8.+India Reliance+General

7/29/2019 8.+India Reliance+General

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A Reliance Capital company

Indian Insurance Market

The Korean Re 26thReinsurance Seminar, Seoul

Date : 18thJune, 2007


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confidential A Reliance Capital company

Some Facts About India


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Geography of India

Continent : Asia

Area : 3,287,590 sq Km

Land Boundaries : 14,103 Km

Coastline : 7,000 Km

Natural Resources : Coal, Iron Ore, Manganese, mica, Bauxite, Titanium

ore , Chromites, natural gas,diamonds,petroleum,limestone, arable land

Irrigated Land : 590,000 sq Km


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Economy of India (In 2005)

Gross Domestic Product : USD 720.3 bln

GDP (Purchasing power Parity) : USD 3.699 trillion

GDP Real Growth Rate : 7.6 %

GDP Per Capita (PPP) : USD 3,400

GDP Composition by sector :Agriculture : 20.6%

Industry : 28.1%

Services : 51.4%

Inflation Rate (CPI) : 4.6%

Industrial production Growth : 8.2% Current Account Balance : USD- 13.19 bln


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Rank in the world (End of 2005)

GDP (Purchasing Power Parity) : 5th - USD 3,699 bln

GDP Real Growth Rate : 26th - 7.60%

GDP Per Capita(PPP) : 152th - USD 3,400

Electricity Production : 8th - 556.8 bln kwh

Exports : 35th

- USD 76.23 bln Imports : 24th - USD 113.1 bln

Foreign Exchange Reserve : 6th - USD 166.2 bln

Airports : 24th - 334

Railways : 5th - 63,230 Km

Roadways : 3rd - 3.9 mln Km Waterways : 10th - 14,500 Km


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Indian Economy

Gross Domestic Product

21.0022.60

25.40

28.40

32.10

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06

(

INRT

rillion)


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Indian Economy

43.851.4 52.7

61.4 63.878.1 83.6

111.5102.7

142.4

0

20

4060

80

100

120

140160

2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06

Foreign Trade

Export Import

Foreign Exchange Reserves

51

71.9

107.4

135.6

159.3

0

20

40

60

80

100

120

140

160

180

2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06

(USDB

illion)



Insurance in India

The insurance sector in India has come a full circle frombeing an open competitive market to nationalization and

back to a liberalized market again.

Tracing the developments in the Indian insurance sectorreveals the 360 degree turn witnessed over a period of

almost two centuries.



A Brief History of the Insurance Sector

Milestones of life insurance business in India:

1818: First company - Oriental Life Insurance Company in Calcutta.

1912: The Indian Life Assurance Companies Act enacted

1928: The Indian Insurance Companies Act enacted to collect statisticalinformation 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 bythe central government and nationalized. LIC formed by an Act of Parliament,viz. LIC Act,1956, with a capital contribution of Rs. 5 crore from theGovernment of India.



A Brief History of the Insurance Sector Condt.

Milestones of General insurance business in India 1850: First general insurance company

1907: The Indian Mercantile Insurance Ltd. - the first company to transact allclasses of general insurance business.

1957: General Insurance Council frames a code of conduct for ensuring fairconduct and sound business practices.

1968: The Insurance Act amended to regulate investments and set minimumsolvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972nationalized the general insurance business in India.

1973: 107 insurers amalgamated and grouped into four companies with GICincorporated as a holding company.


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Insurance Sector Reforms In 1993, a committee was formed to evaluate the Indian insurance industry

and recommend its future direction with an objective of complementing thereforms 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

In 1994, the committee submitted the report

Some of the key recommendations included:

Structure

Competition

Regulatory Body

Investments

Customer Service


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Insurance Regulatory & Development Authority

Reforms in the Insurance sector were initiated with the passage of the IRDABill in Parliament in December 1999 and incorporation as a statutory body

Since being set up as an independent statutory body the IRDA has put in aframework of globally compatible regulations.

In the private sector 12 life insurance and 8 general insurance companieshave been registered.


