Religare Health Insurance explores the Bancassurance channel

The bancassurance channel has always been a promising distribution channel for the insurance companies. Through it the insurance companies can use the bank's network to reach out to the different areas of the country. All major insurance companies are tied up with banks to increase penetration to the different parts of India. 

The newest in the line exploring this idea is Religare Health Insurance Company Limited (RHICL). The standalone health insurer which began operations in the year 2012 is planning tie -ups with several banks to expand its bancassurance channel. According to CEO Anuj Gulati, the company would break even by 2017-18. 

Till now banks have been following a corporate agency model where a bank can represent one life insurer, one general insurer and one standalone health insurer. The recent relaxation of the Insurance Regulatory and Development Authority (IRDA) to banks allows them to act as brokers as well. This gives the bank the option to pitch different insurance companies products to the same customer. This option is however still to be approved by the Reserve Bank of India, the regulator for Indian banks. Religare's CEO is open to tie up with banks functioning as brokers

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Max Life Insurance rewards its customers

For a policyholder of Max Life Insurance, there is a reason to be happy this New Year. The private insurer has announced a special one-time bonus for its active policyholders. The estimated amount to be distributed in this special award would be around 130 crore. The bonus shall start from February 1^st 2013 and shall be awarded at the policy anniversary of each policyholder.

The parameters on which the respective bonuses would be calculated are

 1. The bonus is calculated as a percentage of annual premium.
 2. Policies with higher term of insurance would earn higher percentage in this special bonus
 3. A reinstatement which causes a policy to be active will be eligible
 4. Surrendered policies will not be eligible

The CEO and managing director of Max Life Insurance expressed his gratefulness to the loyal policyholders and said that a share of their robust growth must also be given to their customers. Max Life Insurance is a joint venture between Max India and Mitsui Sumitomo Insurance, a member of MS&D Insurance Group.

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Private insurer Max Life Insurance reports 6% growth

The first half of this fiscal (April 2012 – September 2012) reflected healthy figure for Max Life Insurance. Although most private players were not able to grab a profitable share, Max Life Insurance reported a 6% growth. The net profit for this period was INR 398 as compared to INR 375 for the corresponding period last fiscal.  The total premium stood at INR 2900 crore against INR 2872 crore from the last fiscal. Max Life Insurance is a joint venture between Max India and Mitsui Sumitomo, a leading general insurance company in the world.

CEO and Managing Director Rajesh Sud that the growth was primarily due to their advice based sales, diversified distribution channel, comprehensive product portfolio and superior customer experience through claims and complaint management.

Apart from the premium collection other parameters like Assets Under Management increased by 30% and the sum assured increased by 7%. Solvency surplus grew to 60% and the company’s paid up capital as on September 2012 was at INR 2127 crore. Overall the figures looks impressive despite the pressing times the insurance industry is facing due to economic and regulatory challenges.

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Healthy Growth Figures for both Life and General Insurers in India

The first half of this financial year (April 2012– September 2012) has registered growth for both life and general insurance companies. As compared to the same period last year, Life insurance companies have registered a growth of 11.2 % in new business premium collection while non-life insurance premium collection grew by 24.70%. The total collection for life insurance companies stood at Rs 26,889 crore while that of non life premium totaled at Rs 34001 crore.

The growth in the life insurers was primarily driven by individual regular premium policies which showed a growth of 21% during April 2012 – September 2012 as compared to April 2011 – September 2011. On the other hand single premium policies registered a negative growth of 9.6% for the same period, the possible reason being these policies are less attractive to prevalent tax exemptions.  The frontrunner in premium collection is once again Life Insurance Corporation of India (LIC). The premium collected by LIC helped to boost the overall figures in the life category while the private players suffered a negative of 13.7%. Among the 23 private life insurers only six insurers managed to show an increase in premium collection.

On the other hand the non life insurance category had a completely different story with the private players faring better than the four state owned general insurance companies. General Insurance companies like Max Bupa Health Insurance, Bharti Axa General Insurance and HDFC Ergo witnessed a healthy growth of 65%, 48% and 40% respectively for the period under consideration. Star Health and Allied Insurance was the only private general insurance firm to report a decline of 38% in premium.



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Postal Life Insurance and Rural Postal Life Insurance initiates improvements in their schemes.

