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Friday, July 28, 2017

ICRA assigns iAAA rating to Tata AIG General Insurance

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Mumbai, March 30, 2017:  TATA AIG General Insurance Company Limited, one of India’s leading private sector General Insurance Company has been conferred the ‘iAAA’ rating (pronounced as I triple A) for their Claims Paying Ability by the rating agency ICRA. The ‘iAAA’ rating is the highest for claims paying ability for an insurance company in the industry.  The ratings indicate TATA AIG’s fundamentally strong position in the market and that the prospect of meeting policyholder obligations is best.

The rating takes into account the parentage of TATA AIG as well as, the strong commitment of both the partners – the Tata Sons Ltd and AIG. The rating factors in, TATA AIG’s strong presence in niche segment like travel, liability and marine cargo insurance. Moreover, the company has also established moderate underwriting profitability indicators, reinsurance and product development and higher share of commercial business in the product mix.

Commenting on this achievement, Neelesh Garg, MD & CEO, Tata AIG General Insurance Company Limited said, “It’s a great honor to receive the ‘iAAA’ rating for our claims settlement process, from ICRA. ‘iAAA’ being the highest industry rating for claims paying ability for an insurance company, signifies our company’s strong commitment, to our partners and customers.”

Three in final race for 35% stake in ICICI Lombard

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MUMBAI | NEW DELHI: Bulgebracket private equity funds Warburg Pincus, Carlyle and Temasek have been shortlisted for a 35% stake in ICICI Lombard General Insurance Co Ltd, the country’s largest private sector general insurer, in a deal that could fetch up to $1 billion, said people familiar with the development. The selection took place late last week after bids were received from four potential investors.

Others in the race included Blackstone, KKR, Advent and General Atlantic. The three will now conduct a final round of due diligence before submitting binding offers by April end, the people mentioned above said.

Earlier this year, Prem Watsa’s Fairfax Financial Holdings decided to sell 25% of its 34.6% stake in the insurance joint venture with ICICI for regulatory reasons. Reducing its stake to 10% will allow the Canadian firm to start a new general insurance joint venture in India, one of the people cited above said, adding that foreign investors cannot own more than 10% in an insurance company as a financial stakeholder.

Three in final race for 35% stake in ICICI Lombard

The Canadian company has already submitted an application to form a fresh joint venture in general insurance with Kamesh Goyal, a former executive at German financial services major Allianz. Fairfax entities will own close to 45% of the new joint venture, in which it will be a strategic investor, while Goyal will have 15% and the residual stake is likely to be held by the other financial investors. The Insurance Act allows foreign promoters to hold up to 49% of local operations.

ICICI is also looking to pare its stake by 7-10% in an effort to maximise value unlocking. Investors are expected to pay a significant premium once a third of the company is up for grabs. Most of the bids range between $900 million and $1billion.
In October 2015, Fairfax hiked its stake by an additional 9% for $237 million (Rs 1,550 crore then), valuing the company at Rs 17,225 crore ($2.5 billion). That has set a basic benchmark for this round as well. Industry watchers are expecting a $3-3.2 billion valuation for the company now, giving Fairfax a significant upside on its 16-year investment.

Hyderabad-born Watsa made his India debut in 2001, picking up 26% stake in ICICI Lombard through Hamblin Watsa Investment Counsel Fund and waited for a decade to write his next cheque, for a 9% stake in brokerage firm IIFL in 2011.

There was no response to emails sent to ICICI and Warburg. Fairfax, Temasek and Carlyle declined to comment.

Temasek is already an investor in ICICI Prudential Life Insurance and Analjit Singh’s Max Group. Both Warburg and Carlyle too have made large bets in the Indian financial services space but lack a sizeable pureplay insurance sector exposure so far.

