Birla Sun Life_garima_group 3

8/8/2019 Birla Sun Life_garima_group 3

1/30

SUBMITTED TO SUBMITTED BYMr.B.S.Rao Sir Garima KhandelwalB2-17

PGDM (BIFAAS)


2/30

INTRODUCTION

Insurance = Collective bearing of Risk

Insurance is nothing but a system of spreading the risk of one onto the shoulders

of many. While it becomes somewhat impossible for a man to bear by himself

100% loss to his own property or interest arising out of an unforeseen contingency,

insurance is a method or process which distributes the burden of the loss on a

number of persons within the group formed for this particular purpose.

Basic Human trait is to be averse to the idea of risk taking. Insurance, whether life

or non-life, provides people with a reasonable degree of security and assurance

that they will be protected in the event of a calamity or failure of any sort.

Insurance may be described as a social device to reduce or eliminate risk of loss to

life and property. Under the plan of insurance, a large number of people associate

themselves by sharing risks attached to individuals. The risks, which can be insured

against, include fire, the perils of sea, death and accidents and burglary. Any risk

contingent upon these, may be insured against at a premium commensurate with therisk involved. Thus collective bearing of risk is insurance.

Insurance Indemnifies Assets & Income. Every Asset has a value and

generates Income to its Owner. There is a normally expected Life-time for the Asset

during which time it is expected to perform. If the Asset gets lost earlier, being

destroyed or made Non-functional through an Accident or other unfortunate event

the Owner is Prejudiced. Insurance helps to reduce CONSEQUENCES of such

Adverse Circumstances which are called Risks

Insurance is the science of spreading of the risk. It is the system of

spreading the losses of an Individual over a group of Individuals

Insurance is a Method of sharing of financial losses of a few from a

common fund formed out of Contribution of the many who are equally

exposed to the same loss


3/30

What is uncertainty for an Individual becomes a certainty for a

Group. This is the basis of All Insurance Operations. Thus insurance

convert uncertainties to certainty

DEFINITIONS

The definition of insurance can be made from two points:

1 Functional definition.

2 Contractual definition.

Functional definition

Insurance is a co-operative device to spread the loss caused by a particular risk

over a number of persons who are exposed to it and who agree to insure

themselves against the risk.

General Definition

Insurance has been defined to be that in which a sum of money as a premium is

paid in consideration of the insurers incurring the risk of paying a large sum

upon a given contingency.

In the words ofJohn Magee, Insurance is a plan by themselves which

large number of people associate and transfer to the shoulders of all, risks that

attach to individuals.

Fundamental Definition

In the words ofD.S. Hansell, Insurance accumulated contributions of all parties

participating in the scheme.

Contractual Definition

In the words ofjustice Tindall, Insurance is a contract in which a sum of money is

paid to the assured as consideration of insurers incurring the risk of paying a large

sum upon a given contingency.


4/30

HISTORY OF INSURANCE

Worldwide History

To talk about the insurance companies, insurance in modern form had occurred

after the Great Fire in London in 1666 which destroyed myriad houses. Nicholas

Barbon, following the disaster, had established England's first fire insurance

company (The Fire Office) in1680. In the United States, the first insurance

company which provided fire insurance was formed in South Carolina; in

1732.The practice of perpetual insurance against fire was popularized by

Benjamin Franklin. In 1752, he founded the Philadelphia Contribution ship for

the Insurance of Houses. In India, the Oriental Life Insurance Company was

started in 1818 by Europeans, much before independence. The first indigenous

insurance company in India was started in the year 1870 in the form of Bombay

Mutual Life Assurance Society.

Babylonia

The roots of insurance might be traced to Babylonia, where traders were

encouraged to assume the risks of the caravan trade through loans that were

repaid (with interest) only after the goods had arrived safelya practice

resembling bottomry and given legal force in the Code of Hammurabi (c.2100

B.C.). The Phoenicians and the Greeks applied a similar system to their seaborne

commerce. The Romans used burial clubs as a form of life insurance, providing

funeral expenses for members and later payments to the survivors .

Europe

With the growth of towns and trade in Europe, the medieval guilds undertook to

protect their members from loss by fire and shipwreck, to ransom them from

captivity by pirates, and to provide decent burial and support in sickness and

poverty


5/30

London

In London, Lloyd's Coffee House (1688) was a place where merchants, ship-

owners, and underwriters met to transact business. By the end of the 18th cent.

Lloyd's had progressed into one of the first modern insurance companies. In 1693

the astronomer Edmond Halley constructed the first mortality table, based on the

statistical laws of mortality and compound interest. The table, corrected (1756) by

Joseph Dodson, made it possible to scale the premium rate to age; previously the

rate had been the same for all ages.

