TABLE OF CONTENTS
Investment summary.......................................................................................................5
Key attributes required in Phase II..................................................................................6
Valuations........................................................................................................................7
Appraisal value methodology..........................................................................................7
Indian insurance sector – a new perspective .............................................................11
Avoiding the ‘growth trap’..............................................................................................11
Importance of persistency.............................................................................................15
Indian insurance market................................................................................................22
Revival of ULIPs............................................................................................................22
Heavy investment in distribution behind us...................................................................24
Decreasing capital need and early signs of break-even...............................................29
Understanding reasons for high expenses ...................................................................33
Understanding product profitability ............................................................................38
Life insurance product analysis.....................................................................................38
The Potential Implications of the ‘Swarup Committee’ report ..................................47
Capital infusion has become a norm...........................................................................50
How and why solvency triggers capital infusion? .........................................................50
I-Sec Insurance universe...............................................................................................53
Companies......................................................................................................................54
Bajaj Allianz Life Insurance Company.........................................................................55
Sacrificing market share for profitability ........................................................................56
Strong distribution network build-up; focus now on productivity...................................58
No requirement of capital infusions...............................................................................60
Profits expected this fiscal ............................................................................................60
Birla Sun Life Insurance Company ..............................................................................64
Strong market share gains on distribution build-up ......................................................65
Expenses blitzkrieg to subside hereon .........................................................................67
Valuations .....................................................................................................................68
Financials ......................................................................................................................71
HDFC Standard Life Insurance.....................................................................................73
Wider product basket, improved persistency key to reserves accretion.......................74
High own-agency gearing offers huge opportunity to reap efficiencies........................77
Residual capital requirement of Rs6bn, breakeven in two years..................................78
Pressure on NBAP margins to continue, likely to inflate multiple .................................79
Financials ......................................................................................................................81
ICICI Prudential Life Insurance.....................................................................................83
Foray into new segments; maintaining dominance in linked products .........................84
Significant lead over peers on cost curves; distribution to slow down..........................87
Some capital requirement pending; breakeven expected in a year..............................89
Marginal pressure on NBAP margins; most valuable franchise ...................................90
Financials ......................................................................................................................92
Reliance Life Insurance.................................................................................................94
Expect Reliance Life to grow at above industry average..............................................95
Runaway growth in expenses to rationalise..................................................................97
Capital and solvency.....................................................................................................99
NBAP margins to remain under pressure, expect breakeven in FY12E.....................100
Financials ....................................................................................................................102
SBI Life Insurance........................................................................................................104
Strong growth in sales, but Group business dominates .............................................105
Impact of low persistency offset by superior cost ratios .............................................107
Solvency and capital position comfortable..................................................................109
Valuations ...................................................................................................................110
Financials ....................................................................................................................112
Appendix: Industry update .........................................................................................114
Overview of Indian insurance market..........................................................................114
Competitive landscape of Indian insurance market ....................................................117
Index of Tables and Charts .........................................................................................121