Max Newyork Life Insurance Co 333s1w
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CHAPTER-1
PROFILE OF THE COMPANY
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MAX NEWYORK LIFE INSURANCE CO. LTD (Max new York life insurance is partnership between Max India ltd.(74%) and New York life insurance (26%).) (ed Office: Max House, 1 Dr. Jha Marg, Okhla, New Delhi - 110020 IRDA Registration No. 104)
Introduction History of Insurance Historians believe that insurance first developed in Sumer & Babylonia. The merchants & traders of these societies transferred & pooled their money to protect themselves from pirates. In the 18th century BC, Babylonian king, Hammurabi developed a code of law known as the code of specific rules governing the practices of early risk-sharing activities. Insurance developed during the 1700’s in the North American colonies. In 1730, Benjamin Frank contributed for the Insurance of Houses from Loss by Fire. The company collected contributions & this money went into an investment fund. Interest on this fund went towards paying claims dividends to those who contributed money. The Industrial Revolution in the US, in the early & mid 1800’s prompted dramatic group. During this time, many companies were establishes to sell life insurance policies & annuities. several shared profits among policy holders, also developed. In addition, some life insurance companies charged s according to age of people & health.
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Life insurance, in its present form, came to India from the United Kingdom with the establishment of a British firm, Oriental Life Insurance Company in Calcutta in 1818, followed by Bombay Life Insurance Assurance Company in 1823, the Madras Equitable Life Insurance Society in 1829, & the Oriental Government Security Life Assurance Company in 1874. Prior to 1871, Indian lives were treated as sub-standard & charged extra of 15% to 20%. Bombay Mutual Life Assurance Society, an Indian insurer which came into existence in 1871, was the first to cover Indian lives at normal rates. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life insurance business. Later in 1928, the Indian Insurance Companies Act was enacted, to enable the govt. to collect statistical information about both life & non-life insurance business transacted in India by Indian & foreign insurers, including the provident insurance society. Comprehensive arrangements were, however, brought into effect with the enactment of the Insurance Act, 1938. Efforts in this direction continued progressively & the Act was amended in1950, making far reaching changes, such as requirement of equity capital for companies carrying on life insurance business, stricter controls on investment of life insurance companies, ceiling on the expenses of management & agency commission etc. By 1956, 154 insurers, 16 non-Indian insurers & 75 provident societies were carrying on life insurance business in India. On 19th January 1956, the management of the entire life insurance business of 229 Indian insurers & provident insurance societies & the Indian life insurance business of 16 non-Indian life insurance companies then operating in India, was taken over by the central govt. & then nationalized on 1st September 1956 when Life Insurance Corporation came into existence.
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An ordinance was ed in 1968 to amend the Insurance Act to regulate/control non-life insurance resulting in set up of GIC in 1973. Malhotra committee submitted its report in 1994 & recommended means to reintroduce an element of competition by withdrawing the exclusivity of LIC & GIC. In 1997, Insurance Regulatory Authority (IRA) was established which was later re-styled as IRDA in 1999.
What is Insurance? Insurance is a legal contract that protects people from the financial costs those results from loss of life, loss of health, lawsuits, or property damage. Insurance provides a means for individuals & society to cope up with some of the risks faced in every day life by every body. People purchase contracts of insurance, called a Policy, from various insurance companies. Almost every person existing in this world is associated with insurance, directly or indirectly. Directly, in the sense that he/she has insured his/her life by some kind of insurance policy from any company. Indirectly, in the sense they must have insured the assets of their own for example their house, car, or any thing else. Insurance can be divided into three categories. 1. Life Insurance 2. General Insurance 3. Health Insurance. Life insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity
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or at specified intervals or at unfortunate death. The contract also provides for payment of periodically to the corporation by the assured. General insurance includes many areas of insurance like marine, motor, engineering, health, fire, etc. The contract provides for the payment of an amount on the happening of some contingency. These types of contracts are annual in nature. OVERVIEW OF INDIAN INSURANCE MARKET The insurance landscape in India is undergoing a tectonic shift. Despite its more than teeming one billion population, India still has a low insurance penetration of 1.95 percent, 51st in the world. Although India boasts a saving rate of around 25 percent, less than 5 percent is spent on insurance. With the entry of competition, the rules of the game have begun to change. The market is already beginning to witness a wide array of products from players whose number is set to grow. In such a scenario, the differentiators among the different players s products, pricing & service. What really increases the appeal of insurance is the benefit of protection of lives & assets from insurance products. Only 22% of the insurable population possesses life insurance. What’s more, in a country over billion people, life insurance forms only 1.8% of GDP indicate the extent of underinsurance. Recognizing the huge potential of the market & the need to make insurance, particularly the life insurance, available on a wider scale, the government opened the industry to private players in 1999 and was flooded with applications. Major international insuresPrudential & Standard life of UK, Sun Life of UK, Sun life of Canada & AIG, MetLife &
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New York Life of the US, to name a few-tied up with leading companies of India to reach out this vast market. Today, the Indian Insurance industry has a dozen of private players, each of which are making strides in raising awareness level, introducing innovative products & increasing the penetration of life insurance in the vastly underinsured country. The success of effort is noteworthy –private insurers captured nearly 9 percent of new business income in two years of operations. The biggest beneficiary of the competition amongst the life insurers is the consumer. A wide range of products, customer focused service & professional advice has become the mainstay in the industry. It is seen a dramatic increase in customer awareness, with penetration cutting across the socio-economic class & attracting people who have never purchased insurance before. With the heightened awareness comes a willingness to evaluate life insurance as an integral part of financial planning kit a significant change n earlier attitude, where insurance is purchased as a tax saving pool. Not only has there been shift in the perception of life insurance, but also the way t s sold. From being a purely advisors driven business, the sector has seen the emergence of a number of channels, including bank assurance, corporate agents & direct marketing. These channels though very new, are quickly gaining importance because they present customers multiple ways of approaching life insurers. There is also a huge improvement in service attitude & delivery making a customer a focus of each initiative. Technology has come to aid giving the platform, the reach & the ability to
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service each customer seamlessly. Multiple touch points have emerged – centers, email, facsimile, websites, snail-mails etc.
On the products front, there are two trends that stand out. The days of high guaranteed return products, are over. Products are now priced flexibly, realistically, sustain ably. LIC of India has witnessed a decline in first year in FY03 while private players has witnessed a more than three fold growth because of reduction of guaranteed return products.
First yr income (Rs. CR) Private Players LIC of India
2002-03 982 11,343
2001-02 297 14,843
The other major change is the introduction of liquid, transparent & flexible policies, with linked products leading the brigade.
While such products are more complex, there s a distinct set of investors who find such products appealing. As the market matures, the demand for unit link & related products will only increase.
Advantages of Life Insurance It is superior to an ordinary saving plan:
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Unlike other saving plans, it affords full protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy; whereas under saving scheme the total accumulated saving alone will be available. The later will be considerably less than the sum assured, if death occurs during early years. 1. Easy settlement & protection against creditors:
The life assured can name person(s) called Nominee to whom the policy money would be payable in the event of his death. The proceeds of a life policy can be protected against the claim of the creditors of the life assured by effecting a valid assignment of the policy. 2. Ready marketability & suitability for quick borrowing:
After an initial period, if the policy holder finds him unable to continue payment of s, he can surrender the policy for a cash sum. Alternatively, ha can tide over a temporary difficulty by taking loan on the sole security of the policy without delay. Further, a life insurance policy is sometimes acceptable as security for a commercial loan. 3. Tax Relief:
The Indian Income-Tax Act allows deduction of certain portion of the
taxable income which is diverted to payment of life insurance s from the total income tax liability. When this tax relief is taken into , it will be found that the assured is in effect paying a lower for his insurance.
The Insurance Regulatory & Development Authority Duties, Powers & Functions
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Section 14 of IRDA Act, 1999 lays down the duties, powers & functions of IRDA. Subject to the provisions of the Act & any other law for the time being in force, the Authority shall have the duty to regulate, promote & ensure orderly growth of the insurance business & re-insurance business. Without prejudice to the generality of the provisions contained in sub-section(1), the powers & functions of the Authority shall include, 1. Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. 2. protection of the interests of the policy holders, insurable interest, settlement of insurance claim, surrender value of policy & other & conditions of contracts of insurance. 3. specifying requisite qualifications, code of conduct, & practical training for intermediary or insurance intermediaries & agents; 4. specifying the code of conduct for surveyors & loss assessors; 5. promoting efficiency in the conduct of insurance business;promoting & regulating organizations connected with the insurance & re-insurance business; 6. levying fees & other charges for carrying out the purpose of this Act; 7. calling for information from, undertaking inspection of, conducting enquiries & investigations including audit of the insurers, intermediaries, insurance intermediaries & other organizations connected with the insurance business; 8. control & regulations of the rates, advantages, & conditions that may be offered by insurer in respect of general insurance business not so controlled & regulated by
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the Tariff Advisory Committee under the section 64U of the Insurance Act, 1938 (4 of 1938); 9. specifying the firm & manner in which books of shall be maintained & statement of s shall be rendered by insurers & other insurance intermediaries; 10. regulating investments of funds by insurance companies; 11. regulating maintenance of margin of solvency; 12. adjudications of disputes between insurers & intermediaries or insurance intermediaries; 13. supervising the functioning of the Tariff Advisory Committee; 14. Specifying the percentage of income of the insurer to finance schemes for promoting & regulating professional organizations referred to in clause(f); 15. Specifying the percentage of life insurance business & general insurance business to be undertaken by the insurer in the rural or social sector; & 16. Exercising such other powers as may be prescribed.
COMPANY PROFILE
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Max New York Life Insurance Company Ltd. is a t venture between New York Life, a Fortune 100 company and Max India Limited, one of India's leading multi-business corporations. The company has positioned itself on the quality platform. In line with its vision to be the most ired life insurance company in India, it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business. In line with its values of financial responsibility, Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. The Company's paid up capital is Rs. 907.4 crore, which is more than the norm laid down by IRDA. Max New York Life has identified individual agents as its primary channel of distribution. The Company places a lot of emphasis on its selection process, which comprises four stages screening, psychometric test, career seminar and final interview. The agent advisors are trained in-house to ensure optimal control on quality of training. Max New York Life invests significantly in its training programme and each agent is trained for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA before beginning to sell in the marketplace. Training is a continuous process for agents at Max New York Life and ensures development of skills and knowledge through a structured programme spread over 500 hours in two years. This focus on continuous quality training has resulted in
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the company having amongst the highest agent rate in IRDA examinations and the agents have the highest productivity among private life insurers. 337 agent advisors have qualified for the Million Dollar Round Table (MDRT) hip in 2007. MDRT is an exclusive congregation of the world’s top selling insurance agents and is internationally recognized as the standard of excellence in the life insurance business.