New York City

The New York fire of 1835 called attention to the need for adequate reserves to

meet unexpectedly large losses; Massachusetts was the first state to require

companies by law (1837) to maintain such reserves. The great Chicago fire (1871)

emphasized the costly nature of fires in structurally dense modern cities.

Reinsurance, whereby losses are distributed among many companies, was devised

to meet such situations and is now common in other lines of insurance. The

Workmen's Compensation Act of 1897 in Britain required employers to insure

their employees against industrial accidents. Public liability insurance, fostered by

legislation, made its appearance in the 1880s; it attained major importance with

the advent of the automobile In recent years

insurance premiums (particularly for liability policies) have increased rapidly,

leaving unprecedented numbers of Americans uninsured. Many blame the

insurance conglomerates, contending that U.S. citizens are paying for bad risks

made by the companies. Insurance companies place the burden of guilt on law

firms and their clients, who they say have brought unreasonably large civil suits to

court, a

trend that has become so common in the United States that legislation has been

proposed to limit lawsuit awards. Catastrophic earthquakes, hurricanes, and

wildfires in late 1980s and the 90s have also strained many insurance company's

reserves.


6/30

Insurance Indian history

The history of life insurance in India dates back to 1818 when it was conceived as a

means to provide for English Widows. Interestingly in those days a higher

premium was charged for Indian lives than the non-Indian lives as Indian lives

were considered more riskier for coverage.

The Bombay Mutual Life Insurance Society started its business in 1870. It was the

first company to charge same premium for both Indian and non-Indian lives. The

Oriental Assurance Company was established in 1880. The General insurance

business in India, on the other hand, can trace its roots to the Triton (Tital)

Insurance Company Limited, the first general insurance company established in

the year 1850 in Calcutta by the British. Till the end of nineteenth century

insurance business was almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life

Insurance Companies Act of 1912 and the provident fund Act of 1912. Several

frauds during 20's and 30's sullied insurance business in India. By 1938 there were

176 insurance companies. The first comprehensive legislation was introduced with

the Insurance Act of 1938 that provided strict State Control over insurance

business. The insurance business grew at a faster pace after independence. Indian

companies strengthened their hold on this business but despite the growth that was

witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers

and provident societies under one nationalized monopoly corporation and Life

Insurance Corporation (LIC) was born. Nationalization was justified on the

grounds that it would create much needed funds for rapid industrialization. This

was in conformity with the Government's chosen path of State lead planning and

development.

The (non-life) insurance business continued to thrive with the private sector till

1972. Their operations were restricted to organized trade and industry in large

cities. The general insurance industry was nationalized in 1972. With this, nearly


7/30

107 insurers were amalgamated and grouped into four companies- National

Insurance Company, New India Assurance Company, Oriental Insurance

Company and United India Insurance Company. These were subsidiaries of the

General Insurance Company (GIC).

The general insurance business was nationalized after the promulgation of

General Insurance Business (Nationalizations) Act, 1972. The post-nationalization

general insurance business was undertaken by the General Insurance Corporation

of India (GIC) and its 4 subsidiaries:

1. Oriental Insurance Company Limited;

2. New India Assurance Company Limited;

3. National Insurance Company Limited; and

4. United India Insurance Company Limited.

Some of the important milestones in the life insurance business in India are:

1850: Non life insurance debuts with triton insurance company.

1870 :Bombay mutual life assurance society is the first Indian owned life insurer

1912: The Indian Life Assurance Companies Act enacted as the first statute to

regulate the life insurance business.

1928 :The Indian Insurance Companies Act enacted to enable the government to

collect statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with

the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by thecentral government and nationalized. LIC formed by an Act of Parliament, viz.

LIC Act, 1956, with a capital contribution of Rs. 5 Crore from the Government of

India.

The General insurance business in India, on the other hand, can trace its roots to

the Triton Insurance Company Ltd., the first general insurance company

established in the year 1850 in Calcutta by the British.


8/30

Some of the important milestones in the general insurance business in India are:

1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact

all classes of general insurance of India.

1957 General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.

1968 The Insurance Act amended to regulate investments and set minimum

solvency margins and the Tariff Advisory Committee set up.

1972 The General Insurance Business (Nationalization) Act, 1972 nationalized

the general insurance business in India with effect from 1st January 1973. 107

insurers amalgamated and grouped into four companies viz. the National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd. and the United India Insurance Company Ltd. GIC

incorporated as a company.

