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Sections

  • 1.Non-Life Insurance 2. Life Insurance
  • 2. Separateness of Banking and Insurance:
  • 3. Role of Information Technology :
  • 4. Using Postal Network:
  • 5. Creating Insurance awareness:
  • 6.1 Fianancial market in today’s market
  • 7.1Whole Life Plans (savings)
  • 7.2Pure Term Plans
  • 7.5Pension Plans (investment)
  • 7.6 Child Plans (investment)
  • 7.7Health Plans (living benefits)

A PROJECT REPORT ON

FINANCIAL MARKET AND INVESTMENT INSTRUMENT At

Master of Business Administration (2009-2010)

Submitted To Institute of Distance Education, M.P. Bhoj (Open) University, Gwalior

Submitted By Sanjay Pathak M.B.A. (Finance) Final Year

M.P. BHOJ (OPEN) UNIVERSITY, GWALIOR (M.P.)

PREFACE
A professional course like Business Administration demand in depth theoretical knowledge and practical exposure to its application, for the same, the course design includes two months training. The course aims to groom the student professionally, and offer him/her a chance to work in the real environment of the corporate world, so as to gain experience on practical aspect and supplement his/her theoretical knowledge. Today is an era of competition not just among the company’s products, but also among the company’s strategic decisions which aims at large consumer base. Consumer is one of the important entities in the channel as the generation of the value offered by the companies is focused on the ultimate users. Thus, to have an effective consumer base, TATA AIG has taken the strategic decision of Direct Marketing through comparative study among various other steps. TATA AIG is a leading company which deals in many broad areas of business products such as Bank Services, Home Loans, Venture Capital, Securities, General Insurance, and Life Insurance. The organization has continuously evolved to adapt the changing industry scenario and has consistently registered profile and growth. It is been a real privilege to have a great experience with the company for summer training. I sincerely hope that the organization will be benefited by the findings of the project.

ACKNOWLEDGEMENT
Words are indeed inadequate to convey my deep sense of gratitude to all those who have helped me in completing this summer project to the best of my ability. Being a part of this project has certainly been a unique and a very productive experience on my part. I am really thankful to Mr. Suresh Mahalingam (M.D.) for making all kinds of arrangements to carry the project successfully and for guiding and helping me to solve all kinds of queries regarding the project work. His systematic way of working and incomparable guidance has inspired the pace of the project to a great extent. Last but not least I would like to thank all the employees of The Tata AIG life insurance,Gwalior who have directly or indirectly helped me with their moral support for the completion of my project.

SANJAY PATHAK

Table of Contents
Contents Executive Summary Objectives of Project Research Methodology Used Introduction to insurance Definitions Industry segment of insurance Market dynamics Market overview Factors driving changes Reasons for opening of industry Market structure Role of IRDA Insurance sector future in India Company profile History Business summary Business strategy Financial Market and investment instrument Financial market Investment Types of plan Generation of insurance Why insurance is required Working methodology Analysis of questionnaire Findings learning’s Limitations

Bibliography

study of Tata AIG life insurance as a whole.” Besides this. And from the analysis finding are generated. understanding the different plans by Tata AIG life insurance.Executive summary The main objective of this study is to “financial market of insurance and generating leads for Tata AIG life insurance Gwalior. Types of plans provided by the company and how company is generating the business. After this we have analyzed our questionnaire on the basis of which lead generation was done. . the other objective is to understand the insurance sector in India. Then understating types of insurance.yhe market share by different players in the market. Which give a generalize idea about Indian insurance industry. Understanding the role of IRDA in Indian insurance market as a regulatory agency. Then we gone through the questioner analysis.

• • • • To get insight about the recovery procedure followed by the bank for managing the NPA’s. To know how on the basic of demography people buy insurance. . To understand who is the market leader in insurance sector with how much insurance. To understand role of IRDA in insurance sector.Objectives of the Project • To understand financial market in insurance sector.

. we was not directly approaching the people to buy insurance from Tata AIG life but indirectly creating a good image for Tata AIG.Research Methodology The main objective of project was to understand financial market in insurance sector and generating leads for the Tata AIG life insurance Gwalior. The work of lead generation was done by survey we have targeted the group who are having good disposable income.

Insurance is helpful in mitigating such adverse consequences. this appears to be a fine arrangement provided the asset completes its expected lifetime! All assets carry the risk of being destroyed or damaged. To sum up. the probability turns out to be true and the asset gets actually lost or destroyed by accident or some other unfortunate event before the completion of its expected lifetime. as they are likely to be lost or made non-functional through an accidental occurrence.Introduction to Insurance Every asset has a value for its owner and also for those who are benefited with the existence of that asset. The owner and those deriving benefits from the asset will suffer because the arrangement to make available its substitute is not yet ready. Well. . plans the things in such a way that by the time the expected lifetime of the asset expires. But all assets may not necessarily get destroyed or damaged. Every asset has normally an expected lifetime. Insurance is concerned with the protection of economic value of assets. being aware of this. he is ready with the funds required for its replacement. The owner. it is expected to perform and provide income/comfort to the owner. assets are insured. Only in a few instances. In this way. During this period. he ensures that the value or income from the asset is not lost.

