Insurance Newsletter 29 April - 3 May, 2013

Raghuram Rajan, chief economic adviser at the finance ministry, said that two major finance bills—insurance and goods and services tax (GST) — should be taken up on an urgent basis

May 03, 2013 8:23 IST | India Infoline News Service

Top Stories 

Life insurers’ new business premium fell 6.3% in FY13

First year premium of life insurance companies declined 6.3% to Rs. 1.07 trillion for the period ended 31 March 2013, according to data from the Insurance Regulatory and Development Authority (IRDA).

Life insurers collected new premiums of Rs. 1.14 trillion in the previous financial year. 

The first year premium of private life insurers fell 5.9% to Rs. 307.65 bn in FY12-13.


State-run LIC’s (Life Insurance Corporation of India) first year premium decreased 6.4% to Rs. 762.46 bn in FY12-13.

The drop in first year premiums is mostly on account of the economic slowdown, resulting in lower disposable income. With this, the number of policies purchased has also come down.

Insurance Bill to be taken on urgent basis: Rajan

Raghuram Rajan, chief economic adviser at the finance ministry, said that two major finance bills—insurance and goods and services tax (GST) — should be taken up on an urgent basis.

He pitched for early passage of the Insurance Bill, which seeks to increase the foreign direct investment level to 49% from the current 26%.

Rajan said that the passage of the Bill would signify that the country’s reform process is continuing… Read more

General insurers, reinsurer to set up TPA by Sept

Four general insurers and a national reinsurer are planning to form a joint venture to set up a third-party administrator (TPA) claims processing unit, according to a media report. 

The joint venture is expected to start operations by September and the total project cost is estimated at Rs. 2 bn, the report added.

Four general insurers include: United India Insurance, National Insurance, New India Assurance and Oriental Insurance. In the joint venture, the four general insurers will hold 23.75% stake each and General Insurance Corporation of India (GIC) will hold 5%.

At present, the four insurers together earn a premium of around Rs. 90 bn under their health insurance portfolio and pay a service fee of over 5% to the TPAs.

Domestic News

SBI Life Insurance net profit at Rs. 6.22 bn

Reflecting on its sustained superior efficiency in business operations, SBI Life Insurance posted a record profit of Rs. 6.22 bn, during the financial year ended on 31 March, 2013, an increase of 12% over the last financial year 2011-12. Distinctively, the operational efficiency has been the key driver of SBI Life’s profitability. The company ranks number one amongst private life insurers, in new business premium (NBP), for the financial year 2012-13, as per the latest report from IRDA.

Contrary to the continued business decline faced by the life insurance industry, SBI Life’s regular new business premium increased by 19%, to Rs. 26.18 bn during the FY2012-13 from Rs. 21.93 bn in FY2011 -12.In line with its focus on improving strategic business mix, the share of single premium from the new business individual premium reduced to 16%, during the FY2012-13 from 41% during the FY 2011-12… Read more 

United India Insurance aims to achieve Rs. 110 bn premium

United India Insurance Company is looking to start a new wave of transformation aiming to enhance its human resources skills and to increase productivity of its employees to ensure improved performance across various verticals. 

The company is also targeting to achieve around Rs. 110 bn premium with a profit after tax (PAT) of Rs. 6 bn in the current fiscal, United India Insurance added.

The insurer reported a 36% growth in net profit to Rs. 5.27 bn for the fiscal 2012-13, against Rs. 3.87 bn for the previous year.

New India Assurance PAT rises to Rs. 8.44 bn in FY13

Improved all-round performance drove the 2012-13 results of New India Assurance, recording a PAT of Rs. 8.44 bn, the highest in past five years. In 2011-12, it was Rs. 1.79 bn. The net worth of the company, largest among general insurers in India for many years, touched Rs. 77.37 bn growing from Rs. 70.58 bn in the previous financial year.

Company’s market leadership in Indian general insurance business, continues for more than 40 years as it crossed Rs. 100 bn in 2012-13 in India, consolidating the position with a commanding lead. Indian business reached Rs. 100.38 bn recording a growth rate of 18%. The foreign operations of the company, spread over 22 countries, generated a premium of Rs. 24.67 bn, up by 17.6%. The global business for the year was Rs. 125.05 bn, higher by 18 % than that of previous fiscal… Read more

United India Insurance PAT rises 36% to Rs. 5.27 bn in FY12-13

United Indian Insurance Company profit after tax (PAT) rose 36% to Rs. 5.27 bn for the fiscal 2012-13 from Rs 3.87 bn for the previous year.