Malhotra Committee

In 1993, Malhotra Committee- headed by former Finance Secretary and RBIGovernor R.N. Malhotra- was formed to evaluate the Indian insurance industry

and recommend its future direction. The Malhotra committee was set up with the

objective of complementing the reforms initiated in the financial sector. The

reforms were aimed at creating a more efficient and competitive financial system

suitable for the requirements of the economy keeping in mind the structural

changes currently underway and recognizing that insurance is an important part

of the overall financial

System where it was necessary to address the need for similar reforms. In 1994,

the committee submitted the report and some of the key recommendations

included:

i) Structure


9/30

Government should take over the holdings of GIC and its subsidiaries so that these

subsidiaries can act as independent corporations. All the insurance companies

should be given greater freedom to operate.

ii) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to

enter the sector. No Company should deal in both Life and General Insurance

through a single entity. Foreign companies may be allowed to enter the industry in

collaboration with the domestic companies.

Postal Life Insurance should be allowed to operate in the rural market. Only one

State Level Life Insurance Company should be allowed to operate in each state.

iii) Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller

of Insurance- a part of the Finance Ministry- should be made independent

iv) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced

from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any

company (there current holdings to be brought down to this level over a period of

time)

v) Customer Service

LIC should pay interest on delays in payments beyond 30 days. Insurance

companies must be encouraged to set up unit linked pension plans.

Computerization of operations and updating of technology to be carried out in the

insurance industry

The committee emphasized that in order to improve the customer services and

increase the coverage of insurance policies, industry should be opened up to

competition. But at the same time, the committee felt the need to exercise caution

as any failure on the part of new players could ruin the public confidence in the

industry.


10/30

The committee felt the need to provide greater autonomy to insurance companies

in order to improve their performance and enable them to act as independent

companies with economic motives. For this purpose, it had proposed setting up an

independent regulatory body- The Insurance Regulatory and Development

Authority.

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory

body in April 2000 has fastidiously stuck to its schedule of framing regulations and

registering the private sector insurance companies. Since being set up as an

independent statutory body the IRDA has put in a framework of globally

compatible regulations. The other decision taken simultaneously to provide the

supporting systems to the insurance sector and in particular the life insurance

companies was the launch of the IRDA online service for issue and renewal of

licenses to agents. The approval of institutions for imparting training to agents has

also ensured that the insurance companies would have a trained workforce of

insurance agents in place to sell their products.

PURPOSE OF INSURANCE

1. Insurance spreads the economic burden of losses by using funds

contributed by members of the group to pay for them. Thus, it is a loss

spreading device.

2. The fundamental purpose of insurance however is neither the spreading

nor the prevention of losses. Rather, it is reduction of the uncertainty which

is caused by awareness of the possibility of loss.

3. An insurance scheme provides certainty for the individual members of the

group by averaging loss costs. The contribution made by the individual to

the group is assumed, on the basis of predictions, to be his share of losses

suffered by the group.


11/30

In exchange for this contribution, he is assured that the group will assume any

losses that involve him. He transfers his risk to the group and averages his loss

costs, thus substituting certainty for uncertainty. He pays a certain premium

instead of facing the uncertainty of the possibility of large loss.

FUNCTION OF INSURANCE

The functions of Insurance can be bifurcated into three parts:

1. Primary Functions

2. Secondary Functions

3. Other Functions

The primary functions of insurance include the following:

Provide Protection

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 certainly provide for the losses of risk.

Collective bearing of risk

Insurance is a mean by which few losses are shared among larger number of

people. All the insured contribute the premiums towards a fund and out of which

the persons

Exposed to a particular risk is paid.

Assessment of risk

Insurance determines the probable volume of risk by evaluating various factors

that give rise to risk. Risk is the basis for determining the premium rate also .

Provide Certainty

Insurance is a device, which helps to change from uncertainty to certainty.

Insurance is device whereby the uncertain risks may be made more certain.

Research and publicity


12/30

Insurers also spend money in research and publicity in creating risk consciousness

amongst which has a far reaching effect on reduction in national waste.

The secondary functions of insurance include the following:

Prevention of Losses

Prevention of losses causes lesser payment to the assured by the insurer and this

will encourage for more savings by way of premium. Reduced rate of premiums

stimulate for more business and better protection to the insured.

Small capital to cover larger risks

Insurance relieves the businessmen from security investments, by paying small

amount of premium against larger risks and uncertainty.

Contributes towards the development of larger industries

Insurance provides development opportunity to those larger industries having

more risks in their setting up. Even the financial institutions may be prepared to

give credit to sick industrial units which have insured their assets including plant

and machinery.

If improves efficiency

The insurance eliminates worries and miseries of loans at death and destruction of

property. The carefree person an devote his body and soul together for better

achievement. It improves not only his efficiency, but the efficiencies of the masses

are also advanced.

It helps economic progress

The insurance by protecting the society from huge losses of damage, destruction

and death, provides an initiative to work hard for the betterment of the masses.

The next factor of economic progress. The capital is also immensely provided by

the masses. The property, the valuable assets, the man, the machine and the

society cannot lose much at the disaster.