9. ‘New India’ and ‘Jupiter’ in Mumbai and ‘Lakshmi Insurance’ in New Delhi. who used to gather at Lloyd’s coffee house in London. Marine traders. formed in 1870. Nationalisation of Life Insurance in India In 1956. Life Insurance in India In India. The first insurance policy was issued in England in 1583. It was in the early 19 th Century when the Britishers on their postings in India felt the need of life insurance cover. The First Indian insurance company was the Bombay Mutual Assurance Society Ltd.. LIC got the exclusive privilege to transact life insurance business in India . insurance started with life Insurance. In the wake of the Swadeshi Movement in India in the early 1900s.  Loss of or damage to the goods in transit by ship due to bad weather in high seas. life insurance business was nationalized and LIC of India came into being on 1.  Goods in transit by ship robbed by sea pirates. It started with the marine business. Thereafter. ‘Bombay Life’. agreed to share losses to goods during transportation by ship. quite a good number of Indian companies were formed in various parts of the country to transact insurance business. Marine related losses included: Loss of ship by sinking due to bad weather in high seas. ‘The European and the Albert’.. It started with English Companies like.History of Insurance The beginning of insurance business is traced to the city of London. To name a few:: ‘Hindustan Co-operative’ and ‘National Insurance’ in Kolkata United India’ in Chennai. The government took over the business of 245 companies (including 75 provident fund societies) who were transacting life insurance business at that time..1956.

2% to INR 178 billion (USD 3. be insured. During the 2003 financial year1. various plans to revamp the sector finally resulted in the passage of the Insurance Regulatory and Development Authority (IRDA) Act of 1999. Following the move towards economic reform in the early 1990s. Perils are the events. This refers to the losses. therefore. The strong growth in 2003 did not come in isolation.Significantly. With the introduction of the 1999 IRDA Act.An overview of India’s insurance market Insurance in India used to be tightly regulated and monopolized by state-run insurers. the insurance business was opened on two fronts.3% in real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums rose 12. Risks are the consequential losses or damages. • • We can say that a human life is also an income-generating asset. Assets can. domestic private-sector companies were permitted to enter both life and non-life insurance business. floods. earthquake etc.8 billion). If this happens by the time one is on the verge of retirement when his income is about to cease. albeit with a cap on shareholding at 26%.3% in real terms over the last decade. Growth in insurance premiums has been averaging at 11. which may or may not happen. breakdowns. • • Possibility of damage to asset caused by any peril is the risk that asset is exposed to. which may happen suddenly and unexpectedly. he might have made alternative arrangements to meet his needs . the insurance sector joined a set of other economic sectors on the growth march. Secondly. foreign companies were allowed to participate. life insurance premiums increased by an estimated 12. A few examples of perils are: fire. Firstly. Human life may be lost due to unexpected early death or become nonfunctional following sickness or disabilities cause by accidents. Purpose and Need for Insurance Assets are likely to be destroyed or made non-functional due to accidental occurrences called perils. lightning. Risk means uncertainty or unpredictability about future loss or damage.

Types of Insurance 1. Life Insurance Basically Non-Life Insurance Includes: Marine Insurance   Fire Insurance  Miscellaneous Insurance  Vehicles  Furniture  Building  Aircrafts  General Life Insurance Includes: Only Human Life Insurance  Human being’s sickness. Non-Life Insurance 2. illness  Long term concept .

the range of risks that the insurance companies accept has also expended substantially. Casualty coverage includes accident and health insurance besides the above mentioned categories. The insurer collects the . Marine insurance covers mobile property. while general insurance contract is a one-year renewable contract.Industry Segments of Insurance Industry Insurance is an important aid to minimize the effect of uncertainties of life as well as property. Fire insurance covers stationary property. a non life insurance contract is different from a life insurance contract. GIC has been delinked from its subsidiaries and has been assigned the role of Indian reinsurer MEANING AND IMPORTANCE OF NON-LIFE INSURANCE :Non-life insurance refers to the property and liability insurance. The risk namely ‘death’ is certain in life insurance. A life insurance contract is a long term contract.Section 2(6B) of the Insurance Act 1938. The broadest classification of insurance is in terms of Life Insurance and Non-Life Insurance (General insurance). defines general insurance business.A non-life insurance contract is different from a life insurance contract. According to this general insurance business means fire. With the increasing complexities in our personal and professional life. It is difficult to determine the economic value of life. Miscellaneous Insurance business means all other general insurance contracts including therein motor insurance. The only uncertainty is as to when it will take place. Insurance achieves both risk transfer and risk reduction. marine. the insured event may or may not take place. General Insurance Corporation of India (GIC) was set up with exclusive privilege for transacting General Insurance business.The role of insurance is two fold. or miscellaneous insurance whether carried separately or in combination. whereas in general insurance. After the passage of IRDA Act 1999. Bonding is a special coverage that guarantees the performance of the contract by one party to another.Because of these peculiar features. whereas the financial value of any asset to be insured under a general insurance policy can be determined. In this lesson we will learn in detail the treatment of each type of non-life insurance.

Insurance also acts as a risk reduction mechanism in various senses.the individual risks have been shifted to the insurance company by way of pooling. If the aircraft is insured. followed by the Bombay Assurance Company in 1823. the insurance companies bring their experience and expertise to the field of risk management.of running the business. The first company that sold policies to Indians with “fair value” was the Bombay Mutual Life Assurance Society starting in 1871. was . finished stock and other things. Insurance is the best protection. and the Madras Equitable Life Insurance Society in 1829. Goods may be damaged or lost in the process of transportation and may be destroyed due to fire or flood while in storage. For those types of risks. Some of the risks can be avoided by timely precautions but some are unavoidable and are beyond the control of a businessman. they are able to add value to the customer’s business processes. Thus. The first general insurance company. Triton Insurance Company Limited. As a matter of fact. By providing protection against at least some of these risks. After transferring risks and uncertainties of the business to the insurance company. the insurance industry helps him better manage his risks and contributes to capital formation in the economy.Every business enterprise is exposed to a large number of risks and uncertainties to its premises.premium from a group of business firms who wants to protect their property against the damage caused by fire. They insured the lives of Europeans living in India. firm’s risk exposure is well spread out because insurer has an access to the reinsurance market making possible a further spread of risk. business means risk and uncertainties. Also. the entrepreneur can focus on his core activity. Modern insurance came with a British accent Insurance in its modern form first arrived in India through a British company called the Oriental Life Insurance Company in 1818. Secondly. So the collective contributions of this entire group of the insured have been utilized to pay for the losses of the unfortunate few who sustain losses. raw materials. the loss would be spread out among a large number of insurance companies throughout the world. If an aircraft is destroyed. plant and machinery. the airline company will have a big hole in its financials.Insurer will then indemnify the firm that suffers a loss to property due to fire out of the premium so collected. Firstly.