Having set a best in class agency distribution model in place, the company is spearheading a major thrust into additional distribution channels to further grow its business. The company is using a five-pronged strategy to pursue alternative channels of distribution. These include the franchisee model, rural business, direct sales force involving group insurance and telemarketing opportunities, bancassurance and corporate alliances. Max New York Life offers a suite of flexible products. It now has 43 life insurance products and 8 riders that can be customized to over 800 combinations enabling customers to choose the policy that best fits their need.
History Introduction The story of Max is the story of Enterprise, Perseverance, and Credibility. These have enabled our birth, energized our life, and continue to define our path forward. We have 12
tempered Enterprise with Knowledge, Perseverance with Systems and Processes, Credibility with Values and Operating Principles, to create business acumen and culture, uniquely our own. This has led us to believe in People. To recognize human capital as our most vital resource and our greatest intrinsic worth. Enterprise and Knowledge have led us to find the 'new' through the 'unknown'. We have grown with a 'hands on' approach. With the building blocks of Enterprise, Knowledge, and People, we have created diverse businesses from the ground up. Each of these, has emerged as a distinguished organization. Our mature businesses enjoy leadership positions in their area of activity; our emerging businesses are well on their way to creating industry benchmarks. MAX REINVENTS ITSELF After divestment in Hutchison Max, Max India Limited spent a year answering fundamental questions about itself. This was a period of introspection, study, and self-definition. We decided to move away from being a predominantly manufacturing driven business-tobusiness company, and move towards being a service driven business-to-consumer company. We chose service excellence and world-class quality, as over-riding value propositions. Our competitive advantage was identified as: Businesses built on Knowledge, delivered through People, and distinguished by Service Excellence. Each of these offer the potential of developing into institutions, of adding lasting value to people's lives, and optimizing the intrinsic genius of India. Each of these offers Max complementary windows of geographical reach and business maturity.
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Healthcare, at present, is our local business, centered in and around Delhi. Life Insurance has a national reach. Information Technology and Clinical Studies are international in scope. Taken together, they are the 'flags' of Max : Local -Max Healthcare National -Max New York Life International -Neeman Medical International Our entry into these new businesses is part of a paradigm shift. A carefully considered strategic decision, which has chosen these as core businesses, very largely defining the entity that is Max. In the Indian context, these businesses do not have precedents to emulate, and therefore must define the industries they are in. They do not have peers to benchmark against, because no one is quite like them. This gives them the added responsibility of getting everything right the first time round. Business View Core businesses define the 'new' Max. They are mostly in early stages of evolution and growth. These businesses enjoy primacy of interest. Traditional Business The manufacturing driven traditional business, which operates on the business to business mode .
Vision
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To be one of the India’s most ired corporate for service excellence
Mission •
Establish niche services businesses in life insurance, health care and clinical research
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Life insurance and health care……….convergence!
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Rank amongst top 3 players in each niche
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Partner with best in class world leaders
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Create service excellence in all business.
PRODUCTS OF MNYL WHOLE LIFE INSURANCE Whole Life Participating Insurance provides an insurance cover that is guaranteed for your entire life. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses. KEY BENEFITS On death of life insured: Sum Assured plus accrued bonuses. On Maturity (attaining age 100): Sum Assured plus accrued bonuses. Bonus: From 3rd policy year, we will declare bonuses every year.
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Option to Participate in Progressive Bonuses: Allows you to top up your s to purchase additional Sum Assured in your existing policy. It also generates further bonuses. Tax benefits: You are entitled to the following tax benefits under Income Tax Act 1961: •
Your s are eligible for deduction u/s 80C up to Rs.100,000/- every year.
•
Your DD rider s are eligible for an additional deduction u/s 80D up to Rs.10,000/- every year.
•
Your claim amounts (from death, through surrenders or on maturity) are eligible for tax exemption u/s 10(10D).
UNIQUE FEATURES IN THIS POLICY: Bonuses:
You can use your bonuses in the following ways:
Withdraw in cash:
bonus will be paid to you by cheque.
Pay your s:
bonus will be used to pay the next .
Increase your Sum Assured:
bonus will be used to buy additional layers of insurance
cover in the existing policy by buying Paid Up Additions (PUA). Purchase term insurance: bonus will be used to purchase additional coverage valid for one year. Terminal Illness Benefit: Pays 50% of Sum Assured (subject to maximum of Rs. 5,00,000/-) to you in case you are diagnosed to be suffering from a terminal illness that can lead to death in 6 months; you can use this money for your treatment. The balance of the
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sum assured and the bonuses will be payable to your family on the occurrence of the Insured Event. Non Forfeiture Options: In case you are unable to pay your s, your policy will lapse and we will utilize your cash value to buy you insurance coverage in one of the following ways: Reduced Paid Up: A lower Sum Assured for the remaining term of your policy. Extended Term Insurance: The same Sum Assured for part of the remaining term of your policy.
CHIDREN’S ENDOWNMENT Children's Endowment Participating Insurance to age 18/24 with whole life option enables you to provide for specific needs of your growing children viz •
Child Endowment to Age 18 enables you to provide for higher education of your child.
•
Child Endowment to Age 24 enables you to provide for the best possible wedding of your child and also builds cash value, which you can use during to fund any unforeseen needs by taking a loan. In addition this policy is also eligible for bonuses.
KEY BENEFITS •
On death of life insured: Refund of s plus interest.
•
On Maturity: Sum Assured.
•
On Surrender of Policy: Surrender value.
•
Bonus: From 3rd policy year, we will declare bonuses every year
•
Tax benefits:
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You are entitled to the following tax benefits under Income Tax Act 1961: •
Your s are eligible for deduction u/s 80C up to Rs.100,000/- every year.
•
Your claim amounts (from death, on maturity or through surrenders) are eligible for tax exemption u/s 10(10D)
Unique features in this policy Cash Bonuses: Bonus will be paid to you by cheque. Non Forfeiture Options: In case you are unable to pay your s, your policy will lapse and we will utilize your cash value to buy you insurance coverage in the following way: Reduced Paid Up : A lower Sum Assured for the remaining term of your policy. In case you do not want the above, you can choose to take cash value by cheque. •
Upon your child attaining the age of 18, he/she will have the option to buy a permanent life insurance policy without medical underwriting (irrespective of his/her health at that time).
•
On maturity of the policy, the benefits payable under the policy shall automatically vest with your child – so that your child receives the benefits
LIFE PARTNER PLUS
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KEY BENEFITS On death of life insured: Initial Sum Assured Plus Sum Assured of Paid Up Additions through bonuses On survival: Money backs @ 7.5% of the Initial Sum Assured will be paid on each policy anniversary from age 61 to 75. On maturity: 100% of Sum Assured with Sum Assured of Paid Up Additions, if any. On Surrender of Policy: Surrender value. Limited Payment term: You can choose to pay the s over 4 i.e. 3 years, 7 years, 10 years or 20 years. Bonus: From 3rd policy year, we will declare bonuses every year. Tax benefits: You are entitled to the following tax benefits under Income Tax Act 1961: 1.
1. Your s are eligible for deduction u/s 80C up to Rs.100,000/- every year.
2.
2. Your DD rider s are eligible for an additional deduction u/s 80D up to
Rs.10,000/- every year. 1.
3. Your claim amounts (from death, on maturity, or Money Backs or through
surrenders) are eligible for tax exemption u/s 10(10D).
Unique features in this policy: Bonuses: You can use your bonuses in the following ways:
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Withdraw in cash: bonus will be paid to you by cheque. Pay your s: bonus will be used to pay the next . Increase your Sum Assured: bonus will be used to buy additional layers of insurance cover in the existing policy by buying Paid Up Additions (PUA). Terminal Illness Benefit: Pays 50% of Sum Assured (subject to maximum of Rs. 5,00,000/-) to you in case you are diagnosed to be suffering from a terminal illness that can lead to death in 6 months; you can use this money for your treatment. The balance of the sum assured and the bonuses will be payable to your family on the occurrence of the Insured Event. Non Forfeiture Options: In case you are unable to pay your s, your policy will lapse and we will utilize your cash value to buy you insurance coverage in one of the following ways: Reduced Paid Up: A lower Sum Assured for the remaining term of your policy. Extended Term Insurance: The same Sum Assured for part of the remaining term of your policy.
LIFE GAIN PLUS ENDOWMENT Life Gain™ Plus Endowment (Participating) Policy Provides you with an insurance cover that is guaranteed during the tenure of the policy. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated
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PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses.
KEY BENEFITS On death of life insured: In the first 5 years - Sum Assured plus additional insurance coverage purchased from bonuses. After 5 years - Double the Sum Assured plus additional insurance coverage purchased from bonuses. 1.
On maturity: Sum Assured plus accrued bonus plus Guaranteed Additions @ 10%
of Sum Assured. On Surrender of Policy: Surrender value. Bonus: From 3rd policy year, we will declare bonuses every year. 1.
Dread Disease (DD) Rider: Pays a lump sum amount in case you contract any of the
ten diseases covered e.g. Heart Attack, Cancer, etc. 2.
Personal Accident Benefit (PAB) Rider: Pays additional insurance coverage in case
of death or disability caused by an accident. 3.
Term / Term R&C Riders: Offers additional Sum Assured to match your changing
needs. The R&C also allows you the freedom to buy a fresh insurance plan later in your life. 4.
Waiver of (WOP) / Payor Riders: Waives your future s in case
you suffer total disability. The payor rider waives future s on your child’s policy in case you suffer total disability. 21
Unique features in this policy: 1.
Bonuses: You can use your bonuses in the following ways:
1.
Withdraw in cash: bonus will be paid to you by cheque.
2.
Pay your s: bonus will be used to pay the next .
3.
Increase your Sum Assured: bonus will be used to buy additional layers of
insurance cover in the existing policy by buying Paid Up Additions (PUA). 2.
Limited period of payment: so that you pay only during the years that
you are earning, while you enjoy the insurance coverage for a longer period. 3.
Terminal Illness Benefit: Pays 50% of Sum Assured (subject to maximum of Rs.
5,00,000/-) to you in case you are diagnosed to be suffering from a terminal illness that can lead to death in 6 months; you can use this money for your treatment. The balance of the sum assured and the bonuses will be payable to your family on the occurrence of the Insured Event. 4.
Non Forfeiture Options: In case you are unable to pay your s, your policy
will lapse and we will utilize your cash value to buy you insurance coverage in one of the following ways: 1.
Reduced Paid Up: A lower Sum Assured for the remaining term of your policy.
2.
Extended Term Insurance: The same Sum Assured for part of the remaining
term of your policy.
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MARKET PROFILE •
Wide range of Products and Services.
•
41 years experience as investment advisors and Financial Planners
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More than Seven Lakh satisfied clients all over India
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Countrywide network of 109 branches
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Over 12000 NRI clients across the globe.
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Personalized wealth management advice.
