 200-

-RAPH NO-@.1A

@.>.@. B r*% S(! L +e I!s(r%!"e Comp%!) L m $e'

Incorporation Lear 7anaging $irector #enera& 7anager 3egistered >ffice

2000 7r. ('ay :rinivasan 7r. :an'iv .hasin .ir&a :un +ife Insurance ,ompany +imited, >ne India bu&&s ,entre, Tower 1, 15th T 1-th 8&oor, Bupiter 7i&&

,ompound, !@1,:enapati .apat 7arag, 9&phinstone 3oad 7umbai- @0001* ?ebsite www.Insurance.bir&asun&ife.com

9stab&ished in 2000, .ir&a :un +ife Insurance ,ompany +imited /.:+I2 is a 'oint venture between the (ditya .ir&a #roup, a we&& known and trusted name g&oba&&y amongst Indian cong&omerates and :un +ife 8inancia& Inc, &eading internationa& financia& services organi1ation from ,anada. The &oca& know&edge of the (ditya .ir&a #roup combined with the domain e4pertise of :un +ife 8inancia& Inc., offers a formidab&e protection for its customers= future. ?ith an e4perience of over ) years, .:+I has contributed significant&y to the growth and deve&opment of the &ife insurance industry in India and current&y ranks amongst the top 5 private &ife insurance companies in the country. Mnown for its innovation and creating industry benchmarks, .:+I has severa& firsts to its credit. It was the first Indian Insurance ,ompany to introduce F8ree +ook %eriodG and the same was made mandatory by I3$( for a&& other &ife insurance companies. (dditiona&&y, .:+I pioneered the &aunch of Dnit +inked +ife Insurance p&ans amongst the private p&ayers in India. To estab&ish credibi&ity and further transparency, .:+I a&so en'oys the prestige to be the originator of

practice to disc&ose portfo&io on month&y basis. These category deve&opment initiatives have he&ped .:+I be c&oser to its po&icy ho&ders= e4pectations, which gets further accentuated by the comp&ete bou;uet of insurance products /vi1. pure term p&an, &ife stage products, hea&th p&an and retirement p&an2 that the company offers. (dd to this, the e4tensive reach through its network of -00 branches and 1, 5,000 empane&&ed advisors. This impressive combination of domain e4pertise, product range, reach and ears on ground, he&ped .:+I cover more than 2 mi&&ion &ives since it commenced operations and estab&ish a customer base spread across more than 1500 towns and cities in India. To ensure that our customers have an impeccab&e e4perience, .:+I has ensured that it has &owest outstanding c&aims ratio of 0.005 for 8L 200!-0). (dditiona&&y, .:+I has the best Turn (round Time according to +>7( on a&& c&aims %arameters. :uch services are we&& supported by sound financia&s that the ,ompany has. The (D7 of .:+I stood at 3s. !1-5 crs as on 8ebruary 2!, 200), whi&e as on 7arch *1, 200), the company has a robust capita& base of 3s. 2000 crs.

TABLE NO-@.1= CA-R SALES OF BIRLA SUN LIFE INSURANCE COMPANY LIMITED 3:.=000

L9(3

200)

200!

200

200-

:(+9:

2!-15)

2-0- @

15*!2!

)*-0-

,(3# :(+9: I @5.1 INTERPRETATION The above tab&e shows the sa&es of .I3+( :D0+I89 in 200) was 3:.2!,-1,5),000, in 200! it was 3:.2-,0-, @,000, in 200 3:.15,*!,2!,000 and in 200- it was 3:. ),*-,0-,000 INFERENCE In terms of sa&es of .I3+( :D0+I89, the higher sa&es was in 200) and &ower sa&es was in 200- and the ,(#(3 :(+9: is @5.155 it was

-RAPH NO-@.1?

TABLE NO-@.,< CA-AR EPS OF BIRLA SUN LIFE INSURANCE COMPANY LIMITED L9(3 9%: 200) -@.@@ 200! -5.11 200 -2.5! 200-1.5

,(#3 9%: I @1.@1 INTERPRETATION The above tab&e shows of 9%: of .I3+( :D0+I89 in 200) was -@.@@,in 200! it was -5.11, in 200 it was -2.5! and in 200- it was -1.5

INFERENCE In terms of 9%: of .I3+( :D0+I89, the high 9%: was in 200- and &ow

9%: was in 200! and the ,(#(3 9%: is @1.@15

-RAPH NO-@.1B

TABLE NO-@.,1

CURRENT RATIO L9(3 ,( ,+ 200) -2*@01! *))5!0 200! @!2 2!! 5*!5)5 200 2@1!2 ! *0!)! ) 200120@5) 1-0 110

,3

0.!@2@!2-!1

0.!)-2 *0*

0. !2-@@!!

