Tag: insurance companies

FPIs bet big on private insurers

Banking & Finance

[ad_1]

Read More/Less


Foreign portfolio investors (FPIs) are going strong on the Indian insurance sector. Bolstered by a strong growth in new business premium and profitability besides sensing a huge scope for insurance penetration, FPIs have been substantially increasing their stake in listed private insurers over the last 2-3 years.

Between FY19 and FY21, FPIs pumped in ₹52,527 crore into the sector.

Explosive growth

“Insurance industry in India is on the cusp of explosive growth. Even now insurance penetration (insurance premia as percentage of GDP) in India is abysmally low at 3.72 percent,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said. “The upcoming five years are expected to witness 13-15 percent growth of the industry. Eying this opportunity, all investors – FIIs, DIIs, HNIs – have been scaling up investments in the sector,” he added.

Of the record FPI inflows worth ₹2.74-lakh crore in FY21, insurance attracted the second largest chunk after the private sector banks, Vijayakumar noted.

Prayesh Jain, Lead Analyst – Institutional Equities at YES Securities said that both life and general insurance are highly under-penetrated in India and have the potential to see a 15-18 per cent growth in premium CAGR over the next few years.

“Unlike other countries where insurers went bankrupt due to default in their investment papers, Indian insurers did not face any such situation due to strong regulations; their underwriting and claim settlement are quite impressive. All these factors make Indian insurance space more attractive for the foreign investors,” Jain added.

FPI holdings

Among private insurers, FPI holding in SBI Life more than doubled to 30.51 per cent as of FY21 from 14.06 per cent in FY19.

Similarly, foreign investors’ holding in HDFC Life jumped to 25.67 per cent (10.52 per cent) while their holding in ICICI Prudential Life went up to 16.51 per cent (10.08 per cent) during this period.

Stake dilution by promoters in these companies over the last two years to meet the regulatory guidelines have also helped FPIs to lap up their stocks in these companies.

“SBI Life has seen amongst the highest increase in APE market share for private players from 9 per cent to 11 per cent over the last one year. New Business Premium market share for the company has also improved more than 100bps to 7.4 per cent,” said Siji Philip, Senior Research Analyst at Axis Securities.

He also added that while HDFC Life had a commendable improvement in APE market share over the last one year from 6 per cent to 8 per cent, ICICI Prudential’s market share was largely flattish at 5.9 per cent.

“Overall, the industry performance is expected to improve in FY22 driven by a revival in ULIPs, improvement in non-par pension, annuity products, and demand pick-up which generally happens post a pandemic, besides the benefit of the low-base effect,” Philip added.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

FinMin asks State-run banks, insurers to consider postponing promotion process

Banking & Finance

[ad_1]

Read More/Less


The finance ministry has asked all public sector financial intermediaries to take cognisance of the prevailing Covid-19 pandemic situation and take appropriate steps to ensure that the promotion process factors in the constraints likely to be faced by their officers and staff.

The ministry emphasised that the officers and staff of the public sector financial intermediaries — public sector banks (PSBs), public sector insurance companies (PSICs) and financial institutions (FIs) — may be given adequate opportunity for participating in the promotion process.

Postponement of the promotion process may also be considered, it added.

The promotion process has coincided with a spike in Covid-19 cases across the country, along with lockdown/curfew and increase in micro-containment zones.

There also cases of bank employees or their family members being hospitalised due to Covid-19 infection.

When the Covid-19 pandemic set in last year, some of the public sector financial intermediaries went online for conducting promotion interviews.

Sanjeev K Bandlish, Convenor, United Forum of Bank Unions (UFBU), in a letter to the finance ministry, said: “In the current wave that is sweeping across the nation, we are distressed to note that already several bank employees and officers have died. It is shocking to note that some of them could not even get admitted to hospitals due to the dearth of beds.”

Govt should usher in five-day week

Bandlish sought reduced working hours, five-day banking and exemption from duty to employees with existing comorbidities, pregnant employees/officials, persons with disabilities (Divyangjan), among others.

Referring to the Centre recently declaring every Saturday as a public holiday for the Life Insurance Corporation of India (LIC) in the run up to its initial public offer, KS Krishna, General Secretary, All India SBI Employees’ Association, observed that bank employees too should get relief in the form of five-day week amid the raging pandemic.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Insurance cos getting FDI up to 74% to get 1 year time fulfil conditions for key managerial positions

Banking & Finance

[ad_1]

Read More/Less


The Finance Ministry has notified draft rules for increased foreign direct investment (FDI) ceiling in the insurance sector. These rules prescribe one year time frame for compliance of requirements related with appointment of Resident Indian Citizens on key management posts. Also, total investment will mean sum of direct and indirect foreign investments, it states.

After announcement in the Budget this year, Parliament approved amendment in the Bill for raising FDI limit to 74 per cent from 49 per cent. According to the Ministry, persons ‘likely to be affected’ can give their suggestions within 15 days from now to the draft rules.

According to the draft, in an Indian Insurance Company having foreign investment, a majority of its directors, a majority of its key management persons, and at least one among the chairperson of its Board, its managing director and its Chief Executive Officer, will be Resident Indian Citizen.