Future Generlai. Universal Sompo Specialised insurers(2) AIC. United India Insurance Company Limited Private sector (8) Bajaj Allianz. HDFC Std. Kotak Mahindra. For the next hundred years. Royal Sundaram. Source:. Reliance. Max NewYork. ECGC Stand-alone Health insurance companies(2) Apollo DKV.IRDA handbook statistics 2007-08 Regulation of insurance companies began with the Indian Life Assurance Companies Act. Bajaj Allianz. MetLife. New India Assurance Company Limited. Shriram. Tata AIG. ING Vysya. Future Generali. both life and non-life insurance were confined mostly to the wealthy living in large metropolitan areas. Cholamandalam. In 1938. Star Health & Allied Reinsurers (1) General Insurance Corporation of India (GIC) established in 1850. HDFC Ergo. IFFCO-TOKIO. SBI Life. 1912. all insurance companies were brought under regulation when a new Insurance Act was . Non-life insurers (14) Public sector (6) National Insurance Company Limited.Tata AIG. Bharti Axa. IDBI Fortis. ICICI Lombard. Oriental Insurance Company Limited. ICICI Pru.Life insurers (18) Public sector (1) Life Insurance Corporation of India (LIC) Private sector (17) Tata AIG . Reliance Life. Birla Sunlife. Sahara.

in 2007-08. It clearly defined what would come under life and non-life insurance business. In addition. commissions of agents and directors appointed by the policyholders. as the IRDA Act of 1999 was superimposed on the 1938 Insurance Act. of which four were former subsidiaries of the GIC that operatedas nationalised companies. Six of them are public-sector companies. . supervision of insurance companies. In the non-life insurance sector. the earlier Insurance Act of 1938 was reinstated as the backbone of the current legislation of insurance companies. there were 17 life insurance companies comprising one public (the old monopoly) and 13 private companies. there were 16 non-Indian insurance companies and 75 provident societies also issuing life insurance policies. alongside five public sector companies . The life insurance business was nationalised in 1956 with the Life Insurance Corporation of India (LIC) designated the sole provider – its monopolistic status was revoked in 1999. The Act also covered. When the market was opened again to private participation in 1999. This piece of legislation lost significance after the insurance business was nationalized in 1956 (life) and 1972 (non-life). among others. It covered both life and non-life insurance companies. Most of these policies were centred in the metropolitan areas like Bombay. there were 25 private sector insurance companies operating in India.Most of these private-sector companies have foreign partners with a maximum of 26% of shares.passed. respectively. investments. there were 14 companies operating in India in 2007-08. there were 154 Indian life insurance companies. The rest are private-sector companies. Life insurance business When the life insurance business was nationalised in 1956. deposits. Most private companies had foreign participation up to the permissible limit of 26% of equity.Of these. and the other two are the Export Credit Guarantee Corporation Limited and the Agriculture Insurance Company of India Limited. Calcutta.but there are also purely domestic companies (eg Reliance General Insurance Company Limited). Delhi and Madras.

but the potential for further growth is phenomenal. Insurance companies create products and go out to find customers. There is no market research worth the name and computerization is woefully inadequate. Most agents and development officers are interested only in producing new business servicing existing customers satisfactorily has not been a priority for them the obvious reason to this is that incentives are them the obvious reason to this is that incentives are based on new business generation and not on satisfactory serving of existing customers it is surprise to note that more than 10% of LIC policies are surrendered or get lapsed every year. 2. Globalization of Insurance Sector . . 4. There is a dearth of innovative and buyer-friendly insurance products.Insurance Plants are not promoted. 1.Factors Driving Change The insurance industry has been growing between 15 and 20 percent. The demand for insurance is likely . what market structure to have finally and what is the role for regulator. India is one of the least insured countries. Insurance company thereby offers schemes of different kinds. Different situation and different people require different mix of risk – cost combinations. Term. : Reason for opening up the Insurance Industry: An insurance policy protects the buyer at some cost against financial loss arising from a specified a risk. Among the emerging economies. 5.They do not create products that the market wants. 7. Insurance covers are expensive. Returns from Insurance Products are low. 9. 3. Unit -linked assurances are not available. Insurance awareness among the general public is low. but it lags for behind its global counterparts.Issues : The three key issues that impinge on liberalization of insurance in India are: why liberalize. 6. This was due to the following reasons. 8. Inefficient management and low investment yield are responsible for the high premium charged by Indian Insurance companies Investment restrictions have been responsible for 10w yields.

telecom. HDFC Standard Life Insurance and Royal Sundaram Alliance Insurance. IRDA has granted licenses to three private companies on October 24. Further.to increase with rising per capital incomes. .innovation and variety of products. When traditional public sector businesses like banking. 2000 . the Korean market has grown 3 times faster than GDP and Taiwan the rate of growth has been almost 4 times than that of its GDP. Market Structure: What is the appropriate market structure for insurance markets?Should it be monopoly (state or regulated) or should there be unlimited private entry or should there only be a few regulated players? The answer is quite obvious. After Korean and Taiwanese insurance sectors were liberalized. Keeping in view the recommendations of insurance reforms committee that a limited number of high capital private companies be licensed.It will also generate greater awareness on the need for buying insurance as a service and not merely for tax exemption.Reliance Fire and General Insurance. opening of the sector to private firms will foster competition. better technology and better customer service including faster settlements. to set up the shop and to get into business. which is currently done. and no firm be allowed to operate both in life and non-life insurance.rising literacy rates and increase of the service sectors. airlines and even postal services have been allowed private entry. why must insurance remain a state monopoly? State monopoly had little incentives to offer a wide range of products with more complex and extensive risk categorization.power.