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24x7 online accessibility through www.maxnewyorklife.com
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Strong team of qualified and experience professional including CAs, MBAs,MBEs, CFPs,CSs and others.
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SEBI- Approved Category I Merchant Bankers.
•
Group Co. BCIBL is an IRDA – licensed Direct Insurance Broker.
ORGANISATION STRUCTURE MANAGEMENT
BOARD OF DIRECTORS:
Analjit Singh
Gary R. Bennett
Chairman, Max India Limited
Managing Director and CEO, Max New York Life Insurance
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Ted Mathas
Anuroop 'Tony' Singh
President & Chief Operating Officer, New York Life Insurance
Vice Chairman, Max New York Life Insurance
MANAGEMENT TEAM: Rajesh Sud
Sunil Sharma
Managing Director and CEO, Max New York Life
Chief Operating Officer and Executive Director
Rajit Mehta Executive Director, Human Resources, Training and Internal Communications
Rajesh Sud Executive Director, Distribution Sunil Kakar
Anil Mehta Director, Group Business
Director and Chief Financial Officer
Ajay Seth
Debashis Sarkar
Director, Legal & Compliance
Director - Marketing, Product Management and Corporate Affairs
John Poole Chief Actuary
Research Methodology:
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Data Collection Method: The survey conducted is of structured and direct type. This is done through telephone and personal interviews. Questionnaire Design: The following seven steps have been followed while deg the questionnaire. 1. Preliminary decision: Exactly what information is required, who are the respondents and what method of communication will be used to reach the respondents are determined. 2. Decisions about the question content: Questions are designed taking into
required information and capability and willingness of respondents. 3. Decisions concerning question phrasing: Questions are phrased taking into the following factors. a) These mean same to all the respondents b) No words and phrases are loaded in any way. c) Are there any implied alternatives in the question? d) Are there any unstated assumptions related to the question? e) Will the respondent approach the question from the frame of reference desired by me? 4. Decisions about response format: Can this question be asked as an open ended, multiple choice or dichotomous question? 5. Decision concerning question sequence: Are the questions organized in a logical manner that avoids introducing errors?
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6. Decisions on the layout of the questionnaire: Is the questionnaire designed in a manner to avoid confusion and minimize recording error? 7. Pretest and revise: The final questionnaire has been subjected to a thorough pretest using respondents similar to those who have included in the final survey.
Sampling Plan: 1. Define the population: The population for the present research has been defined as 2. MNYL customers with high s preferably HNIs. 3. Specify sampling frame: As the sample taken here is not a probability sample hence sampling frame is not required. 4. Specify sampling unit: Here sampling unit and element are same. Source of the data is the database of customers provided by MNYL. 5. Selection of sampling method: In this case a non probability judgment sample is taken. A representative sample is taken using judgmental selection procedures considering cost versus value principle. 6. Determination of sample size: applying cost versus value principle it has been decided that sample size would be 40. 7. Specify sampling plan: The sampling plan involves the specification of how each of the decisions made thus far is to be implemented.
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8. Select the sample: The final step in the sampling process is the actual selection of
sample
elements.
Recommendation by various groups
10% 25%
Friends & Relatives ment(Prin t Media) Television
10% 50%
5%
Agent Others
Most of the people like to invest in whole life insurance plan.
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LIC
12
ICICI prudential
10
bajaj allianz
8
HDFC standard life
6
kotak
4
sahara
2
reliance 0
1
aviva ING
LIC is on number one. Private players are still behind. Interpretation: From Factor Analysis results we can say that four major factors drive satisfaction in customers about Life Insurance. These are given below. 1. Value for money: This factor comprises subfactors Price, Coverage, Financial
stability & Reputation of the company. 2. Reference: This factor comprises subfactors Relationship with agent and
Recommendations by friend or acquaintance. 3. Company proactiveness: This factor comprises subfactors Role of agent as financial
analyst without consultation fee and the company’s willingness to insure. 4. Customer service: This factor comprises subfactors Service provided by agent and
Service provided by company. Limitations
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1. No proper after sales follow up 2. Not making people aware about the different products of the company 3. Advisors are more target oriented rather than people oriented. Recommendations: 1. Renewal reminder may be given through SMS 2. Customers’ need identification is to be improved. 3. 4 Major factors driving customer satisfaction may be focused on while developing and selling policies 4. A proper follow up should be made after sales to know customer satisfaction level.
Conclusion As per the objective of my project we can conclude that the customer whom I have approached for advisor ship showed a good response in associating themselves in MNYL. Most of the people turned up and finally became the advisor of MNYL. Customer satisfaction survey made with the help of questionnaire and personal interview helped me in observing that 87% of the customers surveyed were satisfied with the service of MNYL which they provide in the form of timely reminder for s, acknowledging people with latest schemes and offerings.
Questionnaire Customer satisfaction survey 1. Name:
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2. Gender:
M/F
3. Designation: 4. Marital status:
married / single
5. Organization: 6.who recommended you MNYL a. friends and relative
b. ment(print media)
c. agent
d. tele vision
e. others 7. did you come to branch or an agent visit to your place a. office
b. agent
8. How did you find the agent on following parameters a. punctuality c courtesy
e. responsible
b. softness d. knowledge
f. confidence
9. In which plan would you like to invest a. whole life insurance
b. children plan
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c. pension plans d. endowment plans 13. Which organization would you prefer for investment other than MNYL a. L.I.C
b. ICICI prudential
c. Bajaj allianz
d. HDFC standard life
CHAPTER 2 SWOT ANALYSIS OF THE COMPANY
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SWOT ANALYSIS STRENGTHS •
The Investment Banking Group, a crack term of highly qualified, experienced and motivated professionals, delivers Max newyork life insurance’s Investment Banking Service.
•
Max newyork life insurance is a strongly research-driven organization. The Max newyork life insurance centre for Investment Research comprises highly qualified and talented professional who constantly monitor the market and collect, collate, analyes and disseminate valuable information.
•
With over 120 offices in 50 cities and a network of over 10,000 Advisor Associate, we assure you a pan-India reach.
•
Max newyork life insurance enjoys a extremely cordial relationship with major institution in the financial markets such as banks, insurance companies, mutual fund houses, PF Trust, educational trust, act.
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WEAKNESSES
•
The systems are not automobile so manual intervention is reqired.hence process becomes time consuming.
•
Limited expose for Max newyork life insurance is 4 times as compared to other competitive firms it is 10-12 times.
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No categorization of stock e.g they treat reliance as same as that of any low category companies.
•
No major from research team for short term investment.
OPPORTUNITIES •
India is one of the few developing economy growing at a rate of 6-7%. Whereas rest of the world is either contracting or growing at a rate of 1% or less and financial service sector is 1 of the major growing sector.
•
Out of total population around 100 crore people 4 crore have de-mat .
•
Max Newyork life insurance
has client conservative approach so by using the
strategy the client should make more profits as compared to other. •
Indian economy is becoming a default destination for global investors, hence foreign funds for this year is close to 66000crore hence Indian stock markets are booming so bajaj can capitalized on this growing phase of Indian stock markets.
THREATS
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•
Well-established players like India bulls, kotak, etc. they are offering higher services to the clients hence they are tough in breaking.
•
Infrastructure ing is very less so client face lot of issue because of technology.
•
They do not provide funding to clients as other firms do.
CHAPTER-3 ANALYSIS OF FINANCIAL REPORT
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FINANCIAL STATEMENT ANALYSIS Financial analysis is the selection, evaluation, and interpretation of financial data, along with other pertinent information, to assist in investment and financial decision-making. Financial analysis may be used internally to evaluate issues such as employee performance, the efficiency of operations, and credit policies, and externally to evaluate potential investments and the credit-worthiness of borrowers, among other things. The analyst draws the financial data needed in financial analysis from many sources. The primary source is the data provided by the company itself in its annual report and required disclosures. The annual report comprises the income statement, the balance sheet, and the statement of cash flows statements. Financial statement analysis is important to boards, managers, payers, lenders, and others who make judgments about the financial health of organizations. One widely accepted method of assessing financial statements is ratio analysis, which uses data from the balance sheet and income statement to produce values that have easily interpreted financial meaning. With a great
understanding of the balance sheet & p&l and how it is constructed, we can look at some techniques to analyze the information contained within the balance sheet & P&L .
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Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements we mean two statements: 1. Profit and loss or Income Statement 2. Balance Sheet or Position Statement 3. Cash Flow Statement 4. Ratio Analysis
Profit and loss or Income Statement A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement".
Balance Sheet or Position Statement A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity
Cash Flow Statement The cash flow statement shows how much cash comes in and goes out of the company over the quarter or the year. At first glance, that sounds a lot like the income statement in that it
36
records financial performance over a specified period. But there is a big difference between the two.
Ratio Analysis: A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. PURPOSE: The main purpose of analyzing the financial statement are the following:•
To assess past performance and current financial position.
•
To make predictions about the future performance of a company
Financial Statement of the company
•
Total Revenue increased by 20% to Rs. 5,813 crores in 2010-11 over previous year.
•
First Year recorded a growth of 11 % over previous year to Rs. 2,061 crores in 2010-11.
•
Renewal income grew by 25% over previous year to Rs. 3,751 crores in 2010-11.
•
Net Profit has increased to Rs. 283 crores, 12 times higher than previous year.
•
Assets under management rose to Rs. 13,836 crores, a growth of 37% over last year.
37
•
The cost to ratio improved 400 basis points to 38%.
•
Has amongst the highest conservation ratio at 82%.
•
Solvency capital ratio at 365% was significantly higher than the mandated 150%.
•
Cumulative sum assured is over Rs. 1,54,000 crores, up by 25% over previous year.
Financial Year (FY) 2010-11 (April 2010 – March 2011) compared with FY 2009-10 (April 2009 – March 2010). Revenue The Total Revenue for FY 2010-11 increased by 20% to Rs.5,812 crore with new business growing 11% to Rs.2,061 Crore and the renewal recording a growth of 25% to Rs.3,751 crore. (31 Mar ‘11) (Rs.(31 Mar ’10) (Rs.Change % Income
Crs) 5,812
Crs) 4,861
20%
Sum Assured in force
154,687
123,288
26%
10,116
37%
24
1079%
Asset
Under13,836
Management Profit for the year
283
Max New York Life believes Adjusted Individual First Year is the true indicator to measure new business success. During the financial year 2010-11, on this parameter, the company achieved income of Rs. 1,726 Crore recording a growth of 9% over the previous financial year where as both the industry and private players have recorded a decline of 8% and 20% respectively. Consequently the private market share of the company also increased by 199 bps to 7.5%.
