INDUSTRIAL TRAINING REPORT

An Organizational Study of

Bharti-AXA Life Insurance Co. Ltd.

&

Risk Analysis of Bharti-AXA Life Insurance ULIP Funds – A Study

This Industrial Training Report is submitted in partial fulfillment of the requirements for the
award of the Degree of

MASTER OF BUSINESS ADMINISTRATION

of

BANGALORE UNIVERSITY

This training has been undertaken by

Naina Monica Pranesh Lazarus

Reg. No. 09VWCMA056

Under the guidance and support of

Poonam Nam Joshi M S Dilip

Professor Agency Manager

Alliance Business Academy Bharti-AXA Life Insurance

ALLIANCE BUSINESS ACADEMY

BANGALORE-560 076

1
 Batch: 2009-2011

DECLARATION

I, Naina Lazarus, studying at Alliance Business Academy, hereby state that this
industrial training report titled “Risk Analysis of Bharti-AXA Life Insurance ULIP
Funds - A Study” carried out at Bharti-AXA Life Insurance Co. Ltd., is submitted in
partial fulfilment of the requirement of the MBA Program of Bangalore University, is
an original work carried out by me under the guidance and supervision of Poonam Nam
Joshi, faculty guide & M S Dilip, industry guide, and that the project or any part thereof
has not been previously submitted for a degree/diploma of any University/ Institution
elsewhere.

Date: 20th August 2010

Place: Bangalore

Naina Lazarus

Reg. No. 09VWCMA056

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 ACKNOWLEDGEMENT

The satisfaction that accompanies the successful completion of task would be incomplete
without the mention of the people who have made it possible and whose consent, guidance and
encouragement served as a guiding light for the completion of the study.

I would like to express my profound sense of gratitude to Prof. Sudhir Angur, President,
Alliance Business Academy for providing constant source of inspiration and the support to
conduct this research. I would also like to thank Prof. Prabhakaran and Prof. Rajasekhar for
providing constant source of inspiration and the support to conduct this research.

With a deep sense of gratitude, and indebtedness, I sincerely & whole-heartedly thank Mr. M S
Dilip (Agency Manager) and Mrs. Latha Balasubramanian (Branch Head), Bharti-AXA Life
Insurance Co. Ltd. for giving me an opportunity to conduct this study & for being a guiding
factor in all the steps of my internship and report, which has been a rewarding experience.

I would like to thank my guide, Prof. Poonam Nam Joshi and our program manager Prof.
Smitha Shenoy for their continuous guidance and support in bringing out this project.

I also express my deep gratitude to my family and friends, whose cooperation, wishes and help,
have made this project possible.

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 Naina Lazarus

TABLE OF CONTENTS

Chapter Page
Topic
No. No.

EXECUTIVE SUMMARY

1 INDUSTRY PROFILE

1.1 Overview of the Indian Economy

1.2 Insurance Industry

2 COMPANY PROFILE

2.1 Introduction

2.2 Functional Departments

3 RESEARCH DESIGN

3.1 Statement of the Problem

3.2 Title of the Study
3.3 Objectives of the Study

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3.4 Scope of the Study

3.5 Operational Definitions

3.6 Research Methodology

4 DATA ANALYSIS

4.1 Introduction

4.2 Analysis and interpretation

5 FINDINGS, SUGGESTIONS & CONCLUSION

5.1 Summary of Findings

5.2 Suggestions

5.3 Conclusion

MY LEARNING

BIBLIOGRAPHY

ANNEXURE

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 LIST OF TABLES

Page
Sl. No. Particulars
No.

4.1 Table showing asset allocation & risk-return potential of the different funds

4.2 Table showing calculation of Value at Risk (VaR)

4.3 Table showing conversion of VaR to a different time period

4.4a Table showing range of returns for Steady Money Fund

4.4b Table showing frequency distribution for Steady Money Fund

4.4c Table showing SD, VaR & maximum loss for Steady Money Fund

4.5a Table showing range of returns for Save ‘n’ Grow Money Fund

4.5b Table showing frequency distribution for Save ‘n’ Grow Money Fund

4.5c Table showing SD, VaR & maximum loss for Save ‘n’ Grow Money Fund

4.6a Table showing range of returns for Safe Money Fund

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4.6b Table showing frequency distribution for Safe Money Fund

