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Friday, July 28, 2017

Analysts Explain Why HDFC Life, Max Life Insurance Are Merging

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HDFC Standard Life Insurance on Friday said it has agreed with Max Financial Services and subsidiary Max Life Insuranceto open exclusive merger talks, as the trio target an increased share of domestic insurance market. Shares of Max Financial Services and HDFC rallied sharply today.

Bhavik Hathi of A&M India told NDTV Profit than the deal shows the path that the insurance industry is going to take ahead. Max Life would be able to gain access to HDFC’s bancassurance network, he added.

Bancassurance enables insurance companies to sell their products to the bank’s client base.

“There is clear wave of consolidation happening. We have seen HDFC doing something similar on the general insurance side as well,” he said.

HDFC’s general insurance arm HDFC Ergo earlier this month agreed to buy L&T General Insurance in an all-cash deal for Rs 551 crore.

Analysts said Max Life’s and HDFC Standard Life’s businesses were complementary, which may be one reason why the two companies have decided to explore merger option.

“HDFC Life is largely a unit-link insurance player while Max Life is a traditional insurance player. From that point of view it is a good portfolio match as well,” said Mr Hathi.

Gaurang Shah of Geojit BNP Paribas told NDTV Profit that given low insurance penetration in the country, these mergers and acquisitions will help stronger players continue in business and at the same time those who are in business will have advantage of getting a bigger market share.

“This is the beginning…there is a possibility of more mergers coming through subject to approvals… It is win-win situation depending on scale of business and with this deal

Max will have the banking customer base, housing customer base and will have the positives of the diverse network of branches that both the HDFCs have,” he added.

Mahantesh Sabarad, deputy head of equity research at Mumbai-based SBI Cap Securities, told NDTV Profit that he is bullish on the insurance sector because of the value creation taking place right now.

LIC’s Gulf Arm Tops Its Overseas Chart, Chips In 80% Income

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Mumbai: Life Insurance Corporation (LIC) has had a good run in the Gulf countries with its Bahrain-based arm, LIC International, that manages the GCC markets becoming the best among its eight international subsidiaries in terms of new business premium collection in 2015.

Bahrain-headquartered LIC International is present in five Gulf Cooperation Council (GCC) countries of Bahrain, Dubai, Kuwait, Oman and Qatar. This subsidiary has contributed over 80 per cent of the corporation’s total overseas business in terms of new business in 2015.

The corporation also has eight overseas subsidiaries – Britain, Fiji, Mauritius, Bahrain, Nepal, Sri Lanka, Kenya and Saudi Arabia.

“New business premium of LIC International grew by a whopping 197 per cent at $121 million in 2015,” chief executive and managing director of LIC International Rajesh Kandwal told  PTI.

“We sold 13,120 policies in 2015, which is a growth of over 16 per cent over previous year. In terms of the number of policies, we enjoy over 88 per cent of market share in Bahrain in 2014,” he added.

The company has five branches across the GCC markets which as around 60 life insurers present.

Mr Kandwal said the major contributing factors for this stellar performance were attractive products, a high trust level of brand LIC and the success of bancassurance in the UAE.

“Brand LIC has a very strong connect with NRIs and is well accepted in the region thereby making the NRI segment as a niche market for us. In spite of competition, we are market leader in Bahrain,” Mr Kandwal said.

“Though we mainly target the non-resident Indians, we also go beyond them. Our bancassurance partners play a significant role in selling to the other nationals, particularly locals,” he said, adding that at the end of 2015, the company achieved its target on all the counts including policies and new premium.

First premium income grew by over 44 per cent whereas new policies rose by over 16 per cent during the year.

As regards repatriation of profit to the parent, annual dividend declared is paid to the shareholders including LIC. Out of total amount invested by LIC, the return on such investment by dividend payout is over 27 per cent, he said.

Going forward, he said the company is not focusing on expansion plans and would prefer to consolidate and tap the potential in the existing markets.

Mr Kandwal said overall insurance penetration in the GCC is expected to improve from 1.1 per cent in 2012 to 2.2 per cent in 2017. Bahrain has the highest insurance penetration of 2.1 per cent.

Max Bupa penalised for deficiency in service

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The District Consumer Disputes Redressal Forum-III here directed Max Bupa Health Insurance Company Limited to return Rs.1,15,353 along with a compensation of Rs.50,000 to a customer for deficiency in service.

The order based on a complaint from Syed Tajuddin Khandri, a resident of Gandhi Nagar, who wrote to the forum that the insurance company had refused the ‘cashless treatment’ facility for his wife in spite of having a valid policy effective from January 17, 2013, which was valid for a year. His spouse, Syed Khazima, was admitted for surgery at Aditya Hospital at Boggulkunta on November 27, 2013.

Mr. Khadri in his petition wrote that in spite of raising a request to solve the matter in March 2015 by writing a letter to the company, the matter was not resolved.

In its response, the Max Bupra Health Insurance Company Limited alleged that Ms. Khazima’s weight was ‘misrepresented’ as 73 kilograms when the policy was taken, whereas her weight was over 100 kg for the last three to four years. The insurance company said that Mr. Khadri failed to comply with clause No.5 of the ‘proposal form’, and also ‘misrepresented’ her age and weight, which is why his request was rejected. However, after scrutinising all the evidence, the forum ruled that his wife’s age was not wrongly mentioned, as he had provided her Aadhar card, which corroborated the information he had provided. The forum also said that it was ‘unable’ to accept the insurance company’s allegation that Ms. Khazima’s weight was over 100 kg, as there was no material evidence to prove it. It ruled that during the period from taking the policy till the date Aditya Hospital had checked her weight, there was a possibility of her gaining weight, it said and also pointed out that this was no bar for taking a policy.