38
Post 1st September 2010, after the new ULIP guidelines came into force, Max New York Life Insurance has outperformed the industry every month. Cumulatively, in this seven months period the total industry and private insurers recorded a decline of 19% and 35% respectively while Max New York Life grew by 10%. The company’s conservation ratio which is amongst the highest at 82% is testimony to its commitment towards customers. Cost Management During the year the company undertook cost management initiatives which had its impact during the last quarter of the year and its full year impact would be visible in Financial Year 2011-12. The cost ratio improved 4 percentage points to 38%. Net Profit During the FY 2010-11, Max New York Life Insurance, recorded the Net Profit of Rs.283 crore, 12 times the profit recorded in the previous year. This impressive rise in net profit was a result of continued revenue growth coupled with better productivity and cost efficiency. Solvency Margin & Capital The solvency margin of the company stood at 365% for FY 2011 as compared to 322% for the corresponding period previous year. Max New York Life maintained more than 2 times solvency margin as compared to the margin mandated by IRDA. The company’s paid up capital (including share ) as on March 31st 2011 was at Rs. 1,976 crs. Sum Assured and Assets Under Management
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The total sum assured increased to Rs. 1,54,687 crore recording a growth of 26%. This increase in sum assured is an outcome of the company’s enhanced focus on long-term savings and protection. During the financial year 2010-11 the Assets Under Management recording a growth 37% to Rs.13,836 Crore.
RATIO ANALYSIS CURRENT RATIO Current Ratio
Year
=
Current Asset Current Liability
Current Assets
Current Liabilities
Current Ratio
(Rs. In crores)
(Rs. In crores)
2010
6294.01
8378.04
0.75
2011
6765.39
10834.99
0.62
Interpretation: An ideal solvency ratio is 2. The ratio of 2 is considered as a safe margin of solvency due to
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the fact that if current assets are reduced to half (i.e.) 1 instead of 2, then also the creditors will be able to get their payments in full. But here the current ratio is less than 1 and more than 0 which shows that the current assets less to the current liabilities which is not satisfactory as the safety margin is very less or zero. Therefore company should keep more current assets so that it can maintain a satisfactory safety margin
LIQUIDITY RATIO: Quick Ratio =
Total Quick Assets Total Current Liabilities
Quick Assets = Total Current Assets – Inventory
Year
Total Quick Assets
Quick Ratio
(Rs. In crores)
Total Current Liabilities (Rs. In crores)
2010
5845.45
8378.04
0.69
2011
6199.28
10834.99
0.57
Interpretation: A quick ratio of 1:1 is considered favourable because for every rupee of current liability, there is at least one rupee of liquid assets. A higher value of ratio is considered favourable. Here this ratio is less than 1 in both of the previous as well as current year which is close to 1 which i.e. not satisfactory. This means the company has not managed its funds properly in this particular period. Therefore they should rationally utilise its funds to maintain an ideal liquid ratio.
DEBT EQUITY RATIO 41
Debt equity ratio Debt
=
Equity =
Year
= Debt Equity
Debt means long term loan shareholder’s fund + reserve
Debt
Equity
Debt Equity Ratio
(Rs. In crores)
(Rs. In crores)
2010
25931.44
19729.61
1.31
2011
35761.82
19761.82
1.8
Interpretation: The ratio shows the extent to which funds have been provided by long-term creditors as compared to the funds provided by the owners. Here the Debt-Equity ratio for the above period is always high. This shows more relying on outside funds as compared to internal sources of capital, in its capital structure. From the long-term lenders point of view this ratio is not satisfactory.
PROPRIETORY RATIO: Proprietory Ratio = Shareholder’s Fund Total Assets
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Years
Shareholder's Funds
Total Assets
Proprietory Ratio
(Rs. In crores)
(Rs. In crores)
2010
19761.82
71702.01
0.27
2011
19729.61
90388.42
0.21
Interpretation: Proprietory Ratio estalishes the relationship between proprietors fund and total assets. Proprietory ratio was 27% in 2010, after that was 21% in year 2011. Hence it leads to the conclusion
owners have More than 20% stake in the total assets of the bank. It is good sign as far the long term solvency is concerned.
FIXED ASSETS TURNOVER RATIO: Fixed Assets Turnover Ratio = Cost of goods sold or Sales Net Fixed Assets Year
Sales
Net Fixed Assets
(Rs. In crores)
(Rs. In crores)
2010
3549.87
2744.51
1.29
2011
4214.56
1400.98
3.08
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Fixed Assets Turnover Ratio
Interpretation: The objectives of calculating fixed asset turnover ratio is to establishes whether the investment in fixed asset justified in raltion to the sales achived.The fixed assets turnover ratio has been consistently increasing. It indicates that fixed assets have been effectively used in the business without much additional investment in the period of study and also the capital is not blocked in fixed assets
NET PROFIT RATIO Net profit ratio
=
Net profit X
100
Net sales Year
Net Profit
Sales
Net Profit Ratio
(Rs. In crores)
(Rs. In crores)
(in %)
2010
748.40
3549.87
21.08
2011
962.13
4214.56
22.82
Interpretation: Net profit ratio establishes the relationship between net profit and net sale it shows the percentages of net profit earned on Sales.Although both the sales and net profit have increased during the above period but the Net Profit Ratio is declining continuously. This is because of the reason that net profits have not increased in the same proportion as of the sales.
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OPERATING PROFIT RATIO: This ratio is calculated as follows: Operating Profit Ratio =
Operating Profit X100 Net Sales
Year
Operating Profit
Sales
Operating Profit Ratio (in %)
(Rs. In crores)
(Rs. In crores)
2010
6612.7
35498.7
18.62
2011
9712.8
42145.6
23.04
Interpretation: In the year 2010 the operating profit is 18.62%. After that it has been consistently gaining momentum in 2011it was 23.4. This is due to the reason that operating expenses have been increased more as compared to sales during the above period consequently reducing the operating profits. This ratio is computed to establish relationship between operating costs and net sales. This ratio indicates the proportion that the cost of sales or operating cost bear to sales.
GROSS PROFIT RATIO
Gross profit ratio
=
Gross profit X Net sales
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100
Year
Gross Profit
Sales
Operating Profit Ratio (in %)
(Rs. In crores)
(Rs. In crores)
2010
262324
35498.7
18.62
2011
159488
42145.6
23.04
Interpretation Gross Profit Ratio provides guidelines to the concern whether it is earning sufficient profit to cover istration and marketing expenses and is able to cover its fixed expenses. The gross profit ratio of current year is compared to previous years’ ratios or it is compared with the ratios of the other concerns. The minor change in the ratio from year to year may be ignored but in case there is big change, it must be investigated..
EARNING PER SHARE:
Earning Per Equity Share = Net Profit after Tax –Prefrence Dividend No. of Equity shares
Year
Net Income Available For Shareholders
No. Of Equity Shares EPS
(Rs. In crores) 2010
748.40
78.563
9.5
2011
962.13
86.254
11.15
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Interpretation: Earnings Per Share is the most commonly used data which reflects the performance and prospects of the company. It affects the market price of shares. Here the Earning Per Share is shows that in the year 2011 Earnings Per share is increasingl due to incline in profits.This ratio helps in evaluating the prevailing market price of the share in the light of profit earning.
Chapter -4 Lesson learnt 47
OBJECTIVE & METHODOLOGY 2.1
SIGNIFICANCE
The Max Life Insurance site is historically significant: It is the location of what may be the first reported archaeological site in Indian, and it is certainly the site of the first excavation in the state to collect archaeological materials. Moreover, the site is archaeologically significant for the information it can yield about one of the four main villages of the Caborn-Welborn culture, and about how inter-community relationships may have changed over time. For the long-range goal of understanding the development and decline of the Caborn-Welborn culture, it is essential to know the site-specific characteristics of each of the remaining main communities. Because the archaeological deposits at Max Life Insurance sites retain integrity on both the ridge crest and in the buried midden deposits along the swale and slough, we can recover some of the kinds of materials and associations needed to characterize this community. 2.2 MANAGERIAL USEFULNESS OF THE STUDY •
Helps to have sale experience
•
Helps to deal with different customers
•
Helps to overcome the objections of the customers
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•
Helps to understand the problems of agents in a broader prospect
•
It provides a platform where managerial role can be played effectively and efficiently
2.3 OBJECTIVES The summer internship program was carried with two prime objectives in mind. The entire internship program was divided into two parts, The recruitment of the insurance advisors A survey conducted on the agent advisors of Max New York Life.
The recruitment of agent advisors is the most important responsibility of a sales manager in any insurance organization. If the manager is able to recruit quality agent advisors half of his work is done then and there. During this internship program I was involved in the recruitment of insurance agent and the advisors under the supervision of the sales manager. This enabled me to get a first hand experience and learning of this important function which will be very helpful in my future. The survey was conducted on the agent advisors of Max New York Life. The main objective behind the survey was to find out the factors which motivated the advisors to perform their maximum potential. The survey also aimed at finding the factors within the organization which would help them work more efficiently. 2.4
SCOPE OF THE STUDY 1) To study the present recruitment and selection process in the organization at various levels,
49
2) To find the awareness level of employees vis-à-vis recruitment and selection policy and 3) To compare the company’s recruitment and selection policy with the best HR
practices in recruitment and selection process.
FINDINGS & RECOMMENDATIONS 1. As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its, importance. There is a large potential for insurance in India. 2. The entrance of private players will increase the competition and it would be a tough task to securea good position in market. 3. Since Max New York Life Insurance is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship. 4. As seen from the survey that at present 70% of the customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 5. As 43% of the customers are even ready to go for insurance if a service provider away from their city is providing it. But in turn they should provide good products and services. The company should try to convince these customers and get them in its favor.
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CONCLUSION Our exhaustive research in the field of Life Insurance threw up some interesting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the immense awareness and knowledge among people about various companies and their insurance products. People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money. People in general have been impressed by the marketing and advertising campaigns of insurance companies. A high penetration of print, radio and Television Ad campaigns over the years is beginning to have it’s impact now. Another heartening trend was in of people viewing insurance as a tax saving and investment instrument as much as a protective one. A very high number of respondents have opted for insurance for such purposes and it shows how insurance companies have been successful to attract public money in recent times. The general satisfaction levels among public with regards to policy and agents still requires improvement. But therein lies the opportunity for a relative player like Max New York Life. LIC has never been known for prompt service or customer oriented methods and Max New York Life can build on these factors.