The other functions of insurance include the following:


13/30

Means of savings and investment

Insurance serves as savings and investment, insurance is a compulsory way of

savings and it restricts the unnecessary expenses by the insured's For the purpose

of availing income-tax exemptions also, people invest in insurance.

Source of earning foreign exchange

Insurance is an international business. The country can earn foreign exchange by

way of issue of marine insurance policies and various other ways.

Risk Free trade

Insurance promotes exports insurance, which makes the foreign trade risk free

with the help of different types of policies under marine insurance cover.

NATURE OF INSURANCE

Sharing of risk

Insurance is a device to share the financial losses which might be fall on an

individual or his family on the happening of specified event. The event may be

death, incase of life insurance, marine perils, marine insurance, fire in fire

insurance and other certain events in general insurance.

Co-operative Device

The most important feature of every insurance plan is the co-operation of large

number of persons who, agree to share the financial loss arising due to a particular

risk which is insured. All co-operative devices, there is no compulsion here on

anybody to purchase the insurance policy.

Value of risk

The risk is evaluated before inuring to charge the amount of share of an insured,

here is called, consideration or premium. If there is expectation of more loss,

higher premium may be charged. So, the probability of loss is calculated at the

time of insurance.


14/30

Payment at Contingency

The payment is made at a certain contingency insured. If the contingency occurs,

payment is made. Since the life insurance is a contract of certainty, because the

contingency, the death or the expiry of term, will certainly occur, the payment is

certain.

Amount of payment

The amount of payment depends upon the value of loss occurred due to the

particular insured risk provided insurance is there up to that amount. In case of

life insurance, the insurer promises to pay a fixed sum on the happening of an

even. (Either death or the expiry of the term).

Large number of insured persons

The co-operation of a small number of persons may also be insurance but in that

case, the cost of insurance to each number may be higher. In case of large number

of persons opposite condition is applicable.

Insurance is not gambling

The insurance is just opposite of gambling. In gambling by bidding the persons

exposes himself to risk of losing ,in the insurance the insured is always opposed to

risk and will suffer loss if he is not insured.

Insurance is not charity

Charity is given without consideration but security and safety provided by

insurance is not possible without consideration or premium. It provides security

and safety to an individual and to the society although it is a kind of business

because inconsideration of premium it guarantees the payment of loss.

PRINCIPLE OF INSURANCE

Principles of Co-operation.

Insurance is co-operative device. If one person is providing for his own losses, itcan not be strictly insurance because in insurance, the loss is shared by a group of


15/30

persons who are willing to co-operate. It is the duty and responsibility of the

insurer to obtain adequate funds from the members of the society to pay them at

the happening of the insured risk. Thus, the shares of loss took the form of

premium. Today, all the insured

give a premium to join the scheme of insurance. Thus, the insured are co-

operating to share the loss of an individual be payment of a premium in advance.

Principles of Probability

The loss in the shape of premium can be distributed only on the basis of theory of

probability. The chances of loss are estimated in advance to affix the amount of

premium. Since the degree of loss depends upon various factors, the affecting

factors are analyzed before determining the amount of loss. With the help of this

principle, the uncertainty of loss is converted into certainty. The insurer will have

not to suffer loss as well have to gain windfall. Therefore, the insurer has to charge

only so much of amount which is adequate to meet the loss. The probability tells

what the chances of loss are and what will be the amount of losses.

The insurance, on the basis of past experience, present conditions and future

prospects, fixes the amount of premium. Without premium, no-operation is

possible and the premium can not be calculated without the help of theory of

probability, and consequently no insurance is possible. So, these two principles are

the two main legs of insurance.

FORMATION OF INSURANCE REGULATION AND DEVELOPMENT

AUTHORITY ACT

The Insurance Act, 1938 had provided for setting up of the Controller of

Insurance to act as a strong and powerful supervisory and regulatory authority for

insurance. Post nationalization, the role of Controller of Insurance diminished

considerably in significance since the Government owned the insurance

companies. But the scenario changed with the private and foreign companies

foraying in to the insurance sector. This necessitated the need for a strong,

independent and autonomous Insurance Regulatory Authority was felt. As the


16/30

enacting of legislation would have taken time, the then Government constituted

through a Government resolution an Interim Insurance Regulatory Authority

pending the enactment of a comprehensive legislation.

The Insurance Regulatory and Development Authority Act, 1999 is an act to

provide for the establishment of an Authority to protect the interests of holders of

insurance policies, to regulate, promote and ensure orderly growth of the

insurance industry and for matters connected therewith or incidental thereto and

further to amend the Insurance Act, 1938, the Life Insurance Corporation Act,

1956 and the General insurance Business (Nationalization) Act, 1972 to end the

monopoly of the Life Insurance Corporation of India (for life insurance business)

and General Insurance Corporation and its subsidiaries (for general insurance

business).