Ruling that the company took an ‘untenable defence to avoid liability’, the forum said that it amounted to deficiency of service, and directed it to reimburse the complainant Rs.1,15,353 he had spent and another Rs.50,000 as compensation to him.

LIC Reshuffles Mid-Level Management Team

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Mumbai: In one of its biggest mid-level changes, Life Insurance Corporation (LIC) has shifted a majority of its 40 executive directors (EDs), apart from elevating 10 general managers as EDs.

There are likely to be two more senior appointments at the state-run insurer as one of its three managing directors, SB Mainak, retired in February, while it has sought government permission to have a fourth MD, a decision on which is awaited.

Mainak was looking after the investments vertical. One round of interviews for the MD’s post has already been conducted.

Considering this, the company has retained two of its senior EDs — Sunita Sharma, chief executive and managing director of LICHFL, and Saroj Dikhale, CEO of LIC Nomura MF — in their existing positions.

Company sources said the transfers were effected this Monday and the personnel will have to assume charge in May.

Sharma, who is among the front-runners for the post of the third MD, will be completing her three-year tenure at LICHFL in November.

At present, LIC, which is headed by its chairman S K Roy, has only two MDs — V K Sharma and Usha Sangwan.

The company has also transferred its ED (HR), Neeraj Agrawal, to the audit department. He has been replaced by Sharad Srivastava, who was in-charge of the zonal office in Kanpur.

Srivastava had appeared for the interview for the MD’s post.

LIC has also transferred Kiran Sahdev, who was at the board secretariat as ED for personnel and industrial relations.

She is being replaced by S C Singh, who was looking after marketing in Kolkata zone.

Vipin Anand, who was heading the direct marketing division as ED, is being transferred to Patna as the zonal head and is being replaced by P K Jain, who was looking after pensions and group securities in New Delhi.

Ganesh K, who was heading the Hyderabad zone, has been transferred to customer relationship management at the headquarters, replacing Susheel Kumar.

Kumar is being sent to Hyderabad.

Hemant Bhargava is being transferred from Kolkata to New Delhi as zonal officer, whereas Rajesh Kandwal will continue to head the operations in Saudi Arabia.

Pravin Kutumbe, who was in charge of the operations wing of the investment vertical, is being transferred to the monitoring wing. V Chandrasekaran has been named his replacement.

The investment wing is considered a coveted posting at LIC and it is divided into operations, monitoring and research departments.

Vinay Sah, who is also in the race for MD’s post, will continue to be ED-marketing.

S N Bhattacharya, who was heading the corporate communications wing, and had been transferred on March 1 to head the New Delhi zone, is being called back to the headquarters and will continue to head the same division.

Padmaja Bhaskaran, who was heading the credit cards division, will now be heading the zonal training centre at Gurgaon. R K Sood, who was in charge of RTI, is being transferred as underwriting head.

Among those who have been promoted as EDs include RC Dutta (additional director, zonal training centre, Chennai), GS Chawla (IT software development), Nalini Ratnam (international operations), Dinesh K Pangaty (Housing AMC, a venture capital floated by LIC), DP Mohanty (additional ED, IT business process reengineering), R Chaturvedi (RTI), PK Molri (investment and research), Madhuri Kulkarni (actuarial) and Shilla Hindoa (chief personnel officer).

Max Life Insurance Wins the Outlook Money Award 2015

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New Delhi, Delhi, India
Max Life Insurance, one of India’s leading non-bank promoted private life insurers, a joint venture between Max Financial Services Ltd and Mitsui Sumitomo Insurance Co. Ltd, has been conferred with the prestigious Outlook Money Award 2015 in the category ‘Life Insurance Provider of the Year’. The award was given by Mr. N K Singh, Former Parliamentarian and Senior Bureaucrat, at a function held in Mumbai on 1st April 2016.

The Outlook Money Awards are given to the best providers of financial products and services in the Country. The Award is given basis a comprehensive set of measures including business performance, customer satisfaction parameters and corporate governance.

Acknowledging the Award, Mr. Rajesh Sud – Executive Vice Chairman and Managing Director, Max Life Insurance, said, “We are delighted and extremely proud to be conferred with the Outlook Money Award 2015 in the category ‘Life Insurance Provider of the Year. In our 15 year journey, we have focused on building a quality life insurance business. This award is an acknowledgement of our efforts to build a customer centric franchise which believes in doing what is right for its customers. The Award will encourage us to recommit the company to further improve in the areas of customer retention, cost management, corporate governance, compliance and customer service including claims management.”

To reach a decision on the winner, Outlook Money followed a comprehensive selection process, before selecting Max Life Insurance as the winner as ‘Life Insurance Provider of the Year’. The data and information shared by all participating companies was verified by CARE and the Outlook Money editorial team. These applications were then reviewed by a jury headed by Mr. Vinod Rai, former Auditor and Comptroller General of India to arrive at the winners.

About Max Life Insurance Co. Ltd. (www.maxlifeinsurance.com)

Max Life Insurance, the leading non-bank promoted private life insurer, is a joint venture between Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Max Financial Services Ltd. is part of the Max Group, which is a leading Indian multi-business corporation, while Mitsui Sumitomo Insurance is a member of MS&AD Insurance Group, which is amongst the leading insurers in the world. Max Life Insurance offers comprehensive long term savings, protection and retirement solutions through its high quality agency distribution and multi-channel distribution partners. A financially stable company with a strong track record over the last 15 years, Max Life Insurance offers superior investment expertise. Max Life Insurance has the vision ‘To be the most admired life insurance company by securing the financial future of our customers’. The company has a strong customer-centric approach focused on advice-based sales and quality service delivered through its superior human capital.

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