While the whole insurance industry is buzzing with competitive products and expensive promotions, the Postal Life Insurance (PLI) and the Rural Postal Life Insurance (RPLI) are working their way to glory. At least that’s what the statistics show. The PLI was introduced in the year 1884 and the RPLI was introduced 1995. These schemes are only available to Government and Semi government employees. The contract is guaranteed by the Government of India and it enjoys high bonus for a lesser premiums.   The RPLI is implemented in the rural areas.

Many technological and administrative steps are taken towards making the two insurance schemes attractive to the customers. As many as 6,000 Gramin Dak Sevaks and 1,000 Direct Agents are contributing to service procurement and taking care of hundreds and thousands of customers. Now, all the after-sales services including maturity and loan cases are handled by local divisions. Policy documents are now printed and submitted to the insurants within 30 days. Facilities that the customers can now avail of include enhanced life cover of up to Rs 20 lakh, online premium deposit for a policy in any Post Office anywhere in the country, option of a variety of products, easier revival process and customers’ care centres at Divisions, Regions and Circles to take prompt care of grievances.  Nomination change, transfer, assignment facilities can be availed at Circle/Regional office level.

These implementations would hopefully bring in more revenue from these Government Initiatives. Statistical Data from the website also shows that RPLI is gaining better ground in terms of growth. Without any promotion, these two schemes are silently adding substantial revenue to the Indian Government.

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What the Insurers Need

The insurance business in India has come a long way since the Insurance Act of 1938. Some of the key milestones in this sector since independence of India would be the merging of all life insurance companies to form Life Insurance Company of India (LIC) in 1956, the merging of all general insurance companies to form four General Insurance Companies (National Insurance, New India Assurance, Oriental Insurance and United India Insurance) and the deregulation of the Insurance Sector in 1999 allowing foreign players to operate in the market. So is this market movement from monopoly to oligopoly really proving to be worthwhile for the Insurance Companies?

The ironclad regulations thrown by IRDA from time to time, economic and political pressures and tough competition has made it difficult for the insurance companies, especially the private players, to make any meaningful business out of it. This year we have already witnessed the exit of New York Life Insurance from Max India Limited. Others following suit might be ING and HSBC. Future group also plans to sever its ties with Generali while DLF wants to exit its tie up with Pramerica. Nine of the 23 private sector life insurers, including units of HSBC, Italy's Generali and Dutch life insurer Aegon, lost money in the year ended in March. The joint venture between France’s Axa and Bharti Enterprises, owner of India’s biggest cellular carrier, has never made money. 

So to revive and attract more investors and foreign partners certain flexibility must be introduced so that the insurers would be able to compete for higher margin and aim for higher penetration. Currently the penetration is only 4.4% in India against 8% in Japan and 9.5% in Britain. Business margin for India is also around 10-15% against 20-25% in China and 30% in Hong Kong.  A helping hand would be the recent proposed hike of FDI cap to 49%. It must be allowed to pass without any political mess up. Additionally the IRDA must have a more benevolent approach towards private players. Because of strict regulations, insurance products are mostly similar and hence competition is high. Without the option of product differentiation margins for insurers would continue to be meager. 

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India First Life Insurance Launches MagicBoard

The days of cumbersome sales meeting, extended paperwork and mis selling may soon come to an end for the Indian Insurance industry. For many years now, insurance companies have been brainstorming with their IT to bring out the cutting edge technology which addresses the above mentioned hassles surrounding the insurance industry.  A solution to this would automatically lead to a drop of expenses for both parties viz. the customer and the insurer.

A leap towards this idea has been taken by India First Life Insurance, a joint venture between two of India’s largest public sector banks- Bank of Baroda and Andhra Bank along with UK’s leading risk, wealth and investment company Legal and General. They have launched MagicBoard - a one-of-its kind integrated portable fulfillment device for a fully compliant, truthful and efficient Customer sales and service process that has a potential to be a force multiplier in sales productivity, customer delight and cost efficiency.

The device is an automated sales engine where a customer, distributor, employees and the insurance organization shares an integrated platform at real time to ensure honestly, transparency and agility of the sales process. Each of these stakeholders would have a single page view in his handheld tablet PC for real time access. Thus all the business processes viz. B2B, B2C and C2B are integrated and processed together. A sales person can now complete a sale on the spot (with or without access to internet) within 15 minutes. And instantly thereafter, the sale data is picked up by the MagicBoard command center at Mumbai and a verification call is made to the customer to cross check the information and the call is recorded for future reference by the customer. Once the data is verified, instantly a PDF file of the policy is pushed into the customer email and the summary printout is given simultaneously by the sales person through his blue tooth enabled portable printer which he carries along with him. A hard copy is also couriered to the customer to ensure that he has the same document through different delivery channels for cross check. MagicBoard also allows the sales person cater to customer requests, complaints and claims instantly through live video calls, instant access to key personnel in the corporate office etc.