The act extends to the whole of India and will come into force on such date as the

Central Government may, by notification in the Official Gazette specify. Different

dates may be appointed for different provisions of this Act.

The Act has defined certain terms; some of the most important ones are as

follows appointed day means the date on which the Authority is established under

the act. Authority means the established under this Act.

Interim Insurance Regulatory Authority means the Insurance Regulatory

Authority set up by the Central Government through Resolution No. 17(2)/ 94-lns-

V dated the 23rd January, 1996. Words and expressions used and not defined in

this Act but defined in the Insurance Act, 1938 or the Life Insurance Corporation

Act, 1956 or the General Insurance Business (Nationalization) Act, 1972 shall have

the meanings respectively assigned to them in those Acts. A new definition of

"Indian Insurance Company" has been inserted. "Indian insurance company"

means any insurer being a company

(a) which is formed and registered under the Companies Act, 1956

(b) in which the aggregate holdings of equity shares by a foreign company,

either by itself or through its subsidiary companies or its nominees, do not

exceed twenty-six per cent. Paid up capital in such Indian insurance

company (c) whose sole purpose is to carry on life insurance business,

general insurance business or re-insurance business.


17/30

COMPANY PROFILE

Birla Sun Life Insurance Company Limited (BSLI)

+ =Vision

To create long term value along with market leadership

Mission

To help people mitigate risks of life, accident, health and money at all

stages and under all circumstances

Enhance the financial future of our customers, including enterprises.

ValuesIntegrity

Commitment

Passion

Seamlessness

Birla Life Insurance Co Ltd market share of the company increased from 1.22%

to 2.11% in 2007-08. The company moved to the 7th position in 2007-08 from 8the

a year before, pushing down Max New York Life insurance company.

About Birla Sun Life Insurance Company Limited

Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance

Solutions in India.

Within 4 years of its launch, BSLI has cemented its position as a leading

player in the Private Life Insurance Industry.


18/30

There has been focus on Investment Linked Insurance Products, supported

with protection products to maintain leadership in product innovation.

Multi Distribution Channels- Direct Sales Force, Alternate Channels and

Group offering convenient channels of purchase to customers.

Web-enabled IT systems for superior customer services.

First to have issued policies over the Internet.

Corporate governance and a high degree of transparency in all business

practices and procedures.

First to have an operational Business Continuity Plan.

Strong fundamentals based on the Aditya Birla group's local insight and Sun Life

financial global expertise.

PARTNERSHIP

Briefing mediapersons, Birla said, "The insurance sector, which is a knowledge

based industry is to be one of our core business. Our vision is to be among the top

five insurance companies in India and in this regard, we have aligned with one of

the best companies-the Sun Life financial group.

The partnership is based on values, mutual respect, integrity and customer focus.

Sun life financial is indeed delighted to be back in India in the insurance sector

after almost 40 years."

"Our group holding is 74 per cent, with Indian Rayon and Birla Global Finance

Ltd having a stake of 69 per cent and 5 per cent respectively, while Sun Life

financial holds 26 per cent. The current capitalization of this venture stands at Rs120 crore."
http://www.birlasunlife.com/BirlaSunLife/Insurance/BSLI_MP/BSLI_AboutUs/Company_Profile/abtus_comprofile2.aspx#adityahttp://www.birlasunlife.com/BirlaSunLife/Insurance/BSLI_MP/BSLI_AboutUs/Company_Profile/abtus_comprofile2.aspx#aditya


19/30

He informed the gathering that the current funding for the insurance business "in

no way affects Indian Rayon's existing cap". "Considering the immense growth

potential of the life insurance business, this venture will definitely create value for

our three lakh shareholders. Our group's extensive presence in India as well as our

network of employees, shareholders and distributors is a great advantage, which

our insurance business will leverage. We have a receptive population of over a

million stakeholders," Birla added.

He also said that the new team for the insurance company was declared and that

Don Steward, chairman & CEO of Sun Life financial services, takes over as the

chairman of the Birla Sun Life insurance board of directors. Kumarmanagalam

Birla continues as a director on the board. The total 12 directors have been

nominated consisting of six directors each from Aditya Birla group and Birla Sun

Life insurance company.

JOINT VENTURES

Birla Sun Life under the management of Mr. Nani B. Javeri as the CEO is a Rs.

180 crore equity capital company. Birla Sun Life Insurance Co. Ltd is a 26:74 joint

venture between Sun Life Financial Services Canada and Aditya Birla Group. Just

four years down the industry pipeline, Birla Sun Life Insurance or BSLI has

secured a lead in private life insurance market.

About the Aditya Birla Group:

The Aditya Birla Group has a turnover exceeding Rs. 28,000 crores (as on 31

March 2004) and is one of the largest business houses in India. It enjoys a

leadership position in all the sectors in which it operates. With over 75 business

units, spanning the South East Asian belt, Africa, Canada and the UK, among

others, it is reckoned as India's first multinational corporation. The group is

anchored by 72,000 employees and has seven lakh shareholders, with an asset base

of over Rs.23,000 crores.