Stop Financial Service Paradigm”. rebating and misappropriation of funds.Emerging Areas: Some of the emerging areas for insurance sector in India are: 1. The reasons against are .Role of IRDA IRDA’s primary function is to protect consumer interests. creating better incentives for agents and intermediaries. fraudulent practices. Insurance Sector . keeping prices affordable but also insisting on some mandatory products. Separateness of Banking and Insurance: There is lot of speculation whether banks should be allowed to operate in the insurance sectors.Growth of insurance business entails better education and production to customers. The first one is the joint family system which worked like an insurance arrangement.IRDA has evolved a set of operational guidelines to deal with maintaining the solvency of insurers. Licensing of agents and brokers are required to check their indulgence in activities such as twisting. This number is expected to increase to 100 million by 2004. These two trends portend a large and growing market for life insurance in India. India had about 54 million people above the age of 60.it would create unhealthy concentration of . In 1990. Thus future senior citizens look towards planning for their own old age and the need for pensions and annuities. banks could recoup some of the lost business to securities firms and there would be synergies in operating insurance and banking.Further. Demand for Pension Plans: Two relatively modern trends affect life insurance business in India significantly. The reasons for allowing banks are – competition would enhance efficiency and benefit consumers. and to almost 10% of the total population by 2010. and most importantly making sure that consumers get paid by insurers. 2. ensuring the solvency of insurers is a very important function of regulatory authority. there it a greater demand for life insurance cover the second trend is that elderly are increasingly having to fend for themselves. With more and more nuclear families becoming the rule. public-men enjoy a “One. It has evolved guidelines on the entry and functions of such intermediaries. This means ensuring proper disclosure.

6. Already postal banks generate more deposits than all commercial banks and hence their role can hardly be overemphasized. insurance products are sold Focus of insurance industry is changing towards providing a mix of both protection / risk cover and long.000 branch offices of post andtelegraph to sell life insurances and related financial products. With the increase in the life expectancy of individuals and disintegration of Joint – family system. it would have better utilized this vastly underutilized capacity. each individual now has arranged cover for himself and for his family. Using Postal Network: Another important factor is allowing the existing network of 1.Future Scenario: In India. 4. it would expose banks to additional and unnecessary risks and banks would have unfair advantages since they have detailed information on their customers financial position. Post offices can also act as avenues or agents of non-life insurance companies. Creating Insurance awareness: It is the need of hour to create insurance awareness among the general public. Indian insurance market offers tremendous opportunities to private insurers.term investment opportunities 3 Insurance sector in India. However they cannot be expected to underwrite risks.50. Therefore. coverage of insurers has to grow very fast. . Role of Information Technology : The Business of selling life insurance requires assessing the profile of the customer and assigning the right policy. This process is facilitated by a database and is completely driven by information technology. 3. To serve the population of more than 100 crore Indians.market power. only 10% of the market share has been tapped by LIC and GIC and the balance 90% of the market still remains untapped. 5. Innovative Products: Insurance companies should offer innovative products to tap huge amount of resources for the developmental activities. This vast Potential can be tapped only by a large number of insurance. This debate is for from settled and we are likely to see some restructuring in operations of banking and insurance. In developed economies. If it uses this network of database to offer their products. It will require a whole lot of efforts on the supply and distribution side.

AIG Life Insurance Company established the concept of Bancassurance in India.4 billion≠ and £381 billion†† of funds under management. twice the value". the AIG group is a 26% share holder and the TATA group holds 74% shares in the joint venture. Business summary What we do Tata AIG have premium income and investment sales of £51. The history of AIG Life Insurance I starts at 1919 during nationalization when AIG was the largest foreign insurance group in terms of the compensation paid by the Indian Government. Tata AIG purpose is to bring prosperity and peace of mind.000 employees serving over 50 million customers in 28 countries around the world. TATA AIG offers various products that are meant to provide customers flexibility. transparency and value for money. Tata AIG will optimise performance in the global marketplace and maximize the value we can generate for all our stakeholders . We will do this by realising our vision: "One Tata AIG. in 2001. Given here is a complete list of products & services offered by Tata AIG Life Insurance Company India Ltd. and has leveraged its global expertise in Bancassurance successfully here.Company profile History AIG insurance group in America with a history dating back to 83 years as one of the leading provider of life and pension products to Europe and other parts of the world. The company boasts of 483 branches in India. At present in AIG Insurance India. AIG is distinguished for being the first foreign insurance company to set up its representative office in India. supporting its vast distribution network. In 2001 AIG was the first foreign insurance company to start its representative office in India. We have 54. By working together across our businesses.

non-financial key performance indicators (KPIs). We consider that our financial KPIs are those that communicate to the members the financial performance and strength of the group as a whole. By working together across our businesses. we will optimise our performance in the global marketplace and maximise the value we can generate for all our stakeholders.Strategy Tata AIG purpose is to bring prosperity and peace of mind to our customers. These KPIs comprise: • • • • • Earnings per share Proposed ordinary dividend per share and dividend cover* Group operating profit before tax** Long-term savings new business sales Return equity shareholders' capital Management also use a variety of Other Performance Indicators (OPIs) in both running and assessing the performance of individual business segments and units. twice the value. We will do this by realising our vision: One Tata AIG. rather than the group as a whole. where applicable. Business strategy by Tata AIG life insurance The Companies Act requires that a fair review of the business contains financial and. . new business margins. OPIs include measures such as present value of new business premiums. combined operating ratio and underwriting profit.