KEY PRESENCE
ICICI Lombard, with an 8.4% market share, is a key presence in the vehicle, home, health and travel insurance space with gross written premiums of $1.2 billion in fiscal 2016. The company maintained its market leadership in the private sector with an overall market share of 8.4% and witnessed an increase in policy volumes by 13.90% from 13.87 million in fiscal 2015 to 15.80 million in fiscal 2016. ICICI Lombard’s profit before tax increased from Rs 691 crore in fiscal 2015 to Rs 708 crore in fiscal 2016 despite the impact of the Chennai floods and high weather insurance claims. But profit after tax decreased from Rs 536 crore in fiscal 2015 to Rs 507 crore fiscal 2016, due to a higher effective tax rate in fiscal 2016, as losses carried forward from earlier years had already been absorbed in prior periods.

The nearly Rs 1 lakh crore general insurance business has turned profitable for several companies, which have been given pricing flexibility by the regulator after they bled for several years.

In 2015-16, the general insurance industry underwrote direct premiums of Rs 96,379 crore, registering a growth rate of 13.81%. The general insurance industry has also got an impetus from the government’s focus on crop insurance, which created a new Rs 20,000-crore segment.

This in turn has improved the prospects of large-scale investor interest in the sector, both in life and general insurance.

Future Generali India Life Insurance launches Future Generali Big Income Multiplier Plan

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Future Generali India Life Insurance Company Limited (FGILI) has announced the launch of yet another product in its portfolio of simple to understand and easy to buy products – Future Generali Big Income Multiplier Plan. It is a simple, non-linked, non-participating plan with guaranteed returns which increase over the payout period.

In this product, one can start investing with a minimum premium of Rs 18,000 annually or Rs. 1,500 per month for a fixed period of 12 years. Customers would enjoy an insurance cover till the 14th year after which the payout period commences. Payouts of 1.5x, 2x and 2.5x over 3 evenly distributed blocks of 4 years each are made to customers over a total period of 12 years. The total benfit paid to customers is two times the total premiums paid under the policy.

Eligibility

Premium Frequency Annual Monthly
Entry Age

(as on last birthday)

Minimum: 4 years

Maximum: 50 years

Maturity Age Minimum: 18 years

Maximum: 64 years

Premium payable Minimum: Rs.18,000

Maximum: No limit

Minimum: Rs.1,500

Maximum: No limit

Policy Term 14 years
Premium Payment Term 12 years
Sum Assured* (for age band 31-35 years) 130% of Annual Premium
Maturity Benefit 4 annual payouts of 1.5 times the annual premium shall be payable each year for four years starting from the end of 1st year after the end of policy term.

 

4 annual payouts of 2 times the annual premium shall be payable each year for four years starting from the end of 5th year after the end of policy term.

 

4 annual payouts of 2.5 times the annual premium shall be payable each year for four years starting from the end of 9th year after the end of policy term.

48 monthly payouts of 1.5 times the monthly premium shall be payable each year for 48 months starting from the end of 13th month after the end of policy term.

 

48 monthly payouts of 2 times the monthly premium shall be payable each year for 48 months starting from the end of 61st month after the end of policy term.

 

48 monthly payouts of 2.5 times the monthly premium shall be payable each year for 48 months starting from the end of 109th month after the end of policy term.

Total Benefit Payable 2 times of Total Premium paid under the policy

*Sum Assured is dependent on the age of the insured person and ranges between 280% (for age band 4-10 years) to 100% (for age band 41-50 years).

On the occasion of the launch, Mr. Munish Sharda, Managing Director & CEO, Future Generali Life Insurance said, “We are extremely delighted to bring to our customers a new over-the-counter product with a simplified value proposition. As the name suggests, it guarantees income with a multiplier effect during the payout period. This product is designed keeping in mind the needs of the small savings customers who need to save regularly for specific needs in future. This product is in line with our philosophy of offering simple to understand products which deliver value to both, our customers as well as distributors.

Policybazaar readying for an IPO by the end of 2018

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New Delhi: Policybazaar, an insurance comparison website run by EtechAces Marketing and Consulting Pvt. Ltd, has turned profitable and is readying itself for an initial public offering (IPO) by the end of 2018, a top company executive said.

The company is also close to raising a pre-IPO (initial public offering) round of about $50 million from new and existing investors, chief executive Yashish Dahiya said in an interview.

The eight-year-old company broke even in November 2016 and expects significant growth in profits on net basis in the year ending 31 March 2018.