About Sun Life Financial Inc.:

Sun Life Financial Inc. is a leading international financial services organization

providing a diverse range of wealth accumulation and protection products and


20/30

services to individuals and corporate customers. Tracing its roots back to 1865,

Sun Life Financial and its partners today have operations in key markets

worldwide, including Canada, the United States, the United Kingdom, Hong Kong,

the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31 March

2004, the Sun Life Financial group of companies had total assets under

management of USD 282 billion.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and

Philippine (PSE) stock exchanges under ticker symbol "SLF".

SPAN OF ORGANISATION

CEO

CFO

Senior Vice President- Direct Sales Forces

Senior Vice President Alternate Channel And Group Life

Senior Vice President and Appointed Actuary

Vice President - Marketing and Communication

Vice President - Planning, Legal and Finance

Vice President - Technology

Vice President - Implementation, Control and Administration

Vice President - Client Services and Underwriting

Vice President - Field Operations Direct Sales Force

KEY PERSONS

Name Nani JaveriDesignation CEO

Name Anil J. Jhala

Designation CFO

Name E. N. Goveia

Designation Senior Vice President - Direct Sales Force

Name P. Nandagopal

Designation Senior Vice President - Alternate Channel and Group Life


21/30

Name K.S. Gopalakrishnan

Designation Senior Vice President and Appointed Actuary

Name Anjana Grewal

Designation Vice President - Marketing and Communication

Name Mayank Bathwal

Designation Vice President - Planning, Legal and Finance

Name M.C Raisinghani

Designation Vice President - Technology

Name Snehal Shah

Designation Vice President - Implementation, Control and Administration

Name Mario Braganza

Designation Vice President - Client Services and Underwriting

Name Murli Iyer

Designation Vice President - Field Operations Direct Sales Force

BUSINESS PERFORMANCE IN THE LAST FISCAL

Achieved a first year weighted annualized premium of Rs. 2,204 crores, as

against Rs. 953 corers in the previous year

a growth of over 131%, amongst the highest in the industry

improved market share considerably

ranked number six amongst private sector players

Revenue growth of 94% to Rs. 4,012 corers, from Rs. 2,069 crores last year

Launched 10 products in individual life segment and 2 in Group business

segment

An aggressive growth in customer contact points

No. of branches has grown from 137 to 339, with another 261 branches

going on stream from Q1 2008-09

No. of agents has grown from 56, 000 to 115, 000, over the year

Strong fund performance


22/30

FUTURE PERFORMANCE PLANNING

Comparative study of BSLIs Business Performance Q1 FY 2007-08 and Q1 FY

2008-09

BSLI (Q1 FY 2007-08) BSLI (Q1 FY 2008-09)Market Share-4.9% Market Share-8.15%

Growth Rate (Individual + Group) Growth Rate (Individual + Group)

22% 194%

Annualized Premium Equivalent (APE) Annualized Premium Equivalent

(APE)

Rs. 185.3 Rs. 507.4

Birla Sun Life Insurance Company Ltd. (BSLI), the pioneer of Unit Linked Life

Insurance plans amongst the private life insurers in India, has registered strong

growth amongst the private life insurers, as per reports for the Q1 of the fiscal

2008-09. As per the Q1 FY 2008-09 figures, BSLI has a market share of 8.15%

amongst private life insurance playersas compared to BSLIs market share for Q1

FY 2007-08, which was 4.9%, indeed a significant leap. BSLIs life insurance

business has achieved a growth rate of194%. The total APE (Annualized Premium

Equivalent)is at Rs. 507.4crores.

Birla Sun Life Insurance continues its momentum into the new fiscal year with an

increased market share of 8.15% for Q1 FY 2008-09 (amongst private life

insurance players) and a growth rate of 194%. The first quarter FY 2008-09 has

seen a ramp up on account of our expansion in distribution network with 600

branches nationally as on July 2008, our innovative product suite and superior

quartile fund performance, resulting in the present high growth rate and market

share,said Mr. Vikram Mehmi, President & CEO, and Birla Sun Life Insurance


23/30

PRODUCTS

Protection Policies:

o Birla Sun Life Term Plan

o Premium Back Term Plan

Savings Based Policies:

o Birla Sun life Insurance Saral Jeevan

o Birla Sun Life Insurance Gold-Plus

o Supreme Life

o

Dream Plano Classic Life Premium

o Simply Life

o Prime Life Premium

o Prime Life

o Life Companion

o Flexi Cash Flow

o Flexi Save Plus

o Flexi Life Line

o Single Premium Bond

Retirement Solutions:

o Flexi secure Life Retirement Plan II

Child Policy:

o Children's Dream Plan

Policies For Rural India:

o Bima Suraksha Super

o Bima Dhan Sanchay

o Bima Kavach Yojana

Accident Protection Policies

o Accidental Death Rider

o Accidental Death Dismemberment Rider

o Term Rider

o Critical Illness Rider

o Waiver PF Premiumso Critical Illness Plus Rider


24/30

o Critical Illness-Woman Rider

Besides these the Group Insurance Products by Birla Sun Life Insurance include

Group Protection Solutions that offers you insurance at affordable prices, Group

Superannuation and Gratuity Plans, Single Premium Group Term Plan and

Group Credit Guard Plan.