The state owned insurer’s premium increased 13% to Rs. 92.66 bn during FY12-13 from Rs. 81.79 bn during the previous year with an accretion of Rs. 10.87 bn.

United Indian Insurance is targeting a premium of Rs. 110 bn with a PAT of Rs. 6 bn in the current fiscal.

The company is planning to sign deals with vehicle manufacturers and dealers in its motor insurance portfolio, while it would tie up with banks for the business of small and medium entrepreneurs, mainly in fire and engineering policies.

Canara HSBC OBC Life reports net profit of Rs. 235 mn in FY13

Canara HSBC Oriental Bank of Commerce Life Insurance reported its maiden profit of Rs. 235 mn in FY12-13, its fifth year of operations.

Distributing exclusively through its shareholder-banks and associates, Canara HSBC Oriental Bank of Commerce Life Insurance’s achievements demonstrate the strength of the bancassurance model in efficiently reaching both urban and rural customers through the reach of the banks' branch networks.

Strong focus on need-based selling and regular collection of renewal premiums has ensured that the business remains stable and sustainable. For FY 2012-13, 13th-month persistency (a measure of how many policies remain in-force) stood at 75.3% and 25th-month persistency stood at 87.7%, amongst the highest in the industry… Read more

Shriram Life plans to launch 14 new products in FY14

Shriram Life Insurance on Sunday said that it expects the new business premium income to rise 29% to Rs. 5.45 bn by the end of March 2014 from Rs. 4.21 bn in FY12-13.

According to Shriram Life, the total premium income is expected to rise 28.6% to Rs. 7.95 bn by March 2014 from Rs. 6.18 bn in the previous year. 

In order to increase its premium collection, Shriram Life is expanding to strengthen its presence across India including states such as Delhi, Madhya Pradesh, Kolkata, Punjab, Uttar Pradesh and Jharkhand… Read more


Planning Personal Finance? How assured are you?

If you think you have rightly planned your personal finance, check where does medical emergencies fit into it… Read more

Life insurance: You do it for love

Life insurance is equally important for one’s family members in order to allow them grieving time, and provide them with a little time to heal… Read more

International News

Swiss Re Q1 net zooms 21%, reinsurance strong

Swiss Re reports a very strong Group net income of USD 1.4 bn for the first quarter of 2013, 21% higher than the USD 1.1 bn net income reported in the prior year period. Very strong underwriting performances across Swiss Re's Property & Casualty Reinsurance and Corporate Solutions businesses were the key drivers of this performance. Life & Health Reinsurance saw flat profits whereas Admin Re demonstrated an improving underlying earnings capacity. 

Michel M. Liès, Swiss Re's Group Chief Executive Officer, says: "We are starting our 150th anniversary year with a very strong first quarter result. It demonstrates we have the right strategy and structure in place to reach our 2011-2015 financial targets. The successful April renewals are another proof of Swiss Re's ability to perform and grow despite economic headwinds and a continuous low interest rate environment." … Read more

Goldman Sachs affiliate to buy Ebix for $743mn

Nasdaq-listed insurance software maker Ebix Inc on Wednesday agreed to be acquired by an affiliate of Goldman Sachs & Co for about $743 mn, according to a media report.

The deal is worth about $820 mn including debt, the report added… Read more

ING to sell custody services in 7 European countries to Citi

ING said that it has reached an agreement to transfer its local custody services business in seven countries in Central and Eastern Europe to Citi, one of the world’s largest providers of custody services.

The transfer of local custody services in Bulgaria, the Czech Republic, Hungary, Romania, Russia, Slovakia and Ukraine is in line with ING’s strategic objective of sharpening the focus of the bank and a result of the strategic review of ING Commercial Banking’s business portfolio presented in November 2012, the company said in a press release on 26th April… Read more

Economic activity is expected to improve: Swiss Re

After Thursday’s decision by the Federal Reserve to maintain the target fed funds rate at zero to 25 basis points, Swiss Re’s Chief Economist, Kurt Karl, commented: “For now, the Fed is in a holding pattern awaiting further information on the impact of sequestration on economic activity."

Karl added: "Though the Fed continues to discuss changes in policy with respect to quantitative easing, no policy change can be expected until there is greater clarity on the economic outlook. At this time, there are no signs of any inflation concerns so the focus is all on growth. Last month's employment report was disappointing, so the Fed is unlikely to change its QE program any time soon – most likely it will continue through to the end of the year. Economic activity is expected to improve, pushing yields on the 10-year Treasury note to about 3.0% by the end of 2015."… Read more

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