References 1.
http://www.maxindia.com
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2.
http://www.newyorklife.com
3.
http://www.maxnewyorklife.com
4.
http://www.irda.com
5.
http://www.iciciprudential.com
6.
http://www.lic.com
7.
http://www.idoub.com
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53
54
55
PROFILE OF THE COMPANY
1
MAX NEWYORK LIFE INSURANCE CO. LTD (Max new York life insurance is partnership between Max India ltd.(74%) and New York life insurance (26%).) (ed Office: Max House, 1 Dr. Jha Marg, Okhla, New Delhi - 110020 IRDA Registration No. 104)
Introduction History of Insurance Historians believe that insurance first developed in Sumer & Babylonia. The merchants & traders of these societies transferred & pooled their money to protect themselves from pirates. In the 18th century BC, Babylonian king, Hammurabi developed a code of law known as the code of specific rules governing the practices of early risk-sharing activities. Insurance developed during the 1700’s in the North American colonies. In 1730, Benjamin Frank contributed for the Insurance of Houses from Loss by Fire. The company collected contributions & this money went into an investment fund. Interest on this fund went towards paying claims dividends to those who contributed money. The Industrial Revolution in the US, in the early & mid 1800’s prompted dramatic group. During this time, many companies were establishes to sell life insurance policies & annuities. several shared profits among policy holders, also developed. In addition, some life insurance companies charged s according to age of people & health.
2
Life insurance, in its present form, came to India from the United Kingdom with the establishment of a British firm, Oriental Life Insurance Company in Calcutta in 1818, followed by Bombay Life Insurance Assurance Company in 1823, the Madras Equitable Life Insurance Society in 1829, & the Oriental Government Security Life Assurance Company in 1874. Prior to 1871, Indian lives were treated as sub-standard & charged extra of 15% to 20%. Bombay Mutual Life Assurance Society, an Indian insurer which came into existence in 1871, was the first to cover Indian lives at normal rates. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life insurance business. Later in 1928, the Indian Insurance Companies Act was enacted, to enable the govt. to collect statistical information about both life & non-life insurance business transacted in India by Indian & foreign insurers, including the provident insurance society. Comprehensive arrangements were, however, brought into effect with the enactment of the Insurance Act, 1938. Efforts in this direction continued progressively & the Act was amended in1950, making far reaching changes, such as requirement of equity capital for companies carrying on life insurance business, stricter controls on investment of life insurance companies, ceiling on the expenses of management & agency commission etc. By 1956, 154 insurers, 16 non-Indian insurers & 75 provident societies were carrying on life insurance business in India. On 19th January 1956, the management of the entire life insurance business of 229 Indian insurers & provident insurance societies & the Indian life insurance business of 16 non-Indian life insurance companies then operating in India, was taken over by the central govt. & then nationalized on 1st September 1956 when Life Insurance Corporation came into existence.
3
An ordinance was ed in 1968 to amend the Insurance Act to regulate/control non-life insurance resulting in set up of GIC in 1973. Malhotra committee submitted its report in 1994 & recommended means to reintroduce an element of competition by withdrawing the exclusivity of LIC & GIC. In 1997, Insurance Regulatory Authority (IRA) was established which was later re-styled as IRDA in 1999.
What is Insurance? Insurance is a legal contract that protects people from the financial costs those results from loss of life, loss of health, lawsuits, or property damage. Insurance provides a means for individuals & society to cope up with some of the risks faced in every day life by every body. People purchase contracts of insurance, called a Policy, from various insurance companies. Almost every person existing in this world is associated with insurance, directly or indirectly. Directly, in the sense that he/she has insured his/her life by some kind of insurance policy from any company. Indirectly, in the sense they must have insured the assets of their own for example their house, car, or any thing else. Insurance can be divided into three categories. 1. Life Insurance 2. General Insurance 3. Health Insurance. Life insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity
4
or at specified intervals or at unfortunate death. The contract also provides for payment of periodically to the corporation by the assured. General insurance includes many areas of insurance like marine, motor, engineering, health, fire, etc. The contract provides for the payment of an amount on the happening of some contingency. These types of contracts are annual in nature. OVERVIEW OF INDIAN INSURANCE MARKET The insurance landscape in India is undergoing a tectonic shift. Despite its more than teeming one billion population, India still has a low insurance penetration of 1.95 percent, 51st in the world. Although India boasts a saving rate of around 25 percent, less than 5 percent is spent on insurance. With the entry of competition, the rules of the game have begun to change. The market is already beginning to witness a wide array of products from players whose number is set to grow. In such a scenario, the differentiators among the different players s products, pricing & service. What really increases the appeal of insurance is the benefit of protection of lives & assets from insurance products. Only 22% of the insurable population possesses life insurance. What’s more, in a country over billion people, life insurance forms only 1.8% of GDP indicate the extent of underinsurance. Recognizing the huge potential of the market & the need to make insurance, particularly the life insurance, available on a wider scale, the government opened the industry to private players in 1999 and was flooded with applications. Major international insuresPrudential & Standard life of UK, Sun Life of UK, Sun life of Canada & AIG, MetLife &
5
New York Life of the US, to name a few-tied up with leading companies of India to reach out this vast market. Today, the Indian Insurance industry has a dozen of private players, each of which are making strides in raising awareness level, introducing innovative products & increasing the penetration of life insurance in the vastly underinsured country. The success of effort is noteworthy –private insurers captured nearly 9 percent of new business income in two years of operations. The biggest beneficiary of the competition amongst the life insurers is the consumer. A wide range of products, customer focused service & professional advice has become the mainstay in the industry. It is seen a dramatic increase in customer awareness, with penetration cutting across the socio-economic class & attracting people who have never purchased insurance before. With the heightened awareness comes a willingness to evaluate life insurance as an integral part of financial planning kit a significant change n earlier attitude, where insurance is purchased as a tax saving pool. Not only has there been shift in the perception of life insurance, but also the way t s sold. From being a purely advisors driven business, the sector has seen the emergence of a number of channels, including bank assurance, corporate agents & direct marketing. These channels though very new, are quickly gaining importance because they present customers multiple ways of approaching life insurers. There is also a huge improvement in service attitude & delivery making a customer a focus of each initiative. Technology has come to aid giving the platform, the reach & the ability to
6
service each customer seamlessly. Multiple touch points have emerged – centers, email, facsimile, websites, snail-mails etc.
On the products front, there are two trends that stand out. The days of high guaranteed return products, are over. Products are now priced flexibly, realistically, sustain ably. LIC of India has witnessed a decline in first year in FY03 while private players has witnessed a more than three fold growth because of reduction of guaranteed return products.
First yr income (Rs. CR) Private Players LIC of India
2002-03 982 11,343
2001-02 297 14,843
The other major change is the introduction of liquid, transparent & flexible policies, with linked products leading the brigade.
While such products are more complex, there s a distinct set of investors who find such products appealing. As the market matures, the demand for unit link & related products will only increase.
Advantages of Life Insurance It is superior to an ordinary saving plan:
7
Unlike other saving plans, it affords full protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy; whereas under saving scheme the total accumulated saving alone will be available. The later will be considerably less than the sum assured, if death occurs during early years. 1. Easy settlement & protection against creditors:
The life assured can name person(s) called Nominee to whom the policy money would be payable in the event of his death. The proceeds of a life policy can be protected against the claim of the creditors of the life assured by effecting a valid assignment of the policy. 2. Ready marketability & suitability for quick borrowing:
After an initial period, if the policy holder finds him unable to continue payment of s, he can surrender the policy for a cash sum. Alternatively, ha can tide over a temporary difficulty by taking loan on the sole security of the policy without delay. Further, a life insurance policy is sometimes acceptable as security for a commercial loan. 3. Tax Relief:
The Indian Income-Tax Act allows deduction of certain portion of the
taxable income which is diverted to payment of life insurance s from the total income tax liability. When this tax relief is taken into , it will be found that the assured is in effect paying a lower for his insurance.
The Insurance Regulatory & Development Authority Duties, Powers & Functions
8
Section 14 of IRDA Act, 1999 lays down the duties, powers & functions of IRDA. Subject to the provisions of the Act & any other law for the time being in force, the Authority shall have the duty to regulate, promote & ensure orderly growth of the insurance business & re-insurance business. Without prejudice to the generality of the provisions contained in sub-section(1), the powers & functions of the Authority shall include, 1. Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration. 2. protection of the interests of the policy holders, insurable interest, settlement of insurance claim, surrender value of policy & other & conditions of contracts of insurance. 3. specifying requisite qualifications, code of conduct, & practical training for intermediary or insurance intermediaries & agents; 4. specifying the code of conduct for surveyors & loss assessors; 5. promoting efficiency in the conduct of insurance business;promoting & regulating organizations connected with the insurance & re-insurance business; 6. levying fees & other charges for carrying out the purpose of this Act; 7. calling for information from, undertaking inspection of, conducting enquiries & investigations including audit of the insurers, intermediaries, insurance intermediaries & other organizations connected with the insurance business; 8. control & regulations of the rates, advantages, & conditions that may be offered by insurer in respect of general insurance business not so controlled & regulated by
9
the Tariff Advisory Committee under the section 64U of the Insurance Act, 1938 (4 of 1938); 9. specifying the firm & manner in which books of shall be maintained & statement of s shall be rendered by insurers & other insurance intermediaries; 10. regulating investments of funds by insurance companies; 11. regulating maintenance of margin of solvency; 12. adjudications of disputes between insurers & intermediaries or insurance intermediaries; 13. supervising the functioning of the Tariff Advisory Committee; 14. Specifying the percentage of income of the insurer to finance schemes for promoting & regulating professional organizations referred to in clause(f); 15. Specifying the percentage of life insurance business & general insurance business to be undertaken by the insurer in the rural or social sector; & 16. Exercising such other powers as may be prescribed.
COMPANY PROFILE
10
Max New York Life Insurance Company Ltd. is a t venture between New York Life, a Fortune 100 company and Max India Limited, one of India's leading multi-business corporations. The company has positioned itself on the quality platform. In line with its vision to be the most ired life insurance company in India, it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business. In line with its values of financial responsibility, Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. The Company's paid up capital is Rs. 907.4 crore, which is more than the norm laid down by IRDA. Max New York Life has identified individual agents as its primary channel of distribution. The Company places a lot of emphasis on its selection process, which comprises four stages screening, psychometric test, career seminar and final interview. The agent advisors are trained in-house to ensure optimal control on quality of training. Max New York Life invests significantly in its training programme and each agent is trained for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA before beginning to sell in the marketplace. Training is a continuous process for agents at Max New York Life and ensures development of skills and knowledge through a structured programme spread over 500 hours in two years. This focus on continuous quality training has resulted in
11
the company having amongst the highest agent rate in IRDA examinations and the agents have the highest productivity among private life insurers. 337 agent advisors have qualified for the Million Dollar Round Table (MDRT) hip in 2007. MDRT is an exclusive congregation of the world’s top selling insurance agents and is internationally recognized as the standard of excellence in the life insurance business.
Having set a best in class agency distribution model in place, the company is spearheading a major thrust into additional distribution channels to further grow its business. The company is using a five-pronged strategy to pursue alternative channels of distribution. These include the franchisee model, rural business, direct sales force involving group insurance and telemarketing opportunities, bancassurance and corporate alliances. Max New York Life offers a suite of flexible products. It now has 43 life insurance products and 8 riders that can be customized to over 800 combinations enabling customers to choose the policy that best fits their need.