Special NRI Insurance Policies on offer by Birla Sun life include:

o Prime Life Premium

o Prime Life

o Life Companion

o Flexi Life Line Plan

o Flexi Save Plus

o Flexi Cash Flow

o Classic Life Premier

o Single Premium Bond

o Simply Life

The current range of products offered by BSLI includes:

Flexi Life Line

Flexi Cash Flow

Flexi Save Plus

Flexi Secure Life

Classic Life Premier

Birla Sun Life Term & Premium Back Term Plan

Life Companion

Prime Life & Prime Life Premier

Gold Plus

Simply Life

Single Premium Bond


25/30

Supreme Life

Childrens Dream Plan, Dream Plan

Birla Sun Life Insurance Gold-Plus Plan

Birla Sun Life Bima Kavach Yojana

Birla Sun Life Group Protection Solutions

Birla Sun Life Social Development Plan

Birla Sun Life Group Gratuity Plan

Birla Sun Life Group Superannuation Plan

Birla Sun Life Group Interest Credit Plan

Birla Sun Life Credit Guard Plan

CHANNELS OF DISTRIBUTION

The distribution channels by BSLI include

Direst sales force

Alternate channels

IT systems

Groups to ensure convenience of the potential customers

Highly professional dealing

Corporate governance

Complete transparency has earned Birla Sun Life Insurance Co Ltd the trust of its

customers.

PIONEERING ACTIVITIES

The many pioneering activities by Birla Sunlife include:-

Unit Linked Life Insurance Solutions

Investment Linked Insurance Products

Web-Based Insurance Policies sale

Birla Sun Life Insurance Company Limited also offers:-


26/30

MF (Mutual Fund)

International equity funds

Dream plans in insurance products that give you complete transparency

and value-for-money.

ASSET UNDER MANAGEMENT

The total Assets Under Management (AUMs) of the company are

approximately Rs.4500 corers as of June 30, 2007. BSLI has one of the highest

persistency ratios of 97.7% in terms of premium, amongst private life insurers.

Its Outstanding Claims Ratio continues to be the best in the industry at 0.41%.

FUTURE GROWTH STRATEGIES PLANS

Mumbai March 5 Birla Sun Life Insurance hopes to grab a fair share of the

growing insurance market and be among the top three in two years.

Mr Vikram Mehmi, President and CEO, said that the accent would now be

on aggressive growth.

"The life insurance industry is growing at 100 per cent. We plan to

introduce innovative products and expand our channel reach," said Mr

Mehmi, who took over as CEO in December 2006. He was earlier CEO of

Idea Cellular.

The company has registered 40 per cent growth in new business premium

to Rs 579 crore in the first 10 months of the fiscal, against Rs 414 crore in

the previous year.

On lower rate of growth when compared to other insurance companies, Mr

Mehmi said: "To a certain extent it was a conscious decision, since othercompanies do not have many long-term products. Besides, there has been a

change in the leadership of the company."

In terms of maturity value, most of Birla Sun Life's products have a term of

15 years, said an official.

The company is exploring distribution tie-ups with other companies in the

Birla group, Mr. Mehmi said.

"We will evaluate all the opportunities we have to build synergies amongthe group companies and try to evolve a low-cost distribution model."


27/30

Currently, the company has a tie-up with Idea Cellular to offer group term

insurance cover for subscribers aged 18-35.

It is in talks with non-life insurance companies to design a composite micro-

insurance product. Mr. Mehmi also said that the company's average premium per policy was

close to the industry average of Rs 20,000.

It is likely to be lower in the future as insurers reach out to smaller towns

and lower income groups.

On breaking even, he said that if the company had to grow, break-even

would have to be postponed.

On Monday the company launched the `Children's Dream Plan,' a unit-linked insurance plan with guaranteed maturity benefits.

The plan combines a guaranteed return on savings with upside potential

based on the performance of the investment funds.

The policy administration charge is customized and is deducted on a

monthly basis.

QUESTION THAT WE ASKED TO BIRLA SUN LIFE

IMPORTANT QUESTION

BDM (BUSINESS DEVLOPMENT MANAGER)

What is BSLI' s investment philosophy and stock picking strategy?