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De-tariffing in General Insurance

Around 70% of the premium collected was under Tariff

On 1st Jan 2007 only the Rates in the Tariff were De Regularized

25% flat deduction in the Fire, Engg, WC Tariff Rates

5% To 15% Deduction in the Motor Own Damage Rates

Increase in the Motor Third Party Rates

35% Discount ON the Good Features of the Risk

From 1st Jan 2008, the terms & conditions of the coverage to be De -Regularized


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Effect of De-tariffiing

Sharp Reduction in property premium

Slight Increase in Non Tariff Products

Increase in the Third Party Motor Premium

Creation of Third Party Premium Pool for Commercial Vehicle

Market will take some time to get use to the Change


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Indian Non Life Insurance Companies

Public Sector National Insurance

New India

Oriental

United India

Private Sector Reliance General Insurance

ICICI Lombard General Insurance

Bajaj Allianz

Tata AIG

IFFCO Tokio Cholamandalam

Royal Sundaram

HDFC Chhub


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Indian Life Insurance Companies

Public Sector Life Insurance Corporation

Private Sector

Reliance Life Insurance

Bajaj Allianz

SBI Life Tata AIG

Hdfc Standard Life

ICICI Prudential

Birla SunLife

Aviva Max New York Life

Metlife

Bharti Axa Life


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Life Insurance Companies

Companies 2007(US $,million) Market Share

ICICI Prudential 260 6.79%

Bajaj Allianz 280 5.66%

SBI Life Insurance 190 3.40%

HDFC Standard 4 2.15%Max New York Life 7 1.22%

Birla Sunlife 5 1.17%

Aviva 3 0.96%

Tata AIG 3 0.85%

Reliance Life 7 1.23%

LIC 269 74.18%

Total Market 371


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Market Share of Life Insurance Companies

Bajaj Allianz

5.79%

ICICI Prudential

7.13%

Reliance Life

1.26%

Tata AIG

0.87%

Birla SunLife

1.20%

Max New York Life

1.25%

HDFC Standard

2.20%

SBI Life

3.48%

Aviva

0.98%

LIC

75.86%

ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Max New York LifeBirla SunLife Aviva Tata AIG Reliance Life LIC


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Non Life Insurance Companies

Companies 2007(US $,million) Market ShareNational 828 14.86%

New India 1092 19.59%

Oriental 857 15.37%

United India 763 13.69%

Bajaj Allianz 392 7.04%

Cholamadlam 68 1.23%

HDFC Chubb 41 0.74%

ICICI Lombard 653 11.71%

Iffco- Tokio 250 4.49%

Reliance General 198 3.56%

Tata AIG 130 2.34%

Royal Sundaram 130 2.89%

Total 5402


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Market Share of Non Life Insurance Companies

United India

14.04%Bajaj Allianz

7.22%

Cholamandlam

1.26%

HDFC Chubb0.76%

ICICI Lombard

12.01%

Iffco Tokio

4.60%

Reliance

3.65%

Royal Sundaram

2.40%

Tata AIG

2.96%

National

15.24%

New India

20.09%

Oriental15.76%

National New India Oriental United IndiaBajaj Allianz Cholamandlam HDFC Chubb ICICI Lombard

Iffco Tokio Reliance Ro al Sundaram Tata AIG


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Major Market Losses for 2006 - 07

Sr. No. Name of the risk /Loss

Date of Loss Gross Loss

(US $ million)

1 Balco 18/05/2006 4.39

2 Lanco Kondapalli 20/08/2006 1.09

3 Tata Motors 21/09/2006 3.90

4 RelianceIndustries Ltd.

25/10/2006 2.19

5 BPCL 25/09/2006 1.02


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Catastrophe Losses

Mumbai Floods (26.07.2005)

Gross Market Loss : 580.55 m USD

Surat Floods ( August 2006)

Gross Market Loss : 125.40 m USD

(Includes ONGC 7.67 m USD

Kribhco - 11.63 m USD

IPCL - 9.30 m USD )


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Financial Highlights of Fire Class

2005-2006 (figures in USD , million)

Public SectorCompanies

Private SectorCompanies Total

Gross Direct Premium 609 273 882

Net Premium Income 414 55 469

Net Claims Incurred 274 29 303

Net Claim Ratio 66.13% 52.72% 64.56%


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2004 -2005 (figures in USD,million)






Net Claim Ratio 39.72% 37.92% 39.54%


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2003 -2004(figures in USD, million)






Net Claim Ratio 30.60% 27.18% 30.33%


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2002 2003(figures in USD,million)






Net Claim Ratio 48.05% 21.50% 47.02%


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2001 2002(figures USD,million)






Net Claim Ratio 46.65% 30.90% 46.58%


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Financial Highlights of Marine Class