According to Dahiya, the company will close the current fiscal with revenue of Rs210 crore and expects to post a profit of Rs50 crore on revenue of about Rs350 crore in the following year.

In 2015-16, sales at Policybazaar grew 30% to Rs109 crore while losses widened 72% to Rs110 crore.

The company, which has so far raised Rs410 crore since its start in 2008 largely from InfoEdge, Tiger Global Management and Premji Invest, is close to raising a Series E round of funding that will take the company’s valuation to $350-400 million. Dahiya did not disclose the names of the new investors.

“We are in late discussions of raising $50 million. This is not for business requirement but because we want to build balance sheet strength,” Dhaiya said.

The funds may be used for expansion of the company’s loan and credit cards disbursement business PaisaBazaar.com, which it launched in August 2014.

“Policybazaar does not anticipate losing money here onwards, whatever investment we will make will be from this profit,” Dahiya said, adding that Policybazaar has about $40 million in the bank.

He said the company managed a turnaround through a tight control on costs and with a focus on health, life, critical illness and accident insurance products, a category he sees as more lucrative than others such as endowment plans, money-back plans and unit-linked insurance.

“The policy business in the investment category (endowment and money-back plans) is slowly declining and is being taken over by protection policies,” Dahiya said.

Our projection is that protection policies (life insurance, term insurance, health insurance, critical illness), which grew from 1% of entire first year premium of the industry in 2008 to 5% now, will grow to about 30%,” Dahiya added.

“We focus on what we call triple-D market: disability, death and disease; protection insurance accounts for 73% of our total topline,” he said.

The company will continue to focus on these categories, besides investing in PaisaBazaar.com.

It is also exploring to add more products in mutual funds category and expand low-ticket size mass products like two-wheeler insurance.

The company has already started working with investment bankers to ready itself for the IPO.

“We might do an IPO by October next year. The preparation has started; our CFO (chief financial officer) Alok Bansal is meeting people for the last six months,” Dahiya said.

“A product such as ours is more suited on Nasdaq but the regulations restrict us there. We are currently taking advice on what will be a more suitable from a regulatory point of view,” he added.

Founded in 2008, Policybazaar competes with Sequoia Capital-backed Bank Bazaar (A&A Dukaan Financial Services Pvt. Ltd) and new entrants such as Coverfox (Coverfox Insurance Broking Pvt. Ltd).

Policybazaar raised $40 million in April 2015, led by the investment arm of Wipro chairman Azim Premji, at a valuation of $210 million.

The 2,400-employee-strong company claims to close 120,000 policy deals every month

Paytm launches e-wallet insurance

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New Delhi: Digital payments firm Paytm, run by One97 Communications Pvt. Ltd, on Tuesday announced an insurance cover for users of its mobile wallet services against unlawful debits from the wallet. The facility will be given free of cost.

Customers using Paytm wallet will be insured up to Rs20,000 or the last recorded balance in their wallet, whichever is lower, the company said.

Paytm will refund money the user claims to be unlawfully debited from his or her e-wallet as a result of theft, burglary, loss of device or unauthorized access of Paytm account.

In the case of such an event, the user will have to notify Paytm through email or call its customer care centre within 12 hours.

“Our latest wallet insurance scheme will maintain our seamless payment experience while ensuring greater peace of mind for millions of consumers and merchants who have embraced Paytm in their daily lives,” Krishna Hegde, a vice-president at Paytm, said in a statement.

Paytm has over 200 million wallet users doing about 8.5 million transactions every day, One97 Communications chief executive officer Vijay Shekhar Sharma had tweeted last month. He said the company had Rs899.11 crore deposited in 106.8 million wallet accounts.

Paytm wallets are also used by small- and mid-sized businesses to accept payments. The company said its QR code-based (quick response code) payment solution, which it launched in October 2015, was used by five million merchants and allows consumers to pay at kirana stores, tolls, food courts, hospitals and other retail outlets.

Paytm claims it is acquiring at the rate of one million merchants a month and is aiming to bring on board 10 million merchants by the end of this year.

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