we announced our ambition in February 2008 to double IFRS earnings per share by 2012. continued investment in developing the business and strengthening our provisions for latent claims. twice the value”.9 profit). The key measures that are used to assess performance at a group level are set out below: Earnings per share To demonstrate our commitment to our vision of “one Aviva.Full-year 2008 Our strategy is underpinned by focusing on a number of key financial performance measures. This ambition is based on total IFRS return. . This reflects the net adverse short-term fluctuations and economic assumption changes due to adverse market movement.8 pence (2007 restated: 48. Our IFRS earnings per share for 2008 was a loss of 36. including investment volatility and non-operating items over the weighted average number of shares.

we continue to adopt strict financial management disciplines underpinned by strong corporate governance. up 10% against 2007 and IFRS operating profit of £2. including investment sales. In seeking to achieve this growth.297 million. These results reflect higher life and general insurance results offset by lower fund management returns. up 4% against the prior year.358 million.278 million (2007: £39. In 2008 we delivered strong MCEV operating profit at £3.Group operating profit before tax** We aim to achieve steady sustainable growth in our operating profit.705 million) with growth in life and pension sales being offset by a fall in the sales of investment products. Long-term savings new business sales Total new business sales. increased by 1% in 2008 to £40. both on a MCEV and IFRS basis. As a global group with 67% of our long-term savings sales coming from outside the UK we have benefited from .

in the current economic climate top-line sales growth targets are not our priority. In 2009 we aim to maintain a strong franchise in each of our markets. Proposed ordinary dividend per share and dividend cover* Our intention is to increase the total dividend on a basis judged prudent using a dividend cover in the 1. Dividend cover is 1. but with an increased emphasis on capital efficiency. However.currency movements in the year. mainly the appreciation of the euro and US dollar.9 times (2007: 1. while retaining capital to support future business growth.6 times) within our target range. Our board has recommended a final dividend of 19. .10 pence) bringing the total dividend for the year to 33. but will prioritise profitability and efficient use of capital.00 pence. We will aim to perform in line with the market.91 pence per share (2007: 21.5 to 2. while we have already met the target to double sales in North America a year earlier than planned. The total dividend has been maintained in line with 2007.0 times range as a guide.

358 £m 2.216 1.705 11.631 15 .137 1.137 2007 ˜ £m 39.278 11.Financial analysis 2008 Worldwide long-term savings new business sales* ^ Worldwide general insurance and health business net written premiums** Total sales Consolidated profit and loss account Operating profit Life Market Consistent Embedded Value (MCEV) operating earnings ^ Fund management .415 50.MCEV basis ^ General insurance and health Other Other operations and regional costs Corporate centre Group debt costs and other interest MCEV Operating profit before tax attributable to shareholders' profits^ Adjustment to report the profits of our long-term insurance.061 849 £m 2.801 42 1.065 51.021 (70) (157) 363 3.297 2.274 £m 40. fund management and other operations on an IFRS basis IFRS Operating profit before tax attributable to shareholders' profits Adjusted for the following: Investment return variances and economic assumption changes on long-term business Short-term fluctuation in return on investments backing general insurance and health business Economic assumption changes on general insurance and health business 94 2 819 184 2.544 90 1.198 (163) (141) 379 3.

Impairment of goodwill Amortisation and impairment of intangibles Integration and restructuring costs Exceptional items Loss) / Profit before tax attributable to shareholders' Tax (Loss) / Profit for the year Minority interests Preference dividends Coupon payment on Direct Capital Instrument.252 990 2.190 2.4p 62. net of tax Profit after minority interests.931 12.146 13.9p 10 103 153) 1.912 1.266 15.832 334 1.8p . preference dividends and DCI Consolidated shareholders' funds Capital and reserves – IFRS basis Equity attributable to shareholders of TATA AIG plc – IFRS basis Direct capital instrument Minority interests Shareholders' funds – IFRS basis Capital and reserves – MCEV basis Additional retained profit on an MCEV basis Equity attributable to shareholders of TATA AIG plc – MCEV basis Direct capital instrument and preference dividends Minority interests Shareholders' funds – MCEV basis Other financial information Ordinary dividends declared and charged in the year Total dividend per share Net asset value per ordinary share – MCEV basis Return on equity shareholders' funds ^ Earnings per share Basic – MCEV operating profit after tax basis ^ Basic – IFRS operating profit after tax basis (a) 66 117 326 (551) 1.252 11.4p 52.204 14.190 3.00p 486p 11.481 431 12.689 801 33.342 19.300 415 885 30 17) 40 972 14.656 7.501 23.146 990 1.115 902 33.4% 70.498 178 17) 37 1.446 12.446 11.0% 83.931 13.795 15.00p 763 10.013 17.998 1.

8)p 48. **From continuing operations. Basic earning per ordinary share are shown.9p On an MCEV basis for 2008 and 2007.Basic – total IFRS return (a) (36. ~ 2007 comparatives have been restated for change in approach to reserving for latent claims. No figures have been provided for diluted earnings per share. Prior years presented on an EEV basis. . * Present value of new business premiums plus investment sales. a.

attempts to explore other right brain strategies as well. major marketers must swing from casting a wide marketing net over a vast crowd to selling to millions of individual customers. according to PQ Media. In their efforts to market on a one-to-one basis. This shift from mass to micro marketing presents both opportunities and challenges to market researchers. Individual marketing is tailoring the product or service to one individual. It is about synchronizing the business context. including local marketing and individual marketing.1 Fianancial market in today’s market Fianancial market”. 6. also known as "one-to-one marketing". Thanks to a growing use of personal video recorders and larger placement deals. and the external context pertinent to a particular Company/Organization. The key to effective advertising and promotions is a seamless communication/message. One such right brain strategy is product placement.6. takes into cognizance the growing. Financial market Financial market can be defined as tailoring products and programs or services to the needs and wants of individuals and groups. . marketers move from traditional advertising to alternative media. The success of such shows as Survivor and The Apprentice proves the value of product placement as an additional component to the declining popularity of the 30-second spot. Like the product placement strategy for making consumers sit up and notice your product. The term local marketing refers to tailoring brands and promotions to the needs and want of local groups. To satisfy these customers. market-driven companies must quickly make the move from creative. this book on Micro marketing – Concepts and Cases. product placement gets consumers thinking about trying new products. left-brain strategies. the customer context. Due to TV reality shows etc. the internal context. This is difficult to achieve and is a challenge to Organizations worldwide. right-brain strategies to analytical. such as cities and neighborhoods. There should not be a discordant note anywhere. the report states. If done correctly. observable fact that today s customers distinguish themselves as having unique desires and interests and they demand that businesses understand and meet those personal needs. the explosion of reality TV programs has played a big role in product placement growth in TV.

