Industry Analysis

Industry: NBFC / Insurance Company: HDFC Life Insurance HDFC Standard Life Insurance Company Limited (HDFC Standard Life) is one of the leading private life insurance companies in India. The company offers a complete range of group and individual insurance solutions. The company serves various customer needs such as Protection, Pension, Savings, Investment and Health with its 25 retail and nine group products in its portfolio, along with ten optional rider benefits. The company offers these products and services through over 481 branches servicing customer needs in over 940 cities and towns across India. HDFC Standard Life is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom. HDFC Ltd. holds 72.37% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others. It was established on 14th August 2000 with registration granted on 23rd October 2000 and was the first private player in insurance sector after LIC. It is headquartered in Mumbai, Maharashtra, India. Its top management includes Mr. Deepak S Parekh (Chairman), Mr. Amitabh Chaudhary (Managing Director & Chief Executive Officer), Ms Vibha Padalkar, (Chief Financial Officer) and Mr. Paresh Parasnis (Executive Director & Chief Operating Officer, who recently quit) and had 13,827 employees as of 31st March 2012. The Companys bancassurance partners include HDFC Bank, Indian Bank and Saraswat Bank.

Financial Performance: The industry (including public sector insurer) witnessed de-growth of almost 3% on Overall (Individual & Group) Weighted Received Premium (WRP) basis and of 5% on an Individual WRP basis during the financial year 2011-2012. However, HDFC Life registered a growth of 13% in total premium. First Year regular premium registered degrowth of 7%, while individual renewal premium registered a growth of 29%. Total premium amounted to Rs. 10,202 crores with Rs. 6369 as renewal premium. Conservation ratio rose to 81% and sum assured in force for the overall business stood at Rs.138,718 crores for the year ended March 2012. Companys market share in the private life space (individual business) moved to 15.5% during the FY 2011-12 from 12.9% in the preceding year. The Company recorded Indian GAAP profits of Rs. 271 crores in FY2011-12. The Companys Assets Under Management (AUM) registered a growth of 21.7% and stood at Rs. 32,254 crores as on 31 March 2012.

Strengths: HDFC Life is the first private life insurance company to get license from IRDA. HDFC has great image in India while Standard Life is very popular internationally. So, the alliance gets a strong brand backing. 2nd ranked in private life insurance providers. Largest distribution network among the private life insurers. Strong Financial Expertise and popular advertising. E.g. Sar Utha ke Jiyo slogan. Strong capital and reserve base. Ranked amongst Best Places to work for last two years. Has been voted as Indias most respected private insurance company by Business World. Strong and well spread network of financial consultants, over 100,000. Huge basket of product range suitable for all income and age group with product customization for individual needs. Weaknesses: Less number of branches compared to nearest competitor. Poor retention rate of tied up agents. Heavy management expenses and administrative costs. Poor rural presence. Controversies like job cuts, racism and data loss have affected image. Not enough knowledge among employees about insurance products and commission rates. The company enjoys bad level of Consumer Satisfaction Level (CSL) of 3.28. This is evident from the large number of Consumer Cases filed against it i.e. 122. Opportunities: As per IRDA, 80% of Indias 1.2 billion people have no insurance cover. So there is a huge opportunity of life insurance in India. People are being aware about investment, so from investment point of view, there is huge potential for ULIP products. Growing rural market and better opportunities in the semi-urban areas. Group Insurance through large employers.

Threats: Other private players like ICICI prudential, are also vying for the same uninsured population.

Big public sector insurance companies like LIC enjoy people trust and confidence more as compared to private players. Economic instability, global crisis and Sensex downfall is a big threat to ULIP products. Most people dont understand the need or are unwilling to take insurance policies in general.

References: http://www.hdfclife.com/sites/HSFCSL/Resources/AboutUs/AboutUSDoc/Annual%20Report %202012.pdf http://www.techgig.com/company/HDFC-Standard-Life-Insurance-Company-Ltd-1283 http://www.consumerdaddy.com/consumer-reviews-of-hdfc-standard-life-insurancecompany-limited-c-149.htm http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=870765 3 http://economictimes.indiatimes.com/news/news-by-company/corporateannouncement/hdfc-standard-life-coo-quits/articleshow/14642317.cms