Summarizing the MagicBoard has the following to offer to the Sales Executive and Customer

-       Helps optimize leads

-       Recommends the right product based on the customer needs

-       Details out the product key features and risk factors honestly through pre recorded product audio visuals

-       Eliminates cumbersome procedures - instant upload of documents, collection of premiums and policy printing

-       Provides business intelligence and MIS reports on a real time basis

-       Offers instant insurance at customer door step with end to end fulfillment

-       Uniform communications visually and verbally across all customer touch points

-       Complete migration of manual sales process to an integrated, IT enabled platform

Going by the habit of idiosyncratic investments by insurance companies in anything that boosts sales, we might be on the advent of witnessing some serious and revolutionary changes in the insurance buying process.

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Indian Life Insurance Companies Vs IRDA

The Insurance Regulatory Authority of India (IRDA) has always been the responsible Big Daddy of the insurance industry in India. It has always tried to ensure that things are running smooth and that no one is unfairly holding an edge over the others. However of late, the relationship between IRDA and the Life Insurance Companies of India has been stained. Both sides have their own gamut of reasoning for this rift. IRDA complains of risky and unethical business by these life insurance companies. The latter on the other hand is claiming that the regulator’s tight guidelines are pushing them to adopt previously untried methods. The two major causes of frown for the IRDA are the use of foreign reinsurers by the life insurance companies and the introduction of umbrella products which offers multiple policies under one product.

Before moving to discuss the first issue it is imperative that we understand what and who these reinsurers are. Reinsurance is a form of insurance where the insurance companies redirect the risk to another insurance company for some commission. Some foreign reinsurers currently popular in India are Swiss Re, Munich Re. IRDA has no control over the foreign reinsurers. So by using reinsurers, life insurance companies are naturally making IRDA uncomfortable. IRDA reasons that the end user or the customer is not fully exposed to the risk which they face if they buy such products. For Example if the reinsurer defaults due to credit risk, it is transferred to the insurer and ultimately the customers. The reason why foreign reinsurers are popular is because they offer competitive rates. However exposure to credit risk default is also higher.

The second issue of IRDA is using umbrella products to bring in multiple policies under one. IRDA claims that when the life insurance companies submit their products for clearance, there are fewer funds. But once cleared the funds proliferate. These funds may be significantly smaller in value. Ultimately the customer ends up with a collection of funds which may actually not result in much capital gain. Interestingly though when the Mutual Fund industry had started launching similar products, the capital market regulator had asked them to bring it under one umbrella product. They claimed that this would help remove confusion from the customers.

On the other side of the coin, the life insurance companies feel that IRDA has come down harshly on every profitable idea in the past year starting from pension plans to highest NAV guaranteed products. Earlier in September 2010, the life insurance industry received a major blow due to the restrictions imposed on the ULIP products. Initially it was expected that within six months a recovery was evident. However it took much longer than that. Between April – December, 2011 the premiums collected by the life insurance companies went down 17% reported in the same period a year ago. Also the number of policies issued was down by 11%. It seems that IRDA is changing things too frequently and the life insurance companies are finding it difficult to absorb these changes in their business models. The resistance of the life insurers is meekly visible in the absence of any pension plans after the guidelines were revised to ensure guaranteed returns.

IRDA has also recommended zone-wise distribution tie-ups between bank and insurance companies. This bancassurance guideline has not gone very well with the life insurers. They feel that this would complicate things as the whole business of bancassurance is based on commitment from either side. The financial institutions still have some way to go before they can successfully implement the zone-wise distribution recommendation.

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2012 - The LIC ONGC story so far

For this fiscal ending March 2012 the Government of India had a firm target of acquiring Rs 40,000 crores through its disinvestment strategies. Part of its strategy to achieve the target was the 5% stake offer of Oil and Natural Gas Commission (ONGC). However a flurry of over expectation, bad marketing and perilous economic scenario threatened to completely pulverize this move. Once again, as we have seen in the past, Life Insurance Corporation of India (LIC) came to its rescue.