History Introduction The story of Max is the story of Enterprise, Perseverance, and Credibility. These have enabled our birth, energized our life, and continue to define our path forward. We have 12
tempered Enterprise with Knowledge, Perseverance with Systems and Processes, Credibility with Values and Operating Principles, to create business acumen and culture, uniquely our own. This has led us to believe in People. To recognize human capital as our most vital resource and our greatest intrinsic worth. Enterprise and Knowledge have led us to find the 'new' through the 'unknown'. We have grown with a 'hands on' approach. With the building blocks of Enterprise, Knowledge, and People, we have created diverse businesses from the ground up. Each of these, has emerged as a distinguished organization. Our mature businesses enjoy leadership positions in their area of activity; our emerging businesses are well on their way to creating industry benchmarks. MAX REINVENTS ITSELF After divestment in Hutchison Max, Max India Limited spent a year answering fundamental questions about itself. This was a period of introspection, study, and self-definition. We decided to move away from being a predominantly manufacturing driven business-tobusiness company, and move towards being a service driven business-to-consumer company. We chose service excellence and world-class quality, as over-riding value propositions. Our competitive advantage was identified as: Businesses built on Knowledge, delivered through People, and distinguished by Service Excellence. Each of these offer the potential of developing into institutions, of adding lasting value to people's lives, and optimizing the intrinsic genius of India. Each of these offers Max complementary windows of geographical reach and business maturity.
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Healthcare, at present, is our local business, centered in and around Delhi. Life Insurance has a national reach. Information Technology and Clinical Studies are international in scope. Taken together, they are the 'flags' of Max : Local -Max Healthcare National -Max New York Life International -Neeman Medical International Our entry into these new businesses is part of a paradigm shift. A carefully considered strategic decision, which has chosen these as core businesses, very largely defining the entity that is Max. In the Indian context, these businesses do not have precedents to emulate, and therefore must define the industries they are in. They do not have peers to benchmark against, because no one is quite like them. This gives them the added responsibility of getting everything right the first time round. Business View Core businesses define the 'new' Max. They are mostly in early stages of evolution and growth. These businesses enjoy primacy of interest. Traditional Business The manufacturing driven traditional business, which operates on the business to business mode .
Vision
14
To be one of the India’s most ired corporate for service excellence
Mission •
Establish niche services businesses in life insurance, health care and clinical research
•
Life insurance and health care……….convergence!
•
Rank amongst top 3 players in each niche
•
Partner with best in class world leaders
•
Create service excellence in all business.
PRODUCTS OF MNYL WHOLE LIFE INSURANCE Whole Life Participating Insurance provides an insurance cover that is guaranteed for your entire life. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses. KEY BENEFITS On death of life insured: Sum Assured plus accrued bonuses. On Maturity (attaining age 100): Sum Assured plus accrued bonuses. Bonus: From 3rd policy year, we will declare bonuses every year.
15
Option to Participate in Progressive Bonuses: Allows you to top up your s to purchase additional Sum Assured in your existing policy. It also generates further bonuses. Tax benefits: You are entitled to the following tax benefits under Income Tax Act 1961: •
Your s are eligible for deduction u/s 80C up to Rs.100,000/- every year.
•
Your DD rider s are eligible for an additional deduction u/s 80D up to Rs.10,000/- every year.
•
Your claim amounts (from death, through surrenders or on maturity) are eligible for tax exemption u/s 10(10D).
UNIQUE FEATURES IN THIS POLICY: Bonuses:
You can use your bonuses in the following ways:
Withdraw in cash:
bonus will be paid to you by cheque.
Pay your s:
bonus will be used to pay the next .
Increase your Sum Assured:
bonus will be used to buy additional layers of insurance
cover in the existing policy by buying Paid Up Additions (PUA). Purchase term insurance: bonus will be used to purchase additional coverage valid for one year. Terminal Illness Benefit: Pays 50% of Sum Assured (subject to maximum of Rs. 5,00,000/-) to you in case you are diagnosed to be suffering from a terminal illness that can lead to death in 6 months; you can use this money for your treatment. The balance of the
16
sum assured and the bonuses will be payable to your family on the occurrence of the Insured Event. Non Forfeiture Options: In case you are unable to pay your s, your policy will lapse and we will utilize your cash value to buy you insurance coverage in one of the following ways: Reduced Paid Up: A lower Sum Assured for the remaining term of your policy. Extended Term Insurance: The same Sum Assured for part of the remaining term of your policy.
CHIDREN’S ENDOWNMENT Children's Endowment Participating Insurance to age 18/24 with whole life option enables you to provide for specific needs of your growing children viz •
Child Endowment to Age 18 enables you to provide for higher education of your child.
•
Child Endowment to Age 24 enables you to provide for the best possible wedding of your child and also builds cash value, which you can use during to fund any unforeseen needs by taking a loan. In addition this policy is also eligible for bonuses.
KEY BENEFITS •
On death of life insured: Refund of s plus interest.
•
On Maturity: Sum Assured.
•
On Surrender of Policy: Surrender value.
•
Bonus: From 3rd policy year, we will declare bonuses every year
•
Tax benefits:
17
You are entitled to the following tax benefits under Income Tax Act 1961: •
Your s are eligible for deduction u/s 80C up to Rs.100,000/- every year.
•
Your claim amounts (from death, on maturity or through surrenders) are eligible for tax exemption u/s 10(10D)
Unique features in this policy Cash Bonuses: Bonus will be paid to you by cheque. Non Forfeiture Options: In case you are unable to pay your s, your policy will lapse and we will utilize your cash value to buy you insurance coverage in the following way: Reduced Paid Up : A lower Sum Assured for the remaining term of your policy. In case you do not want the above, you can choose to take cash value by cheque. •
Upon your child attaining the age of 18, he/she will have the option to buy a permanent life insurance policy without medical underwriting (irrespective of his/her health at that time).
•
On maturity of the policy, the benefits payable under the policy shall automatically vest with your child – so that your child receives the benefits
LIFE PARTNER PLUS
18
KEY BENEFITS On death of life insured: Initial Sum Assured Plus Sum Assured of Paid Up Additions through bonuses On survival: Money backs @ 7.5% of the Initial Sum Assured will be paid on each policy anniversary from age 61 to 75. On maturity: 100% of Sum Assured with Sum Assured of Paid Up Additions, if any. On Surrender of Policy: Surrender value. Limited Payment term: You can choose to pay the s over 4 i.e. 3 years, 7 years, 10 years or 20 years. Bonus: From 3rd policy year, we will declare bonuses every year. Tax benefits: You are entitled to the following tax benefits under Income Tax Act 1961: 1.
1. Your s are eligible for deduction u/s 80C up to Rs.100,000/- every year.
2.
2. Your DD rider s are eligible for an additional deduction u/s 80D up to
Rs.10,000/- every year. 1.
3. Your claim amounts (from death, on maturity, or Money Backs or through
surrenders) are eligible for tax exemption u/s 10(10D).
Unique features in this policy: Bonuses: You can use your bonuses in the following ways:
19
Withdraw in cash: bonus will be paid to you by cheque. Pay your s: bonus will be used to pay the next . Increase your Sum Assured: bonus will be used to buy additional layers of insurance cover in the existing policy by buying Paid Up Additions (PUA). Terminal Illness Benefit: Pays 50% of Sum Assured (subject to maximum of Rs. 5,00,000/-) to you in case you are diagnosed to be suffering from a terminal illness that can lead to death in 6 months; you can use this money for your treatment. The balance of the sum assured and the bonuses will be payable to your family on the occurrence of the Insured Event. Non Forfeiture Options: In case you are unable to pay your s, your policy will lapse and we will utilize your cash value to buy you insurance coverage in one of the following ways: Reduced Paid Up: A lower Sum Assured for the remaining term of your policy. Extended Term Insurance: The same Sum Assured for part of the remaining term of your policy.
LIFE GAIN PLUS ENDOWMENT Life Gain™ Plus Endowment (Participating) Policy Provides you with an insurance cover that is guaranteed during the tenure of the policy. This policy also builds cash value, which you can use during your lifetime to fund any unforeseen needs either by surrendering accumulated
20
PUAs (explained below) or taking a loan. In addition this policy is also eligible for bonuses.
KEY BENEFITS On death of life insured: In the first 5 years - Sum Assured plus additional insurance coverage purchased from bonuses. After 5 years - Double the Sum Assured plus additional insurance coverage purchased from bonuses. 1.
On maturity: Sum Assured plus accrued bonus plus Guaranteed Additions @ 10%
of Sum Assured. On Surrender of Policy: Surrender value. Bonus: From 3rd policy year, we will declare bonuses every year. 1.
Dread Disease (DD) Rider: Pays a lump sum amount in case you contract any of the
ten diseases covered e.g. Heart Attack, Cancer, etc. 2.
Personal Accident Benefit (PAB) Rider: Pays additional insurance coverage in case
of death or disability caused by an accident. 3.
Term / Term R&C Riders: Offers additional Sum Assured to match your changing
needs. The R&C also allows you the freedom to buy a fresh insurance plan later in your life. 4.
Waiver of (WOP) / Payor Riders: Waives your future s in case
you suffer total disability. The payor rider waives future s on your child’s policy in case you suffer total disability. 21
Unique features in this policy: 1.
Bonuses: You can use your bonuses in the following ways:
1.
Withdraw in cash: bonus will be paid to you by cheque.
2.
Pay your s: bonus will be used to pay the next .
3.
Increase your Sum Assured: bonus will be used to buy additional layers of
insurance cover in the existing policy by buying Paid Up Additions (PUA). 2.
Limited period of payment: so that you pay only during the years that
you are earning, while you enjoy the insurance coverage for a longer period. 3.
Terminal Illness Benefit: Pays 50% of Sum Assured (subject to maximum of Rs.
5,00,000/-) to you in case you are diagnosed to be suffering from a terminal illness that can lead to death in 6 months; you can use this money for your treatment. The balance of the sum assured and the bonuses will be payable to your family on the occurrence of the Insured Event. 4.
Non Forfeiture Options: In case you are unable to pay your s, your policy
will lapse and we will utilize your cash value to buy you insurance coverage in one of the following ways: 1.
Reduced Paid Up: A lower Sum Assured for the remaining term of your policy.
2.
Extended Term Insurance: The same Sum Assured for part of the remaining
term of your policy.
22
MARKET PROFILE •
Wide range of Products and Services.
•
41 years experience as investment advisors and Financial Planners
•
More than Seven Lakh satisfied clients all over India
•
Countrywide network of 109 branches
•
Over 12000 NRI clients across the globe.
•
Personalized wealth management advice.
•
24x7 online accessibility through www.maxnewyorklife.com
•
Strong team of qualified and experience professional including CAs, MBAs,MBEs, CFPs,CSs and others.