F o r I n t e r n a l C irc u la t io n O n ly F in an cial M ark ets C H R Y S A L IS T a t a A I G L i fe C o r p o r a te T ra i n in .

For Internal Circulation Only Progra Objectives m By the end of this program you will be able to:   Define Basics of Investments Recognize Different Financial Instruments CHRYSALIS For Inter nal Circulation Only Tata AIG Life Corporate Training and Development Session Objectives By the end of this session you will be able to: Outline Investment and identify reasons for Investing  Identify the need for planned Investments  List the various Investment Avenues  Identify relationship between risk and return  CHRYSALIS Tata AIG Life Corporate Training and Development .

For I nter nal C ircu latio n On ly W hat is I nvestment? Ea rn M o n e y Spend S a ve K e e p a sid e In v e s t Yo u c o u in v e sto e a r n in c o m r/a n d a p ita l g ain th e fu tu ld t oe c in rn C H R Y S A L IS T a t a A IG L ife C or p or a te T ra in in g a n d D .

. C H R Y S A L IS T a t a A IG L ife C or p or a te T ra in in g a n d De . 7 la k h s R s . 3 la k h s c o n t i n u ed . 1 0 la k h s R s . 2 0 la k h s R s .F or I nter nal C irc u latio n O n ly W hat is I n vestm ent? E a r n in g s E xp en s es S a v in g s R s . 1 3 la k h s In ve s t i n a H o uK e e p A s i d e s R s ..

2 lakhs x 5 years + Rs.For Inter nal Circulation Only Wha is Investment? t House on Rent Rs. 15 lakhs Rs.000 per month Year 1 Rs. 5 lakhs Capital Gain on Investment CHRYSALIS For Inter nal Circulation Only Tata AIG Life Corporate Training and Development Why Invest? One needs to invest to: 1. Achieve Financial Goals 3.Beat Inflation 2. 5 lakhs = Rs. 10. 11 lakhs Sale of House Rs. 120. 1.000 per year =Income from Investment Year 5 Total Return on Investment (ROI) = Income + Capi tal Gain Rs.Meet with Life’s Uncertainties CHRYSALIS Tata AIG Life Corporate Training and Development .

105 T h e u p e e lovsa eluse h e ’s c e ritc h a s iin g dpeoc w eears r npu n r C H R Y S A L IS c o n tin u T a t a A I G L i fe C o r p o r a te T ra i n in .F o r I n te r n a l C irc u la tio n O n ly B eat I n f latio n T h e r a te a t w h i c h c o s t s o f g o o d Today 1 Y e a r L a te r 5 % In f la t io n Rs. 100 Rs.

Invest to earn at least the inflation rate to ensure your money has the same value in the future. 105 to be abl e to buy the sam e amount of goods next year.For Inter nal Circulation Only Bea Infla t tion So if you kept Rs. 105. Invest Rs. 100 for a year to give you Rs. 100 at home earning nothing Next year you wouldn’t be able to buy the same amount of goods since it now costs Rs. For Inter nal Circulation Only CHRYSALIS Achie Financial Goals ve Financial Goals Buying a car Tata AIG Life Corporate Training and Development Further education Marriage Buying a house Retirement Requires a large sum of money Money should be kept aside and invested on a regular basis to meet these goals CHRYSALIS Tata AIG Life Corporate Training and Development .

You could pay Rs. 10 lakhs + ROI The second option seems better… One should invest periodically and start as early as possible CHRYSALIS Tata AIG Life Corporate Training and Development . however life always doe sn’t go as per our plans We may be affected by unfortunate events such as critical illness. accidents etc. 10 lakhs after 10 years… OR You could invest Rs. CHRYSALIS Tata AIG Life Corporate Training and Development For Inter nal Circulation Only Need for Pla nned Investments I want to buy a house worth Rs. 8.For Inter nal Circulation Only Meet Life’s Uncerta inties We can plan for the future. Wise investments will help cover these unfortunate events. 10 lakhs after 10 years… Not considering inflation rate.334 per month for 10 years. Rs. 8334 x 12 months x 10 years will give you around Rs.

etc. Crude Oil.) ______ ______ _______ _______ _______ _______ _______ _______ Share ______ ______ _______ _______ _______ _______ _______ _______ Bond When you choose an investment avenue. Bonds. etc. you should consider the risk involved against the expected return CHRYSALIS Tata AIG Life Corporate Training and Development .) Financial Assets (Shares.For Internal Circulation Only Investment Decision Having determined the need for investment one needs to consi der the appropriate investment avenues (Where to invest?) One can invest in Physical Assets (Gold.

For Internal Circulation Only Rela tion between Risk a return nd High Risk Moderate Risk Low Risk High Return Moderate Return Low Return Adventurous Balanced Cautious Investor Profile CHRYSALIS Tata AIG Life Corporate Training and Development For Inter nal Circulation Only Rela tion between Risk a return nd Ri sk Gambling Commodities Shares Mutual Fund / Unit Linked Traditional Insurance Company FD Company Bonds Government Bonds Bank FD /Post Office Return CHRYSALIS Tata AIG Life Corporate Training and Development .