4.6c Table showing SD, VaR & maximum loss for Safe Money Fund

4.7a Table showing range of returns for Grow Money Plus Fund

4.7b Table showing frequency distribution for Grow Money Plus Fund

4.7c Table showing SD, VaR & maximum loss for Grow Money Plus Fund

4.8a Table showing range of returns for Growth Opportunities Plus Fund

4.8b Table showing frequency distribution for Growth Opportunities Plus Fund

Table showing SD, VaR & maximum loss for Growth Opportunities Plus
4.8c
Fund

4.9a Table showing range of returns for Build India Fund

4.9b Table showing frequency distribution for Build India Fund

4.9c Table showing SD, VaR & maximum loss for Build India Fund

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 LIST OF CHARTS/GRAPHS

Sl. Page
Particulars
No. No.

1.1 Chart showing the market share of Life Insurance Companies in India

2.1 Chart showing the organisation structure

2.2 Chart showing the recruitment process

2.3 Chart showing the sales process

4.1 Graph showing the distribution of daily returns of Steady Money Fund

Graph showing the distribution of daily returns of Save ‘n’ Grow Money
4.2
Fund

4.3 Graph showing the distribution of daily returns of Safe Money Fund

4.4 Graph showing the distribution of daily returns of Grow Money Plus Fund

Graph showing the distribution of daily returns of Growth Opportunities

4.5
Plus Fund

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 4.6 Graph showing the distribution of daily returns of Build India Fund

EXECUTIVE SUMMARY

The insurance companies, from a long time have been considered as a place where people pay
premium from a view point of its safety & earning returns over the premium paid after the
policy has matured. However, off late the role of insurance has widened. From a mere life
protection provider it has evolved into an institution which tries to meet different financial
requirements of customer. Investment is one such need. This report deals with the different
functions a life insurance company performs which act as a facilitator for investors. The study
is done keeping the policies of Bharti AXA Life in mind.

Bharti AXA Life Insurance Co. Ltd. is a joint venture between Bharti - one of India’s leading
business groups and AXA - global leader in financial protection and wealth management.
Bharti AXA Life Insurance has a 74% stake from Bharti and 26% stake of AXA in the joint
venture. In December 2006, the Company launched its operations in India. At present, it has
more than 5200 employees working over 12 states in the country. With the continuous
expansion, Bharti AXA Life Insurance is making itself proactive to cater to insurance and
wealth management needs of people.

In addition to the study on risk analysis of the ULIP funds, the study was conducted to
know the various functional areas of the organization. It included the study of various
departments, competitors, products of Bharti AXA Life Insurance. The stay in the

9
organization equipped with an in-depth knowledge of insurance as an investment
avenue, its benefits, restrictions, process and other aspects.

The study was an analytical study with a sample size of six different types of funds under Bharti
AXA ULIP plans. Out of this, three are equity funds, two are debt funds and remaining one is a
balanced fund. The data encompassing the performance of various funds was limited to six
months, from January to June 2010. So the study may not hold good for all the time.

The portfolio allocation, as well as sector-wise allocation had a great impact on performance of
the fund, be it an equity fund, a debt fund or a balanced fund. Descriptive statistics revealed that
the equity had the highest standard deviation, which means the risk involved is very high, thus
investment should be made with care in the equity. On the other hand, standard deviation of
debt and balanced funds was low, which means that both these instruments are safe to invest in.

The investment goals of the clients are varied and thus it is a challenge of the distribution
service to meet the investors expected returns irrespective of the market conditions. The
insurance companies should have a well-trained customer care cell for all the customer
grievances. Fund manager should be very careful about the asset allocation as it has a great
impact on the fund’s performance.

Lastly, since there has been an increase in the cost of living, investors should start saving early
so as to get maximum returns. An investor can easily achieve this, if right investment is made in
the right kind of funds thus ensuring that the right portfolio would help an investor to trade off
between risk and return.

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 CHAPTER 1

INDUSTRY PROFILE
11
1.1 OVERVIEW OF THE INDIAN ECONOMY

1.1.1 INTRODUCTION

India is an emerging economy and has witnessed unprecedented levels of economic

expansion. India, being a cost effective and labour intensive economy, has benefited
immensely from outsourcing of work from developed countries, and a strong
manufacturing and export oriented industrial framework. With the economic pace
picking up, global commodity prices have staged a comeback from their lows and
global trade has also seen healthy growth over the last two years.