•
SEBI- Approved Category I Merchant Bankers.
•
Group Co. BCIBL is an IRDA – licensed Direct Insurance Broker.
ORGANISATION STRUCTURE MANAGEMENT
BOARD OF DIRECTORS:
Analjit Singh
Gary R. Bennett
Chairman, Max India Limited
Managing Director and CEO, Max New York Life Insurance
23
Ted Mathas
Anuroop 'Tony' Singh
President & Chief Operating Officer, New York Life Insurance
Vice Chairman, Max New York Life Insurance
MANAGEMENT TEAM: Rajesh Sud
Sunil Sharma
Managing Director and CEO, Max New York Life
Chief Operating Officer and Executive Director
Rajit Mehta Executive Director, Human Resources, Training and Internal Communications
Rajesh Sud Executive Director, Distribution Sunil Kakar
Anil Mehta Director, Group Business
Director and Chief Financial Officer
Ajay Seth
Debashis Sarkar
Director, Legal & Compliance
Director - Marketing, Product Management and Corporate Affairs
John Poole Chief Actuary
Research Methodology:
24
Data Collection Method: The survey conducted is of structured and direct type. This is done through telephone and personal interviews. Questionnaire Design: The following seven steps have been followed while deg the questionnaire. 1. Preliminary decision: Exactly what information is required, who are the respondents and what method of communication will be used to reach the respondents are determined. 2. Decisions about the question content: Questions are designed taking into
required information and capability and willingness of respondents. 3. Decisions concerning question phrasing: Questions are phrased taking into the following factors. a) These mean same to all the respondents b) No words and phrases are loaded in any way. c) Are there any implied alternatives in the question? d) Are there any unstated assumptions related to the question? e) Will the respondent approach the question from the frame of reference desired by me? 4. Decisions about response format: Can this question be asked as an open ended, multiple choice or dichotomous question? 5. Decision concerning question sequence: Are the questions organized in a logical manner that avoids introducing errors?
25
6. Decisions on the layout of the questionnaire: Is the questionnaire designed in a manner to avoid confusion and minimize recording error? 7. Pretest and revise: The final questionnaire has been subjected to a thorough pretest using respondents similar to those who have included in the final survey.
Sampling Plan: 1. Define the population: The population for the present research has been defined as 2. MNYL customers with high s preferably HNIs. 3. Specify sampling frame: As the sample taken here is not a probability sample hence sampling frame is not required. 4. Specify sampling unit: Here sampling unit and element are same. Source of the data is the database of customers provided by MNYL. 5. Selection of sampling method: In this case a non probability judgment sample is taken. A representative sample is taken using judgmental selection procedures considering cost versus value principle. 6. Determination of sample size: applying cost versus value principle it has been decided that sample size would be 40. 7. Specify sampling plan: The sampling plan involves the specification of how each of the decisions made thus far is to be implemented.
26
8. Select the sample: The final step in the sampling process is the actual selection of
sample
elements.
Recommendation by various groups
10% 25%
Friends & Relatives ment(Prin t Media) Television
10% 50%
5%
Agent Others
Most of the people like to invest in whole life insurance plan.
27
LIC
12
ICICI prudential
10
bajaj allianz
8
HDFC standard life
6
kotak
4
sahara
2
reliance 0
1
aviva ING
LIC is on number one. Private players are still behind. Interpretation: From Factor Analysis results we can say that four major factors drive satisfaction in customers about Life Insurance. These are given below. 1. Value for money: This factor comprises subfactors Price, Coverage, Financial
stability & Reputation of the company. 2. Reference: This factor comprises subfactors Relationship with agent and
Recommendations by friend or acquaintance. 3. Company proactiveness: This factor comprises subfactors Role of agent as financial
analyst without consultation fee and the company’s willingness to insure. 4. Customer service: This factor comprises subfactors Service provided by agent and
Service provided by company. Limitations
28
1. No proper after sales follow up 2. Not making people aware about the different products of the company 3. Advisors are more target oriented rather than people oriented. Recommendations: 1. Renewal reminder may be given through SMS 2. Customers’ need identification is to be improved. 3. 4 Major factors driving customer satisfaction may be focused on while developing and selling policies 4. A proper follow up should be made after sales to know customer satisfaction level.
Conclusion As per the objective of my project we can conclude that the customer whom I have approached for advisor ship showed a good response in associating themselves in MNYL. Most of the people turned up and finally became the advisor of MNYL. Customer satisfaction survey made with the help of questionnaire and personal interview helped me in observing that 87% of the customers surveyed were satisfied with the service of MNYL which they provide in the form of timely reminder for s, acknowledging people with latest schemes and offerings.
Questionnaire Customer satisfaction survey 1. Name:
29
2. Gender:
M/F
3. Designation: 4. Marital status:
married / single
5. Organization: 6.who recommended you MNYL a. friends and relative
b. ment(print media)
c. agent
d. tele vision
e. others 7. did you come to branch or an agent visit to your place a. office
b. agent
8. How did you find the agent on following parameters a. punctuality c courtesy
e. responsible
b. softness d. knowledge
f. confidence
9. In which plan would you like to invest a. whole life insurance
b. children plan
30
c. pension plans d. endowment plans 13. Which organization would you prefer for investment other than MNYL a. L.I.C
b. ICICI prudential
c. Bajaj allianz
d. HDFC standard life
CHAPTER 2 SWOT ANALYSIS OF THE COMPANY
31
SWOT ANALYSIS STRENGTHS •
The Investment Banking Group, a crack term of highly qualified, experienced and motivated professionals, delivers Max newyork life insurance’s Investment Banking Service.
•
Max newyork life insurance is a strongly research-driven organization. The Max newyork life insurance centre for Investment Research comprises highly qualified and talented professional who constantly monitor the market and collect, collate, analyes and disseminate valuable information.
•
With over 120 offices in 50 cities and a network of over 10,000 Advisor Associate, we assure you a pan-India reach.
•
Max newyork life insurance enjoys a extremely cordial relationship with major institution in the financial markets such as banks, insurance companies, mutual fund houses, PF Trust, educational trust, act.
32
WEAKNESSES
•
The systems are not automobile so manual intervention is reqired.hence process becomes time consuming.
•
Limited expose for Max newyork life insurance is 4 times as compared to other competitive firms it is 10-12 times.
•
No categorization of stock e.g they treat reliance as same as that of any low category companies.
•
No major from research team for short term investment.
OPPORTUNITIES •
India is one of the few developing economy growing at a rate of 6-7%. Whereas rest of the world is either contracting or growing at a rate of 1% or less and financial service sector is 1 of the major growing sector.
•
Out of total population around 100 crore people 4 crore have de-mat .
•
Max Newyork life insurance
has client conservative approach so by using the
strategy the client should make more profits as compared to other. •
Indian economy is becoming a default destination for global investors, hence foreign funds for this year is close to 66000crore hence Indian stock markets are booming so bajaj can capitalized on this growing phase of Indian stock markets.
THREATS
33
•
Well-established players like India bulls, kotak, etc. they are offering higher services to the clients hence they are tough in breaking.
•
Infrastructure ing is very less so client face lot of issue because of technology.
•
They do not provide funding to clients as other firms do.
CHAPTER-3 ANALYSIS OF FINANCIAL REPORT
34
FINANCIAL STATEMENT ANALYSIS Financial analysis is the selection, evaluation, and interpretation of financial data, along with other pertinent information, to assist in investment and financial decision-making. Financial analysis may be used internally to evaluate issues such as employee performance, the efficiency of operations, and credit policies, and externally to evaluate potential investments and the credit-worthiness of borrowers, among other things. The analyst draws the financial data needed in financial analysis from many sources. The primary source is the data provided by the company itself in its annual report and required disclosures. The annual report comprises the income statement, the balance sheet, and the statement of cash flows statements. Financial statement analysis is important to boards, managers, payers, lenders, and others who make judgments about the financial health of organizations. One widely accepted method of assessing financial statements is ratio analysis, which uses data from the balance sheet and income statement to produce values that have easily interpreted financial meaning. With a great
understanding of the balance sheet & p&l and how it is constructed, we can look at some techniques to analyze the information contained within the balance sheet & P&L .
35
Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements we mean two statements: 1. Profit and loss or Income Statement 2. Balance Sheet or Position Statement 3. Cash Flow Statement 4. Ratio Analysis
Profit and loss or Income Statement A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement".
Balance Sheet or Position Statement A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity
Cash Flow Statement The cash flow statement shows how much cash comes in and goes out of the company over the quarter or the year. At first glance, that sounds a lot like the income statement in that it
36
records financial performance over a specified period. But there is a big difference between the two.
Ratio Analysis: A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis. PURPOSE: The main purpose of analyzing the financial statement are the following:•
To assess past performance and current financial position.
•
To make predictions about the future performance of a company
Financial Statement of the company
•
Total Revenue increased by 20% to Rs. 5,813 crores in 2010-11 over previous year.
•
First Year recorded a growth of 11 % over previous year to Rs. 2,061 crores in 2010-11.
•
Renewal income grew by 25% over previous year to Rs. 3,751 crores in 2010-11.
•
Net Profit has increased to Rs. 283 crores, 12 times higher than previous year.
•
Assets under management rose to Rs. 13,836 crores, a growth of 37% over last year.
37
•
The cost to ratio improved 400 basis points to 38%.
•
Has amongst the highest conservation ratio at 82%.
•
Solvency capital ratio at 365% was significantly higher than the mandated 150%.
•
Cumulative sum assured is over Rs. 1,54,000 crores, up by 25% over previous year.
Financial Year (FY) 2010-11 (April 2010 – March 2011) compared with FY 2009-10 (April 2009 – March 2010). Revenue The Total Revenue for FY 2010-11 increased by 20% to Rs.5,812 crore with new business growing 11% to Rs.2,061 Crore and the renewal recording a growth of 25% to Rs.3,751 crore. (31 Mar ‘11) (Rs.(31 Mar ’10) (Rs.Change % Income
Crs) 5,812
Crs) 4,861
20%
Sum Assured in force
154,687
123,288
26%
10,116
37%
24
1079%
Asset
Under13,836
Management Profit for the year
283
Max New York Life believes Adjusted Individual First Year is the true indicator to measure new business success. During the financial year 2010-11, on this parameter, the company achieved income of Rs. 1,726 Crore recording a growth of 9% over the previous financial year where as both the industry and private players have recorded a decline of 8% and 20% respectively. Consequently the private market share of the company also increased by 199 bps to 7.5%.