How LIC saved the day –

The average quoted price per share was Rs 303.67, which is actually about 5% higher than its floor price of Rs 290. The auction got lukewarm response from foreign financial institutions and domestic banks. The over estimation almost lead to an embarrassing flop. But when things started to look bad, LIC opted to buy about 4.6% stake (of the available 5% stake) or about 40 crore shares thus pushing its investment to about Rs Rs 12,146.80. Till the October – December quarter of this fiscal, LIC already had 3.23% stake in ONGC. With this new investment their total stake has risen to about 8%. This is of course less than the 10% cap imposed by Insurance Regulatory Authority of India (IRDA) on any insurance companies.

What was the cost of this investment to LIC?

The value of share came down to Rs 280 in just two days. That means in just two days, LIC made a loss of about Rs 912 crores. The recent Union Budget added to its woes. Finance Minister Mr Pranab Mukherjee hiked the cess on crude and petroleum oil to Rs 4500 per tone from Rs 2500 per tone. This move would eventually bring down ONGC profit before tax by Rs 5500 crore. Obviously a decrease in stock price was on its way. As I write this article, ONGC’s stock price was hovering over Rs 272 – 273. If you do the math it is not difficult to understand that the loss is around Rs. 1200 crores. The budgetary move has also encouraged Bank of America Merril Lynch to downgrade ONGC shares to “neutral” from its earlier recommendation of “buy”.

What’s ahead?

Government of India’s strategy of transferring money from one pocket (LIC) to the other pocket (Government of India) worked out in the above case. It remains to be seen what interesting episodes awaits this eco-political drama when it sets out to achieve its remaining target.

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Sanlam Group invests in Shriram Capital

Shriram Group has entered into a joint venture with Sanlam Group of South Africa. This deal involves a Rs 2000 crore investment by Sanlam Group in Shiram Capital which is the financial wing of Shriram Group. This would also result in a 26% stake transfer. Though these two companies have been involved in insurance joint ventures before, this is the largest still now. It is for the second time that an outside company will hold stake from Shriram Group. Till a few months back the whole equity is owned by the Shriram Ownership trust until TRG picked 15% stake by investing around Rs 700 crore.

This deal also gives Sanlam Group access to the Indian market. From Shriram Group’s perspective it is a strategic venture which is meant to expand their financial arm. Sanlam’s investment would provide for up-streaming life and general insurance and would also include a cash component. In this way, Shriram Capital would still hold 100% equity which Sanlam Group would indirectly own 26% holding in the insurance venture by virtue of its 26% stake in Shriram Capital. The deal would take six to nine months as they await approvals from IRDA and Sebi

IRDA withdraws the controversial 4.5% guaranteed return on pension products

Life Insurance Companies in India can rejoice at the IRDA’s withdrawal from the controversial 4.5 per cent guaranteed return on pension plans. Usually these returns are fixed according to the reverse repo rate. Reverse Repo rate is the rate at which banks deposits their excess funds in the Reverse Bank of India (in simple words it is the rate at which RBI borrows from the banks). The mandatory return on these pension products was supposed to be 50 basis points more than the reverse repo rate. A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. For example, if the RBI raises interest rates by 50 basis points, it means that rates have risen by 0.50% percentage points. If rates were at 2.50%, and the RBI raised them by 0.50%, or 50 basis points, the new interest rate would be 3.00%.

However amidst this decision the Indian life insurance frontrunner Life Insurance Corporation, India (LIC) has set to offer upto 6% return on it’s unit linked pension product, Pension Plus. Even during the time when the mandatory 4.5 % return was in effect, LIC was the only company to have offered such pension plans. The private players refrained from taking such a risk. The unpopularity of this guideline has forced IRDA to revise it. This revised guideline talks about non zero or capital return instead of a fixed return. Although seeing LIC’s magnanimous premium collected (Rs 400 crore) since the last year through Pension Plus stands testimony to the fact that the guaranteed return guideline should actually work, we should not overlook the fact that other life insurance companies are far behind LIC in terms of size and penetration.

Now we shall all have to wait and see what the private insurers have to offer for pension products.

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LIC comes out with its new Single Premium Product

Not many companies remain so active during a pessimistic phase in the market as Life Insurance Corporation of India (LIC). Apart from investing heavily during these turbulent times, it now plans to launch a new product especially suited for the volatile market. The new product would be a single premium policy and is expected to be released in the month of September.A single premium policy is one where a lump sum payment is made into the policy in return for a death benefit. With this the cash invested builds up rapidly as the policy becomes fully funded. The size of the death benefit depends on the amount invested and the age and health of the insured. However these are relatively expensive.