For Internal Circulation Only Session Summa ry At the end of this session we have been able to:     Outline Investment and identify reasons for Investing Identify the need for planned Investments List the various Investment Avenues Identify relationship between risk and return CHRYSALIS Tata AIG Life Corporate Training and Development .

For Internal Circulation Only Session Objectives By the end of this session you will be able to:     Define Securities and Securities Market and List Securities Market Participants State need for Regulator and Specify powers of regulator Identify Segments of Securities Market Identify major instruments of the Securities Market CHRYSALIS Tata AIG Life Corporate Training and Development .

etc) Intermediaries (Brokers. Government. etc. SEBI will help promote investors and develop this market.) Investors in Securities (Households. Financial Institutions.) Tata AIG Life Corporate Training and Development For Inter nal Circulation Only CHRYSALIS Securities Ma rket Regula tor We will ensure that all these participants behave in a desired manner so that the markets continue to be a source of that the finance and investors are protected. Issuers of Securities (Corporates. REGULATORS Department of Economic Affairs (DEA) Department of Company Affairs (DCA) Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI) CHRYSALIS Tata AIG Life Corporate Training and Development . 2. 3. Merchant Bankers. etc.For Inter nal Circulation Only Securities Securities Units of a Mutual Fund Shares Bonds Derivatives Securities Markets is a place where one can buy and sell securities Securities Market Participants are: 1.

When I need the money I can sell the securities in the secondary market INVESTOR I need mone y for m y business. I can raise money for my company through an issue of securities in the primary market. ISSUER Securities Market Primary Market Sale of new new securities Secondary Market Transaction in existing securities CHRYSALIS Tata AIG Life Corporate Training and Development . I can invest it through any of these markets.For Inter nal Circulation Only Segments of Securities Market I have some savings.

For Inter nal Circulation Only Debt Instruments INVESTOR ISSUER DEBT INSTRUMENT MONEY Predetermined Term s: 1. ‘Debentures’ are instruments issued by private corporate sector. So the total Equity Capital of ABC Ltd. 2. Debenture ________ _ __ ________ _ __ ________ _ __ ________ _ __ CHRYSALIS For Inter nal Circulation Only Tata AIG Life Corporate Training and Development Equity / Share Company Capital Debt Equity Total equity capital of a company is divided into equal units of small denominations. 50. Example:   Company ABC Ltd issued 5000 shares of Rs 10 each. each called a share. Semi-annually. Rate of Interest (Also known as Coupon Rate) Periodicity Of Interest Payment (Annually. ‘Bonds’ are debt instruments issued by the Central and State governments and public sector organizations 2. 3.000 Tata AIG Life Corporate Training and Development CHRYSALIS . The holders of such shares are members of the company and have voting rights whic h gives them company related decision making powers. is 5000 shares x Rs 10 = Rs.) Repayment of Principal Amount on a specific Date (Maturity Date) Bond ______ ______ _______ _______ _______ _______ _______ _______ In the Indian securities markets : 1. etc.

Bonds.For Inter nal Circulation Only Deriva tives Derivative Equity Foreign Exchange (forex) Commodity Bonds Underlying Asset Derivative is a type of security whose value is derived from the value of of the underl ying asset Types of Derivatives Futures CHRYSALIS Forwards Options Swaps Tata AIG Life Corporate Training and Development Mutua Fund l For Inter nal Circulation Only Investors (Individual s / Corporate investors) Pool in their money Mutual Fund Issues units Invests money pooled Securities (Shares. Debentures) Appreciation in value of units Return on Investment Return (ROI) Net Asset Value (NAV) = Market Value of Investments Number of Units CHRYSALIS Tata AIG Life Corporate Training and Development .

CHRYSALIS Tata AIG Life Corporate Training and Development For Inter nal Circulation Only Session Summa ry At the end of this session we have been able to: Define Securities and Securities Market and List Securities Market Participants  State need for Regulator and Specify powers of regulator  Identify Segments of Securities Market  Identify major instruments of the Securities Market  Types of plans in TATA AIG CHRYSALIS Tata AIG Life Corporate Training and Development .For Inter nal Circulation Only Mutua Fund l Equity Funds/ Growth Funds Tax Saving Funds Investment Objective of Mutual Fund Balanced Funds Gilt Funds Liquid Funds/ Money Market Funds Debt/Income Funds The investment objectives specify the class of securiti es a Mutual Fund can invest in Investors are also given the option of getting dividends (by way of cash or given additional units). or to participate only in the capital appreciation of the scheme ( Growth option). declared by the mutual fund.

6 Child Plans (investment) • Super star 7.2Pure Term Plans • Raksha 7.7Health Plans (living benefits) • • Health protector Health investor Generation of insurance There are 3 ways how TATA AIG get insurance .7.1Whole Life Plans (savings) • • Maha life gold Invest Assure gold 7.5Pension Plans (investment) • • Invest assure future Easy retire 7.

TATA AIG Bank tie up (Call center) DSF(Agent) Direct 1. 3.agents are the people who work for the company and bring insurance for the company. Bank tie up – TATA AIG life insurance is having a tie up with some of the banks which help them to get insurance.eg. Punjab and Sindh bank. India largest insurance company LIC is pioneer of this model they are the people who are running this model successfully and they are market leader in insurance. Some of people get ready to purchase insurance and this way company sell their insurance 9 Why insurance is required . Insurance companybring the list of bsnl telephone number and they randomly call people and try to convince people to purchase insurance. Major part of insurance is generated by these people only. TATA AIG life insurance provides them insurance. Direct (call center) – This new marketing phenomena applied by most of the insurance company in these days. 2. DSF(Agent) .