38
Post 1st September 2010, after the new ULIP guidelines came into force, Max New York Life Insurance has outperformed the industry every month. Cumulatively, in this seven months period the total industry and private insurers recorded a decline of 19% and 35% respectively while Max New York Life grew by 10%. The company’s conservation ratio which is amongst the highest at 82% is testimony to its commitment towards customers. Cost Management During the year the company undertook cost management initiatives which had its impact during the last quarter of the year and its full year impact would be visible in Financial Year 2011-12. The cost ratio improved 4 percentage points to 38%. Net Profit During the FY 2010-11, Max New York Life Insurance, recorded the Net Profit of Rs.283 crore, 12 times the profit recorded in the previous year. This impressive rise in net profit was a result of continued revenue growth coupled with better productivity and cost efficiency. Solvency Margin & Capital The solvency margin of the company stood at 365% for FY 2011 as compared to 322% for the corresponding period previous year. Max New York Life maintained more than 2 times solvency margin as compared to the margin mandated by IRDA. The company’s paid up capital (including share ) as on March 31st 2011 was at Rs. 1,976 crs. Sum Assured and Assets Under Management
39
The total sum assured increased to Rs. 1,54,687 crore recording a growth of 26%. This increase in sum assured is an outcome of the company’s enhanced focus on long-term savings and protection. During the financial year 2010-11 the Assets Under Management recording a growth 37% to Rs.13,836 Crore.
RATIO ANALYSIS CURRENT RATIO Current Ratio
Year
=
Current Asset Current Liability
Current Assets
Current Liabilities
Current Ratio
(Rs. In crores)
(Rs. In crores)
2010
6294.01
8378.04
0.75
2011
6765.39
10834.99
0.62
Interpretation: An ideal solvency ratio is 2. The ratio of 2 is considered as a safe margin of solvency due to
40
the fact that if current assets are reduced to half (i.e.) 1 instead of 2, then also the creditors will be able to get their payments in full. But here the current ratio is less than 1 and more than 0 which shows that the current assets less to the current liabilities which is not satisfactory as the safety margin is very less or zero. Therefore company should keep more current assets so that it can maintain a satisfactory safety margin
LIQUIDITY RATIO: Quick Ratio =
Total Quick Assets Total Current Liabilities
Quick Assets = Total Current Assets – Inventory
Year
Total Quick Assets
Quick Ratio
(Rs. In crores)
Total Current Liabilities (Rs. In crores)
2010
5845.45
8378.04
0.69
2011
6199.28
10834.99
0.57
Interpretation: A quick ratio of 1:1 is considered favourable because for every rupee of current liability, there is at least one rupee of liquid assets. A higher value of ratio is considered favourable. Here this ratio is less than 1 in both of the previous as well as current year which is close to 1 which i.e. not satisfactory. This means the company has not managed its funds properly in this particular period. Therefore they should rationally utilise its funds to maintain an ideal liquid ratio.
DEBT EQUITY RATIO 41
Debt equity ratio Debt
=
Equity =
Year
= Debt Equity
Debt means long term loan shareholder’s fund + reserve
Debt
Equity
Debt Equity Ratio
(Rs. In crores)
(Rs. In crores)
2010
25931.44
19729.61
1.31
2011
35761.82
19761.82
1.8
Interpretation: The ratio shows the extent to which funds have been provided by long-term creditors as compared to the funds provided by the owners. Here the Debt-Equity ratio for the above period is always high. This shows more relying on outside funds as compared to internal sources of capital, in its capital structure. From the long-term lenders point of view this ratio is not satisfactory.
PROPRIETORY RATIO: Proprietory Ratio = Shareholder’s Fund Total Assets
42
Years
Shareholder's Funds
Total Assets
Proprietory Ratio
(Rs. In crores)
(Rs. In crores)
2010
19761.82
71702.01
0.27
2011
19729.61
90388.42
0.21
Interpretation: Proprietory Ratio estalishes the relationship between proprietors fund and total assets. Proprietory ratio was 27% in 2010, after that was 21% in year 2011. Hence it leads to the conclusion
owners have More than 20% stake in the total assets of the bank. It is good sign as far the long term solvency is concerned.
FIXED ASSETS TURNOVER RATIO: Fixed Assets Turnover Ratio = Cost of goods sold or Sales Net Fixed Assets Year
Sales
Net Fixed Assets
(Rs. In crores)
(Rs. In crores)
2010
3549.87
2744.51
1.29
2011
4214.56
1400.98
3.08
43
Fixed Assets Turnover Ratio
Interpretation: The objectives of calculating fixed asset turnover ratio is to establishes whether the investment in fixed asset justified in raltion to the sales achived.The fixed assets turnover ratio has been consistently increasing. It indicates that fixed assets have been effectively used in the business without much additional investment in the period of study and also the capital is not blocked in fixed assets
NET PROFIT RATIO Net profit ratio
=
Net profit X
100
Net sales Year
Net Profit
Sales
Net Profit Ratio
(Rs. In crores)
(Rs. In crores)
(in %)
2010
748.40
3549.87
21.08
2011
962.13
4214.56
22.82
Interpretation: Net profit ratio establishes the relationship between net profit and net sale it shows the percentages of net profit earned on Sales.Although both the sales and net profit have increased during the above period but the Net Profit Ratio is declining continuously. This is because of the reason that net profits have not increased in the same proportion as of the sales.
44
OPERATING PROFIT RATIO: This ratio is calculated as follows: Operating Profit Ratio =
Operating Profit X100 Net Sales
Year
Operating Profit
Sales
Operating Profit Ratio (in %)
(Rs. In crores)
(Rs. In crores)
2010
6612.7
35498.7
18.62
2011
9712.8
42145.6
23.04
Interpretation: In the year 2010 the operating profit is 18.62%. After that it has been consistently gaining momentum in 2011it was 23.4. This is due to the reason that operating expenses have been increased more as compared to sales during the above period consequently reducing the operating profits. This ratio is computed to establish relationship between operating costs and net sales. This ratio indicates the proportion that the cost of sales or operating cost bear to sales.
GROSS PROFIT RATIO
Gross profit ratio
=
Gross profit X Net sales
45
100
Year
Gross Profit
Sales
Operating Profit Ratio (in %)
(Rs. In crores)
(Rs. In crores)
2010
262324
35498.7
18.62
2011
159488
42145.6
23.04
Interpretation Gross Profit Ratio provides guidelines to the concern whether it is earning sufficient profit to cover istration and marketing expenses and is able to cover its fixed expenses. The gross profit ratio of current year is compared to previous years’ ratios or it is compared with the ratios of the other concerns. The minor change in the ratio from year to year may be ignored but in case there is big change, it must be investigated..
EARNING PER SHARE:
Earning Per Equity Share = Net Profit after Tax –Prefrence Dividend No. of Equity shares
Year
Net Income Available For Shareholders
No. Of Equity Shares EPS
(Rs. In crores) 2010
748.40
78.563
9.5
2011
962.13
86.254
11.15
46
Interpretation: Earnings Per Share is the most commonly used data which reflects the performance and prospects of the company. It affects the market price of shares. Here the Earning Per Share is shows that in the year 2011 Earnings Per share is increasingl due to incline in profits.This ratio helps in evaluating the prevailing market price of the share in the light of profit earning.
Chapter -4 Lesson learnt 47
OBJECTIVE & METHODOLOGY 2.1
SIGNIFICANCE
The Max Life Insurance site is historically significant: It is the location of what may be the first reported archaeological site in Indian, and it is certainly the site of the first excavation in the state to collect archaeological materials. Moreover, the site is archaeologically significant for the information it can yield about one of the four main villages of the Caborn-Welborn culture, and about how inter-community relationships may have changed over time. For the long-range goal of understanding the development and decline of the Caborn-Welborn culture, it is essential to know the site-specific characteristics of each of the remaining main communities. Because the archaeological deposits at Max Life Insurance sites retain integrity on both the ridge crest and in the buried midden deposits along the swale and slough, we can recover some of the kinds of materials and associations needed to characterize this community. 2.2 MANAGERIAL USEFULNESS OF THE STUDY •
Helps to have sale experience
•
Helps to deal with different customers
•
Helps to overcome the objections of the customers
48
•
Helps to understand the problems of agents in a broader prospect
•
It provides a platform where managerial role can be played effectively and efficiently
2.3 OBJECTIVES The summer internship program was carried with two prime objectives in mind. The entire internship program was divided into two parts, The recruitment of the insurance advisors A survey conducted on the agent advisors of Max New York Life.
The recruitment of agent advisors is the most important responsibility of a sales manager in any insurance organization. If the manager is able to recruit quality agent advisors half of his work is done then and there. During this internship program I was involved in the recruitment of insurance agent and the advisors under the supervision of the sales manager. This enabled me to get a first hand experience and learning of this important function which will be very helpful in my future. The survey was conducted on the agent advisors of Max New York Life. The main objective behind the survey was to find out the factors which motivated the advisors to perform their maximum potential. The survey also aimed at finding the factors within the organization which would help them work more efficiently. 2.4
SCOPE OF THE STUDY 1) To study the present recruitment and selection process in the organization at various levels,
49
2) To find the awareness level of employees vis-à-vis recruitment and selection policy and 3) To compare the company’s recruitment and selection policy with the best HR
practices in recruitment and selection process.
FINDINGS & RECOMMENDATIONS 1. As the people think that insurance is a tool to protect their family & a tax saving device. They are aware of the fact & realizing its, importance. There is a large potential for insurance in India. 2. The entrance of private players will increase the competition and it would be a tough task to securea good position in market. 3. Since Max New York Life Insurance is leading with several companies’ policies it should be easy for them to penetrate into the market and secure a good position if they pay greater attention to the service part provided to their customer and thereby forming a long and trusted relationship. 4. As seen from the survey that at present 70% of the customer are having insurance policy out of which 87.5% of the customer are planning for new investments. So it can be a good potential for the company and they should make an attempt to trap these customers. 5. As 43% of the customers are even ready to go for insurance if a service provider away from their city is providing it. But in turn they should provide good products and services. The company should try to convince these customers and get them in its favor.
50
CONCLUSION Our exhaustive research in the field of Life Insurance threw up some interesting trends which can be seen in the above analysis. A general impression that we gathered during Data collection was the immense awareness and knowledge among people about various companies and their insurance products. People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money. People in general have been impressed by the marketing and advertising campaigns of insurance companies. A high penetration of print, radio and Television Ad campaigns over the years is beginning to have it’s impact now. Another heartening trend was in of people viewing insurance as a tax saving and investment instrument as much as a protective one. A very high number of respondents have opted for insurance for such purposes and it shows how insurance companies have been successful to attract public money in recent times. The general satisfaction levels among public with regards to policy and agents still requires improvement. But therein lies the opportunity for a relative player like Max New York Life. LIC has never been known for prompt service or customer oriented methods and Max New York Life can build on these factors.
References 1.
http://www.maxindia.com
51
2.
http://www.newyorklife.com
3.
http://www.maxnewyorklife.com
4.
http://www.irda.com
5.
http://www.iciciprudential.com
6.
http://www.lic.com
7.
http://www.idoub.com
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53
54
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