LIC’s latest single premium policy comes after a gap of two and a half years when it launched “Jeevan Aastha”. The success of “Jeevan Aastha” clearly laid down that people prefer paying single payments against periodic payments albeit the higher costs incurred. For the records, “Jeevan Aastha” raised Rs 10,235 crore in just 45 days with around 1.8 million policies sold. With this new product LIC plans to raise in excess of Rs 10,000 crore because of the inclusion of 5-10 tenure term.

However experts and Financial Planners are skeptical of such policies. A simple math would show that investing in FD and using little bits of returns and capitals would generate better results.

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Syndicate Bank plans a tie-up with Aviva

Not too long ago, PNB and Metlife created news by entering into an agreement where PNB bought 30% stake in Metlife. However not many know that Aviva Life was also among the final list of companies where PNB had planned to invest. But this miss for Aviva would be short lived as news is brewing that Manipal based Syndicate Bank has set its eye on a 26% stake from Aviva Life.

Although many other life insurance players like Birla Sun Life, HDFC Life, Max New York Life are also included in the list for consideration, Aviva Life seems to be much better placed than these other companies. Aviva started its operations in India in 2002. Last fiscal it recorded a profit of Rs 29 crore. Currently Mohit Burman from Dabur Group holds 74% stake in Aviva and the rest is held by Aviva UK

While the Financial Markets cry, LIC India Invests.

While the stock market reacts to the downgrading of US by S&P, Life Insurance Corporation of India seems to be in an investing spree. In the last three days, LIC India has doubled stock purchases. In the past too, LIC India has been the Government’s tool to take care of a reeling stock market.

Since global turndown brings in pessimistic assumptions, not many companies are keen on coming up with their IPOs. So LIC India has been investing in the secondary market in these days. Currently the country’s biggest investor has stakes in L&T, Axis Bank and Grasim. It has increased its stake in Aurobindo Pharma above 5% by acquiring over 1.67 lakh shares. LIC India has invested around Rs 330 crore in the last three days. Compared to this it invested only Rs 120 crore in the first four months of this fiscal.

While LIC’s move can be welcomed as a stabilizing agent for the stock market, it is after all playing with the common man’s money. Now the question remains: Should the government put a cap on this seemingly limitless power of investing of LIC India?


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IRDA plans to change lock in period for stake sale

Effectively managing capital and coping with long gestation period are two factors which determine which companies survive in the competitive insurance market. Earlier this year in June, Sunil Mittal decided to sell its 74% stake both in Bharti Axa Life Insurance and Bharti Axa General Insurance to Mukesh Ambani precisely for these reasons.

Acknowledging this, Insurance Regulatory and Development Authority (IRDA) already has Article 6AA of the insurance act in place. However some aspects of this act may soon change. Currently the guidelines says that promoters holding a 26% stake in life insurance companies needs to be locked in for a period of 10 years. But news is brewing that a new IRDA guideline would allow promoters to escape as early as 5 years. The new draft however does not apply to those promoters subscribing to IPOs of insurance companies. The draft guideline is expected in August and after public comments and recommendations, the final guideline is expected in October.

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This week’s top Investment News in the Insurance Sector

Some of the top investments news in the investment sector this week

• Reliance Life Insurance plans to divest 23% stake in the domestic public and private lenders or banks. This come after Reliance has already signed a pact to sell 26% to Nippon Life. Some of the banks which have taken interest in this deal are Axis Bank and Syndicate Bank
• Exide plans to pump in another round of investment in ING Vysya Life Insurance Company. This time the amount would be somewhere around Rs 150 crore. It should be noted that Exide has already been investing in ING Vysya Life Insurance.
• Piramal Healthcare is planning to buy Enam Financial’s stake in ING Vysya Life Insurance. The present valuation of the insurance company stands at Rs 2400 crore. Last year Piramal Health got Rs 17,190 crore from Abbott Laboratories for its generic unit.
• Life Insurance Corporation of India (LIC) plans to invest more than Rs 2 trillion through the March fiscal. Apart from this its planned investment in equities will exceed last year’s Rs 400 billion.

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Life Insurance Industry Performance: Apr 2010-Mar 2011

The annual sales figure of the Indian life insurance industry for 2010-11 are now available.

This has indeed been a tumultuous year for the industry, with the new regulations on Unit Linked Insurance Plans (ULIPs) coming into force from Sep 1, 2010. In certain cases, the private life insurance players have had a sales dip of as much as 35% post the new regulations taking effect. However, the overall dip has got masked due to the robust performance in the first half of the financial year. Gradually, the life insurance industry is finding its feet post the regulations and reported traction in sales during the month of March, 2011. The biggest beneficiary of the new regulations has been LIC, the big daddy of insurance in India.