0. @)5@2*@-

INTERPRETATION The above tab&e shows of ,urrent 3atio of .I3+( :D0+I89 in 200) was 0.!@2@, in 200! it was 0.!)-2, in 200 it was 0. !2- and in 200- it was 0. @)5 INFERENCE In terms of ,urrent 3atio of .I3+( :D0+I89, the higher is in 200! and &ower is in 200-

-RAPH NO-@.1D

TABLE NO -@.,, DEBT EJUITY RATIO L9(3 $9.T 9PDITL $9.TA 9PDITL 200) 22*511)))5000 0.0111 !5) 200! 1@))*2 12 @5000 0.011 -*)! 200 !1-*) - 15000 0.01215 0 200202@) @-00000 0.00@@01)5

INTERPRETATION The above tab&e shows the $A9 3atio of .I3+( :D0+I89 in 200) was 0.0111 ,in 200! it was 0.011 -, in 200 it was 0.01215 and in 200- it was 0.00@@

INFERENCE The high $A9 3atio of .I3+( :D0+I89 was in 200 and &ower was in 200-

-RAPH NO-@.1=

TABLE NO-@.,> INTEREST COVERA-E RATIO

L9(3 %.IT I0T939:T %.ITA I0T939:T

200) -2*5 0002 *01 -1 - !.10!1 !

200! -1*!@2*-! 200110 --).1 * )@

200 -5)) 1-5 15 0-1 -*!.1!*--

200-* 5*@510 2 0 -*@.))0 *

INTERPRETATION The Interest coverage ratio in 200) was - !.10!,in 200! it was --).1 , in 200 it was -*!.1! and in 200- it was -*@.)) INFERENCE +ow Interest ,overage ratio /W22 is perceived to have a high degree of financia& risk. Therefore .I3+( :D0+I89 is in a high financia& risk

-RAPH NO-@.,<

CHAPTER -A SUMMARY OF FINDIN-S, CONCLUSION AND SU--ESTIONS

A.1 FINDIN-S 0ow at the fina& the fo&&owing facts emerge from the study of insurance sector for se&ecting appropriate company through ana&y1ing economy, industry and companies ?hen come to the economic factor the g&oba& economies are getting interre&ated, the Indian market wi&& no &onger be &imited to domestic economic situation.

 (gricu&tura& growth rate and the monsoon both have direct inf&uence on insurance and responsib&e for the economy to become prospers.

?ith the entry of severa& &ow-cost air&ines, a&ong with f&eet e4pansion by e4isting ones and increasing corporate aircraft ownership, the Indian aviation insurance market is a&& set to boom in a big way in coming years. 6ome insurance segment is set to achieve a 1005 growth as financia& institutions have made home insurance ob&igatory for housing &oan approva&s. 6ea&th insurance is poised to become the second &argest business for non&ife insurers after motor insurance in ne4t three years.

A., CONCLUSION 8undamenta& ana&ysis a&ways ho&ds good on&y if the company statement are revea&ed c&ear&y and ana&y1ed proper&y. Investment is serious business and not making decision on vague. 8undamenta& ana&ysis has a direct impact on insurance market. ,ompetition wi&& sure&y cause the market to grow beyond current rates, create a bigger Spie,S and offer additiona& consumer choices through the introduction of new products, services, and price options. Let, at the same time, pub&ic and private sector companies wi&& be working together to ensure hea&thy growth and deve&opment of the sector. ,ha&&enges such as deve&oping a common

industry code of conduct, contributing to a common catastrophe reserve fund, and cha&king out agreements between insurers to sett&e c&aims to the benefit of the consumer wi&& re;uire concerted effort from both sectors. The market is now in an evo&ving phase where one can e4pect a &ot of actions in coming days. The current impediments for foreign participation E &ike 2-5 e;uity cap on foreign partner, i&& defined regu&atory ro&e of I3$( /Insurance 3egu&atory deve&opment (uthority- the watchdog of the industry2 in pension business etc.N are e4pected to be removed in near future. The ear&y-adopters wi&& then have a c&ear advantage compared to &aggards in gaining the market share and market &eadership. They wi&& need to make sure right now that a&& their infrastructure is in p&ace so that they can reap the benefit of an Sun&imited potentia&.S

SU--ESTIONS Insurance companies have &ot of opportunities to grow. :o investing in these types of industries he&p the investors at &ong run. .efore investing in any company, it=s re;uired to imp&ement a&& the data and financia& resu&ts.

7uch of the demand may not be accessib&e because of poor distribution, &arge distances or high costs re&ative to returns. There is a tendency to target the business of e4isting companies rather than e4panding the market. 0ew p&ayers find it easier to try to capture e4isting customers by offering better service or other advantages.

BIBLIO-RAPHY

BIBLIO-RAPHY NE/S PAPERS 9conomic Times .usiness :tandard 8inancia& 94press BOO2S %rasanna ,handra, 200), Investment (na&ysis (nd %ortfo&io 7anagement, Third edition, Tata 7c#raw-6i&& pub&ishing company &td.

/EBSITES www.economywatch.com www.icicipru&ife.com www.ba'a'a&&ian1.co.in www.newindia.co.in www.insurance.bir&asun&ife.com www.i&oveindia.com

ANNEXURE