There have been a number of causes behind growth of Indian economy in the last
couple of years. A number of market reforms have been instituted by the
Indian government and there has been significant amount of foreign direct investment
made in India. Much of this amount has been invested into several businesses including
knowledge process outsourcing industries. India’s foreign exchange reserves have gone

12
up in the last few years. Real estate sector as well as information technology industries
have taken off. Capital markets are doing pretty well too.
Growing domestic demand and increased production have changed the Indian
economy.GDP has picked up, trade has become global and the services sector has led
change by throwing its gates open to outsourcing. India’s educated and English
speaking population became the biggest impetus that the economy needed. Trade has
risen by more than 375% since the adoption of the liberalization policies. All these
factors have contributed to the growth of the Indian economy.

1.1.2 INDIAN ECONOMIC INDICATORS

Indian economic indicators are pointing towards the country’s transition to a developed
economy.

a) GDP

India’s gross domestic product (purchasing power parity) was $3.561 trillion in 2009. It
was up from $3.344 trillion in 2008 and $3.113 trillion in 2007. India ranked fifth in the
world in terms of its purchasing power.

The official exchange rate GDP was $1.095 trillion in 2009 with per capita GDP at
$3,100. This was an increase from $2,900 in 2008 and $2,800 of 2007. However,
India’s world ranking was 164 due to its high variance in income and disparate wealth
distribution.

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Real GDP growth was 6.5% in 2009, down from 7.4% and 9% in 2008 and 2007,
respectively. The largest contribution towards GDP came from the services sector,
which contributed 58.4% of the total GDP. The industry sector contributed 25.8% and
agriculture added 15.8% to the GDP. Services kept its position as the biggest employer
as well for the huge workforce of 467 million people. Services employed 62.6%, while
industry generated 20% and agriculture pitched in 17.5% of the total jobs.

b) Inflation

Through a strict credit policy and stringent fiscal arrangements, India could somewhat
evade the recession. However, inflation has been a cause of concern. The 2009 figure
confirmed inflation at 10.7%, up from 8.3% in 2008. With industrial growth at 7.6% in
2009, India ranked as the twelve most progressive countries in the world.

c) FDI

The modern and liberalized Indian economy is a hotspot for FDI (foreign direct
investment). Every year the volume seems to grow larger and 2009 was no exception.
With FDI growing from $123.4 billion in 2008 to $161.3 billion in 2009, the Indian
economy has become the favourite spot for global investors to hedge their investments
and make profits in an economy where disposable income is rising steadily.

d) Core Infrastructure

Growth in the overall core infrastructure sector increased from 3.8% in October 2009 to
9.4% in January 2010, compared to the low growth of 2% achieved during the

14
corresponding months of the previous year. In January 2010, acceleration in growth was
seen in all the six core industry sectors.

e) Fiscal Trends

With an increase of 17%, the total expenditure incurred by the government grew from
$150 billion during the period April-January 2008-09 to $175 billion in the current
fiscal. In case of revenue receipts, the figures have also showed an increase of 5%
during the same period. As a result, the fiscal deficit increased moderately at the rate of
33% and went up from $58 billion to $77 billion during April-January 2009-10.

f) Foreign Investments

Foreign direct investment accumulated during the April-December period of 2009-10

stood at $26.5 billion, which was $2 billion higher than what was achieved previously.
Portfolio investments came in at $23.6 billion, compared to negative $11 billion in the
previous year. The rise in portfolio investments was particularly due to an increase in
FII investments.

g) Foreign Exchange Reserves

India's reserves as of March 2010 are at above $280 billion. In December 2009, the
forex was at $283.5 billion, increasing from $251 billion in April 2009. The forex, at
$283 billion, was less than the $286 billion achieved in the previous month of 2009.

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The issues weighing down on the Indian economy are its unemployment rate and a
rather constant poverty rate. The unemployment rate grew in 2009 to 10.7% from
10.4% in 2008 and almost 25% of the population lives under the poverty line. In order
to combat this, the Indian administration is keen on encouraging privatization and
improving the employment scenario. Privatization will also attract FDI that can help in
structural improvements and thus trigger growth.

1.2 INSURANCE INDUSTRY

1.2.1 MEANING OF INSURANCE

Insurance is a form of risk management primarily used to hedge against the risk of a
contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a
loss, from one entity to another, in exchange for payment.

Insurance is based on the law of large numbers. All who are exposed to a risk or a peril
contribute a relatively small sum to a common pool, which compensates the few who
suffer losses.