BSLI:- Our primary objective is to provide CONSISTENT and long-term returns

to our policyholders. For stock picking, our emphasis is on outstanding track

record of management, clear visibility of growth, financial strengths and a scalable

business model. We focus on blue-chip companies with excellent track record,

management vision and the best degree of corporate governance.

What are the various fund options provided to policyholders by BSLI?

BSLI:-BSLI has been a pioneer of Unit Linked plans in India. Our product range

on the Individual life and Group front largely consists of Unit Linked plans. We

have a range of fund options on our individual and group plans. The equity

component in this fund option varies from 10 % to 90 %. We recommend our

policyholders to select their fund options based on their risk tolerance level and


28/30

the future need of capital. Some of the fund options listed below for Individual life

plans are:

KEY STRENGTH

Financial Expertise

As a joint venture of leading financial services groups. BIRLA SUN LIFE has the

financial expertise required to manage your long-term investments safely and

efficiently.

Range of Solutions

They have a range of individual and group solutions, which can be easily

customized to specific needs. There group solutions have been designed to offer

you complete flexibility combined with a low charging structure.

Strong Ethical Values:

BIRLA SUN LIFE is an ethical and Cultural Organization. False selling or false

commitment with the customers is not allowed.

Most respected Private Insurance Company.

Comment

Indias insurance sector is likely to clock an unprecedented growth of over 200 per

cent by 2009-10. During this period, private players will grow at 140 per cent

owing to their aggressive marketing techniques as against a growth rate of 35-40

per cent of state owned insurance companies.

Fund Equity

ComponentProtector Up to 10 %

Builder Up to 20 %

Enhancer Up to 35 %

Creator Up to 50 %

Magnifier Up to 90 %


29/30

The Chamber expects the total insurance business to reach Rs. 2000 billion in the

next two years from current level of Rs. 500 billion. On account of intense

marketing strategies adopted by private insurance players, the market share of

state owned insurance companies like GIC, LIC and others have already come

down to 70 per cent in the last four-five years from over 97 per cent and more

intense competition is likely to be witnessed in the near future.

Till very recently, the insurance sector was largely under the government.

However, many private multinational firms have now entered the scene, such as

HDFC, ICICI, Kodak Mahindra and Birla Sunlife.

Anyone interested in this field can either work in one of the areas of insurance:life, general and postal or become an agent or an insurance surveyor. In an

insurance company a person can take a, job in.

The skills required to succeed in this field are almost the same as those for any

marketing or sales-related job. ? You have to be outspoken, gentle, persuasive,

calm, and very good at whatever responsibility you take. You have to remember

that here you have to persuade people to go for your insurance policy as against

the hordes of such policies available in the market.

To be eligible for a license, an insurance surveyor must have one of the following:

Fellowship of associate ship through the exam held by the Institute of Insurance

Surveyors and Adjusters (IISA), Mumbai? Degree or diploma in architecture

from a recognized university

With increasing awareness for life insurance, the customer base & mix is changing

rapidly. Birla Sun Life Insurance has been on a high growth path. The report

clearly shows how BSLI is emerging as the preferred life insurance provider for

higher age brackets. An increase in customers in the less than 1 laky income

group validates there efforts in increasing spread and reach.

For YTD January 2008. BSLIs New Business Premium stood at Rs.1259.20 cores,

a 117% increase over same period last year. The AUM for Birla Sun Life

Insurance is in excess of Rs.6590 cores as on 29th February, 2008. Its Outstanding


30/30

Claims Ratio is 0.41%. BSLI has a pan-India branch presence of 339 branches

with over 1, 00,000 advisors nationally, out of which over 500 advisors are

members of the prestigious Million Dollar Round Table (MDRT). BSLI has

insured over 2 million lives since inception, comprising over 1.5 million through its

individual business and the rest through its Group business.

Birla Sun Life Insurance (BSLI) in its 7 successful years of operations has

contributed significantly to the growth and development of the life insurance

industry in India. It pioneered the launch of Unit Linked Life Insurance plans

amongst the private players in India. It was the first player in the industry to sell

its policies through the Banc assurance route and through the Internet. It was the

first private sector player to introduce a pure Term plan in the Indian market.

This was supported by sales practices, which brought a degree of transparency

that was entirely new to the market. The process of getting sales illustrations

signed by customers, offering a free look period on all policies, which are now

industry standards were introduced by BSLI. Being a customer centric company,

BSLI has invested heavily in technology to build world class processing

capabilities. BSLI has covered more than 2 million lives since inception and its

customer base is spread across more than 1500 towns and cities in India. All this

has assisted the company in cementing its place amongst the leaders in the

industry in terms of new business premium income.

Birla Sun Life_garima_group 3

Documents

Transcript of Birla Sun Life_garima_group 3