Also read: Government may hike FDI limit in pension sector to 74 per cent

The rules also stipulate that at least 50 per cent of directors in the board will be independent directors. However, if the chairperson is an independent director then at-least one third of its Board shall comprise independent directors, it clarifies.

“Every Indian Insurance Company having foreign investment, existing on or before the date of commencement of the Indian Insurance Companies (Foreign Investment) (Amendment) Rules, 2021, shall within one year from such commencement comply with the requirements of the provisions,” rules said.

Direct foreign investment

It also envisages that total foreign investment in an Indian Insurance Company will mean the sum total of direct and indirect foreign investment by foreign investors in such a company. Investment by foreigner (non-resident) in an Indian entity is considered as Direct Foreign Investment. Investment by an Indian company (which is owned or controlled by foreigners) into another Indian entity is considered as Indirect Foreign Investment. It is also known as downstream investment.

The foreign investment in insurance sector was permitted in the year 2000 by allowing the same up to 26 per cent in an Indian insurance company. Later, in 2015, this limit was raised to 49 per cent. According to an analysis by State Bank of India, in the last 20 years, private insurance companies have explored many new innovations to boost business. However, due to the nature of this business, the sector needs more capital for growth and regulatory needs. The Covid-19 pandemic has shown that further penetration of insurance in India is needed and for that capital infusion is required.

FDIs in private insurers

The report, using March 2019 data, said that the average FDI investments in the 23 private life insurer is only 35.5 per cent, 30 per cent for 21 non-life private insurers and 31.7 per cent for the 7-specialised health insurance. “In our view, the increase in FDI limit in the insurance may receive ₹5,000-6,000 crore of foreign investment in the sector in the next 1-2 years and ₹15,000-16,000 crore in the next 5-years, apart from deeper product expertise and better underwriting skills,” the report said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

South Indian Bank gets nod to raise Rs 240 crore

Banking & Finance

[ad_1]

Read More/Less


The lender said that up to 28,30,18,867 equity shares of face value of Rs 1 each at an issue price of Rs 8.48 each will be issued to the insurance companies.

South Indian Bank (SIB) said in a regulatory filing on Tuesday that an extraordinary general meeting (EGM) of the bank approved the special resolution to raise Rs 240 crore by issuing equity shares on a preferential basis from HDFC Life Insurance Company, Kotak Mahindra Life Insurance Company, SBI Life Insurance Company and ICICI Lombard General Insurance Company.

The lender said that up to 28,30,18,867 equity shares of face value of Rs 1 each at an issue price of Rs 8.48 each will be issued to the insurance companies.

Post-allotment of the securities HDFC Life, Kotak Mahindra Life and SBI Life will hold 4.23 % shares of the bank each, while ICICI Lombard General Insurance will hold 0.85 % share.

SIB had obtained approval of shareholders in the last annual general meeting for raising of funds in Indian or foreign currency by way of issuance of debt securities up to Rs 500 crore.

South Indian Bank has also obtained approval of shareholders for increasing the authorised capital of the bank to Rs 350 crore. The Thrissur-based bank had reported a net loss of `91.62 crore in the third quarter of the fiscal on account of higher credit cost.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Bite-size insurance products whet customer appetite

Banking & Finance

[ad_1]

Read More/Less


Amidst muted sales and low penetration, insurance companies are taking a leaf out of the FMCG playbook and introducing sachet-size products at low premiums to get more people to purchase cover.

The popularity of low-premium Corona Kavach and Corona Rakshak against Covid-19 has given a boost to sachet-size insurance products.

Comprehensive cover

Companies are successfully selling cover for range of issues — from vector borne diseases such as dengue and malaria, credit card protection, flight delay, personal accident from participating in a sport, at the gym and even from firecrackers, emergency hospital cash, to cyber security plans — at premiums as low as ₹200.

Compared to a comprehensive insurance cover, these policies are typically for a specific requirement and condition and, therefore, the cover is lower.

“The concept of sachet started when we realised customers may not be very happy paying a ₹5,000 premium and we discussed whether we can break it into smaller fragments and create customised products for ₹500 or ₹1,000,” said TA Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance, adding that the small ticket size of such products make them very affordable.

Bajaj Allianz GI offers sachet insurance such as personal accident policies against an injury from a firecracker, while travelling in a local train, policy for vector borne diseases and also a group cover that covers financial losses like email phishing and spoofing.

Appetiser for more

Mayank Bathwal, CEO, Aditya Birla Health Insurance, said such bite-size insurance products have seen good pick up across platforms. “Sometimes it’s good to give customers a small offering so that they just experience the product… they will hopefully come and buy a bigger product,” he noted.

Rakesh Goyal, Director, Probus Insurance, said that while a few companies are trying to sell such sachet products, many insurtech and e-commerce companies are taking this up in a big way. “If India needs to improve insurance penetration, there is a need to push such small-size products,” he said.

Companies such as PhonePe, Flipkart and Paytm also offer small-size insurance products.

The industry is still at a nascent stage and renewals and distribution are a challenge for such products and, often, customers are not even aware that such policies exist.

Insurers also point out that distribution channels and agents may not be very keen on pushing such products given the low premium.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,