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An insurer is a company selling the insurance; an insured or policyholder is the person
or entity buying the insurance policy. The insurance rate is a factor used to determine
the amount to be charged for a certain amount of insurance coverage, called the
premium.

The transaction involves the insured assuming a guaranteed and known relatively small
loss in the form of payment to the insurer in exchange for the insurer's promise to
compensate insured in the case of a large, possibly devastating loss. The insured
receives a contract called the insurance policy which details the conditions and
circumstances under which the insured will be compensated.

TYPES OF INSURANCE

Insurance is generally classified into three main categories:

1. Life Insurance
2. Health Insurance
3. General Insurance

1.2.2 FUNCTIONS OF INSURANCE

a) PRIMARY FUNCTIONS

Providing protection – The elementary purpose of insurance is to allow security

against future risk, accidents and uncertainty. Insurance cannot arrest the risk from
taking place, but can for sure allow for the losses arising with the risk. Insurance is
in reality a protective cover against economic loss, by apportioning the risk with
others.

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Collective risk bearing – Insurance is an instrument to share the financial loss. It is
a medium through which few losses are divided among larger number of people. All
the insured add the premiums towards a fund, out of which the persons facing a
specific risk is paid.

Evaluating risk – Insurance fixes the likely volume of risk by assessing diverse
factors that give rise to risk. Risk is the basis for ascertaining the premium rate as
well.

Provide Certainty – Insurance is a device, which assists in changing uncertainty to

certainty.

b) SECONDARY FUNCTIONS

Preventing losses – Insurance warns individuals and businessmen to embrace

appropriate device to prevent unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm systems, etc.

Covering larger risks with small capital – Insurance assuages the businessmen
from security investments. This is done by paying small amount of premium against
larger risks and dubiety.

Helps in the development of larger industries – Insurance provides an opportunity

to develop to those larger industries which have more risks in their setting up.

c) OTHER FUNCTIONS

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Is a savings and investment tool – Insurance is the best savings and investment
option, restricting unnecessary expenses by the insured. Also to take the benefit of
income tax exemptions, people take up insurance as a good investment option.

Medium of earning foreign exchange – Being an international business, any

country can earn foreign exchange by way of issue of marine insurance policies and
a different other ways.

Risk Free trade – Insurance boosts exports insurance, making foreign trade risk free
with the help of different types of policies under marine insurance cover.

1.2.3 RISKS ASSOCIATED WITH INSURANCE SECTOR

As we all know Risk is the probability that a hazard will turn into a disaster.
Vulnerability and hazards are not dangerous, taken separately. But if they come
together, they become a risk or, in other words, the probability that a disaster will
happen.

TYPES OF RISKS

With regards to insurability, there are basically two categories of risks:

1. Speculative or Dynamic Risk

2. Pure or Static Risk

Speculative or Dynamic Risk

Speculative (dynamic) risk is a situation in which either profit OR loss is possible.

Examples of speculative risks are betting on a horse race, investing in stocks/bonds and

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real estate. In the business level, in the daily conduct of its affairs, every business
establishment faces decisions that entail an element of risk. The decision to venture
into a new market, purchase new equipments, diversify on the existing product line,
expand or contract areas of operations, commit more to advertising, borrow additional
capital, etc., carry risks inherent to the business. The outcome of such speculative risk
is either beneficial (profitable) or loss. Speculative risk is uninsurable.

Pure or Static Risk

The second category of risk is known as pure or static risk. Pure (static) risk is a
situation in which there are only the possibilities of loss or no loss, as oppose to loss or
profit with speculative risk. The only outcome of pure risks are adverse (in a loss) or
neutral (with no loss), never beneficial. Examples of pure risks include premature
death, occupational disability, catastrophic medical expenses, and damage to property
due to fire, lightning, or flood.

Types of Pure Risk

The major types of pure risk that are associated with great economic and financial
insecurity include:

1. Personal risk

2. Property risk

3. Liability risk

Personal risks are risks that directly affect an individual. They involve the possibility
of loss or reduction of income, of extra expenses, and the elimination of financial

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assets.
There are four major personal risks:

• Premature death

• Old age

• Poor health

• Unemployment

Premature death risk is defined as the risk of the death of the head of a household
with unfulfilled financial obligations. These can include dependents to support, a
mortgage to be paid off, or children to educate.

Old age is a risk of insufficient income during retirement. When older workers retire,
they lose their normal amount of earnings. Unless they have accumulated sufficient
assets from which to draw on, they would be facing a serious problem of economic
insecurity.