2005-2006 (figures in USD,million)






Net Claim Ratio 67.67% 107.71% 74.40%


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2004-2005(figures in USD, million)






Net Claim Ratio 62.81% 87.81% 66.61%


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2003 -2004(figures in USD ,million)






Net Claim Ratio 59.76% 81.88% 62.19%


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Net Claim Ratio 67.02% 66.11% 66.97%


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2001 2002(figures in USD, million)






Net Claim Ratio 60.03% 36.55% 59.75%


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Financial Highlights of Misc. Class







Net Claim Ratio 96.08% 52.35% 86.88%


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Net Claim Ratio 92.34% 50.76% 86.27%


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Net Claim Ratio 94.68% 53.03% 90.87%


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Net Claim Ratio 89.57% 55.62% 87.65%


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Net Claim Ratio 107.39% 3.96% 93.77%


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Financial Highlights of All Classes







Net Claim Ratio 89.94% 54.47% 83.03%


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Net Claim Ratio 81.63% 51.17% 77.42%


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Net Claim Ratio 81.93% 50.97% 79.14%


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2002 2003(figures in USD,million)






Net Claim Ratio 80.21% 51.58%78.68

%


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Net Claim Ratio 90.21% 4.46% 81.83%


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A Reliance Capital company

Reliance General Insurance Co. Ltd.

Some facts


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About Reliance General Insurance

First Private Sector Non Life Insurance Company to get licensed from theIRDA in October 2000

The only 100% Indian Private Sector Insurance Company

Only profit making Pvt. Insurance Co. from the first year

Fastest Growing Company in Insurance Arena YoY 500%

Profitability Making underwriting profits from the 1st year of inception,consistently for the past 6 years


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About Reliance General Insurance

RGICL offers an exhaustive range of insurance products that covers mostrisks including Property, Marine, Casualty, Liability, Health and Aviation etc.

The Company has over 88 branches Pan India spreading over 19 States.

Permission of opening 115 more branches obtained

Number of employees currently (May 2007) employed with us is over 1200.


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Our Vision & Mission.Vision

To be an Insurer of World Standards and the most preferred Choice forClientele at the domestic and Global Level.

Mission

Our Mission is to keep the customer satisfaction as focal point of all ouroperations, adopt the best international practices in underwriting, claims and

customer service, be the most innovative in product development, establishpresence all over India, ensure sustained value addition to all stake holdersand to uphold Corporate Value & Corporate Governance.


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Our Quality Policy

Delight Customers at all our Touch Points

Continually improve our Processes and Technology

Comply with Statutory Regulations


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Guiding Principles6 Cs

Customer

Customer Care

Corporate Governance

Corporate Values

Creativity

Competitiveness


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Our Underwriting Philosophy

Risk Identification

Risk Management advises like risk retention & transfer to Insurance

Insurance Portfolio analysis

Ongoing risk evaluation & advice


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Gross Written Premium(2006-07)

Fire24%

Marine

4%

Motor

35%

Other

Miscellaneous

37%

(Premium in US $,million)

Fire : 48Marine : 8Motor : 69Other Misc. : 73


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Portfolio Segment wise

Segmentwise Contribution

Retail

55%

Corporate

45%

Retail Corporate


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Growth Story

0

100

200

300

400

500

600

700

800

900

1000

0

20000

40000

60000

80000

100000

120000

140000

160000

Gross Premium (In Rs.

Crores)

77.45 185.67 161.05 161.68 162.33 912

No. of Policies 28,631 56,469 63,900 135,355

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

18.01 43.18 37.45 37.6 37.75 198Million USD


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Highlights

House Hold Brand Reliance

Vast Coverage through the Network Of 88 Branches covering 19 States

Short Term Debt Raised with Highest Rating by ICRA

Ranked currently no. 2, moved up from 8th position

137 products to service all class of client risks along with customizedproduct policies.

Technology support at every stage sourcing, document flow, policyissuance, claims, MIS & renewals


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Highlights

Strong Underwriting skill sets and Reinsurance programs

Decentralised Claims processing

Human Capital has progressed from 150 members in March 2006 to

1200 as on May 2007 vertical concept

We deliver faster & effective documentation which coupled with cuttingedge technology solutions provides effective insurance solutions.

Constantly maintaining solvency ratios well above IRDA guidelines

The average claim settlement time in the year 2006-07 is days


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Thank you

18thJune , 2007

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