Term plans 2. Plans Plans are broadly divided into two categories 1. Life insurance can be defined as a means to protect the policy holder's family in the event of his demise. Financial loss The person who has been passed in some accident or disease might have some earning and he or she was going to earn till his or her survival so this thing cause financial loss to the family to cover these kind of loss insurance companies are there. And indeed it is an essential component for the future family . In the event the insured dies. the reinsurer is obligated to pay that part of the death benefit which is equivalent to the net amount at risk. Kind this kind of loss cannot be covered by any insurance company.Two type of losses are there for the family when they loss a family member 1 Emotional loss to the family 2Financial loss Emotional loss This loss is due to the death of family member or because of absence of that person. Endorsement plans  Term plans Type of Proportional Reinsurance under which the Ceding Company (Primary Insurer) cedes to a Reinsurer its Net Amount At Risk for the amount above its retention limit on a life insurance policy. for covering this financial loss insurance companies are helping the family.

Mortgage insurance: The flat premium rate of this type of a policy reduces its face value. And the premium can be increased at each renewal. Incase the policy holder passes away the mortgage will be paid. since the aim . The reason why the Term Life is an ideal choice for individuals is that.the cost to the insured. b) Premium to be paid . 3. c) Length of coverage .the protection or death benefit. 2. The term can be for one or more years. It provides the insurance coverage for a specific term of years with a specified premium. the face amount is paid to the named beneficiary. Yearly Renewable Term: For this type of a policy the insurance company assures to provide a policy worth an amount equivalent or lesser to the insurability of the insured and also a premium fixed according to the insured's current age. There are three key factors in the term insurance: a) face amount .planning. Term life insurance benefits offer an affordable protection and sometimes it also comes with a guaranteed premium. The face amount can remain constant or decline.the term. The term life insurance types would mostly occur in combination of the above three parameters: 1. The premium can remain level or increase. Over here the premium buys only the death protection and nothing else. If the insured dies while the policy is in force. 2. The insured can renew the coverage at a higher premium at the end of the premium guarantee period. We can define the two common types of term life policies namely 1. it has an initial lower premium rate compared to the permanent policies. Term Life insurance policy is probably the basic form of all Life Insurances.

 Endorsement plans An endorsement is a written document attached to an insurance policy that modifies the policy by changing the coverage afforded under the policy. After the lead generation company sends their relationship manager to the person and the R. It was possible for me to reach 50 people in the span of 15 days. An endorsement can add coverage for acts or things that are not covered as a part of the original policy and can be added at the inception of the policy or later during the term of the policy. find the requirement of that particular person and provide him insurance as per his requirement. Leads – A person who is interested in buying any policy that is called a lead.O. in layman’s term I have to target the people who are having a salary of more than 20000. .of the policy is to match the face amount with the amount of mortgage on his residence.during my training I have been taught that how I have to approach people. in this way I have to find out who is the people willing to buy any insurance and how much they are ready to invest and have to submit this to company.I have to target a group of people who are having a good disposable income means I have to target officers. Targeting. Working methodology The work which was assigned to me was to bring the leads from government offices of Gwalior. First of all I have to go to any government office and tell them that I am doing my project on insurance sector and I am comparing the insurance policies of government employees and private sector employees. This Is the way I was approaching the people. Approach. On the basis of this company finalize the leads and TATA AIG’s relationship officer contacts them. Sometimes company was providing me the contacts and most of the time I have to approach the government offices by myself. This was our questionnaire on which basis we have to generate the leads.

Name Address Married Phone no Q1 Do you think life insurance is important? Yes No yes no Child Age Q2 how much insurance do you have? Yes No Q3 if you are married have you planned for your child’s education /marriage? Yes No Q4 Have you done your retirement plan? Yes No Q5 If we will suggest you a good plan for your child/retirement/short term investment will you be interested? Q6 if yes. how much you will you be comfortably save for your child/retirement/short term investment Per year? Analysis of questionnaire Q1 Do you think life insurance is important? Yes Ans no .

Q2 which companies insurance do you have? This pie chart is based on market data of insurance in the year 2007-08. . Thepie chart given below is on the basis of our survey.

Out of 200 people only 10 people was having a retirement plan and all the people was having the same reason for not having retirement plan was that they was government employees .after their retirement they will be getting pension. .Q3 if you are married have you planned for your child’s education /marriage? Q4 Have you done your retirement plan? Ans. They believe that their future is secure this was the reason why they people was not having retirement plans.

they were saying this thing is dependent on the plan. Not specified by people.Q5 If we will suggest you a good plan for your child/retirement/short term investment will you be interested? Q6 if yes. . how much you will you be comfortably save for your child/retirement/short term investment Per year? Ans.

Security in the foam of pensions. Behavior in government offices. Limitations .LIC is undoubtedly market leader with the market share of more than 60%. Dealing with people.The most important thing which I have learn with TATA AIG is that how to deal with people because my work was like that I have to contact government employees and find the opportunity that they are going to buy any policy or not.  TATA AIG is having almost a 2% insurance market in Gwalior to improve their market they need to increase the number of agents.  80% of Government employees are having some or another kind of policy.  Government employees are not interested in retirement plans because they are. Learning’s 1. 3.In government offices approaching the people is very difficult.When you dealing with people and telling them that you are from insurance sector people get afraid they want to save them self from you. 2. 4.insurance sector is one the most competitive sector in this day due to the presence of more than fifteen players in the market.Findings  Insurance sectored is highly competitive sectored with more than 15 players and LIC is leading the market with 64% and the reason is that they is having a huge network of agents. Some of the times people are really very busy so sometimes they are not having the time to listen you. Insurance is a unknown psychological fear. Insurance is very competitive market.

Covering all the government offices was very difficult because before entering in some of the office you have to take permission from higher authority.I. . Company was having interest in getting leads. II.

tata-aig.wikipedia.irdaindia.google.com .14.org www. Bibliography www.com www.com www.

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