At an overall level, the life insurance industry has reported a growth of 15% over the previous year. The industry grossed new business premium of Rs 1.26 lakh crores in FY10-11 over Rs 1.09 lakh crores in FY 09-10. However, most of this growth was accounted for by LIC which recorded a 22% increase in premium to Rs 86,444 crores from an earlier 70,891 crores. In the process, LIC increased its market share of the overall life insurance market by 4% from 64.86 % to 68.7%.

The private life insurance players, with a combined premium of Rs 39,381 crores and a market share of 31.3%, reported only a 3% growth in new business premium in this financial year. However, that tells only part of the story. In the last 6 months since when the ULIP regulations came into force, the private life insurance industry would have had a significant de-growth which has been hidden by the stronger performance prior to the regulations taking effect.

The New business premium and the market share of the private players is as follows:

Company New Business Premium in (Crs) Market Share
ICICI Prudential........7861............................6.3%
SBI Life................7571............................6.0%
HDFC Life...............4065............................3.2%
Bajaj Allianz...........3462............................2.8%
Reliance Life...........3035............................2.4%
Birla Sunlife...........2077............................1.7%
Max New York............2060............................1.6%
Tata AIG................1331............................1.1%
Kotak Mahindra..........1253............................1.0%
Canara HSBC OBC Life....823.............................0.7%
Star Union Dai-ichi.....759.............................0.6%
Aviva...................745.............................0.6%
IndiaFirst..............705.............................0.6%
Met Life................704.............................0.6%
ING Vysya...............660.............................0.5%
Shriram Life............575.............................0.5%
Future Generali Life....449.............................0.4%
IDBI Federal............445.............................0.4%
Bharti Axa Life.........362.............................0.3%
Aegon Religare..........275.............................0.2%
Sahara Life.............91..............................0.1%
DLF Pramerica...........74..............................0.1%
Total...................39381...........................31.3%

Clearly, the top 5 private players are ICICI Prudential, SBI Life, HDFC, Bajaj Allianz and Reliance Life while there are 14 life insurance companies at a market share of less than 1%. A detailed look at the business premiums of the private companies throws up a list of companies which have had a significant increase in premium, while at the same time, a few have lost ground. IndiaFirst Life has recorded a significant increase of 250% premium growth, though on a significantly low base. DLF Pramerica and Aegon Religare have also shown an increase on a low base, but the most impressive increases are for Canara HSBC Oriental, HDFC Life and ICICI Prudential Life , all of whom have recorded increase of +25%.

IndiaFirst..............250%
DLF Pramerica...........98%
Aegon Religare..........83%
Star Union Dai-ichi.....46%
Shriram Life............37%
Canara HSBC OBC Life....29%
HDFC Standard...........25%
ICICI Prudential........24%

However, a few private life insurance companies have registered significant degrowth. MetLife, which lost the Axis Bank relationship, registered a decrease in premium income of as much as 34% (it is in the final shortlist for the PNB Bancassurance relationship, and could possibly make up the lost ground). Birla SunLife’s new business premium was 30% less than last year, while Bajaj Allianz Life Insurance had a 22% decrease.

It would be interesting to see how the life insurance industry performs in the current financial year, which would be the first full year since the watershed regulations on ULIPs took effect. In the long term, the changes brought about would be healthy for the life insurance market in India. The pensions product, which used to account for 30% of the market and for all practical purposes was killed by the new regulations, would also come back to life in this financial year as IRDA is planning to bring about changes from its earlier guidelines. All in all, it promises to be an interesting year ahead.

Reliance Life Insurance's deal with Nippon Life may get delayed

Nippon Life, which announced a deal to pick up 26% stake in Reliance Life Insurance just around the time the Tsunami struck Japan might have to wait a bit longer before the deal goes through. As per local rules in India, a company needs to be in existence for 10 years before it can divest any stake. Reliance Life completes 10 years in January 2012, and if the deal is to be completed before that, it will need special approval from the regulator IRDA. Reliance Life came into existence by buying the erstwhile AMP Sanmar.

Nippon Life is to pay Rs 3062 crores for a 26% stake, valuing the company at around 12250 crores.

In our humble opinion, the valuation seems way too inflated given the scale of operations of Reliance Life. But then, the Japanese are well known for overpaying!