Risk of poor health includes both catastrophic medical bills and the loss of earned
income. The cost of health care has increased substantially in recent years. The loss of
income is another major cause of financial instability. In cases of severe long term
disability, there is a substantial loss of earned income, medical bills are incurred,
employee benefits may be lost, and savings depleted.

The risk of unemployment is another major threat to most families. Unemployment

can be the result of an industry cycle downswing, economic changes, seasonal factors
and frictions in the labour market. Regardless of the cause, unemployment can create

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financial havoc in the average families by way of loss of income and employment
benefits.

Property risk is the risk of having property damaged or loss from numerous perils.
Property loss can occur as a result of fire, lightning, windstorms, hail, and a number of
other causes.

Liability risks are another important type of pure risk that many people face. More than
ever, we are living in a litigious society. One can be sued for any frivolous reason. One
has to defend himself when sued, even when the suit is without merit.

Nevertheless, risks can be reduced or managed. ‘Risk Management’ is an integrated

process that identifies, classifies, analyses & quantifies the financial impact of various
risks involved in running a business. It is a tool that recognizes the potential threats to
the business’s objectives and allows management to make informed decisions on the
appropriate course of action, be it to mitigate, transfer or allocate capital to the risk.
Risk management is not a new concept in life insurance and many of the basic
principles are as old as the insurance industry itself. The majority of companies already
have some form of risk management process in place. However, over recent years, there
has been significant progress in developing and formalizing these processes and even in
using them for regulatory purposes.

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1.2.4 BENEFITS OF LIFE INSURANCE

Depending on its usage, life insurance gives various benefits. They are as follows:

• Income for Family Life: Insurance proceeds ensure a source of financial security for
your family to meet its household and living expenses.

• Payment of Debts: On the unfortunate death of the insured, the proceeds from a life
insurance policy can be used to meet outstanding debts such as mortgages, car loans or
charge account balances.

• Provide Education Funding For Children: The cash value of a whole life insurance
policy can be used to help accumulate funds for the higher education of insured’s
children.

• Equalize Inheritance: When an asset such as the family business passes on to family
members who are active in it, life insurance proceeds can be used to provide equal
assets to other family members Apart from these there are also Investment advantages
to the Insurance. While most investment options make a person’s money work harder,
they are no substitutes to life insurance. That's because when a person takes up a life
insurance policy, he enjoy the twin benefit of risk protection as well as returns on
savings.

• Life insurance enables a person to enjoy savings that guarantee full protection against
the risk of death of the insured. These long-term savings are made in an easy and
hassle-free manner because of low and convenient installments (or premiums).

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• Life insurance also encourages 'forced thrift'. This means that the insured is made to
pay his/her premiums by saving his/her money, which he/she might not do in the
regular course of life.

• Some life insurance policies often allow insured to take loans against his policy,
should he require money to meet any unforeseen expenditure. What's more, some life
insurance policies also allow saving on taxes

1.2.5 BRIEF HISTORY OF INDIAN INSURANCE SECTOR

The insurance sector in India has completed all the facets of competition – from being
an open competitive market to being nationalized and then getting back to the form of a
liberalized market once again. The history of the insurance sector in India reveals that it
has witnessed complete dynamism for the past two centuries approximately.

I. IMPORTANT MILESTONES IN THE INDIAN LIFE INSURANCE

BUSINESS

With the establishment of the Oriental Life Insurance Company in Kolkata, the business
of Indian life insurance started in the year 1818.

1912: The Indian Life Assurance Companies Act came into force for regulating the life
insurance business.

1928: The Indian Insurance Companies Act was enacted for enabling the government to
collect statistical information on both life and non-life insurance businesses.

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1938: The earlier legislation consolidated the Insurance Act with the aim of
safeguarding the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were taken over by the
central government and they got nationalized. LIC was formed by an Act of Parliament,
viz. LIC Act, 1956. It started off with a capital of Rs. 5 crores and that too from the
Government of India.

II. IMPORTANT MILESTONES IN THE INDIAN GENERAL INSURANCE

BUSINESS

The history of general insurance business in India can be traced back to Triton
Insurance Company Ltd. (the first general insurance company) which was formed in the
year 1850 in Kolkata by the British.

1907: The Indian Mercantile Insurance Ltd. was set up which was the first company of
its type to transact all general insurance business.

1957: General Insurance Council, an arm of the Insurance Association of India, framed
a code of conduct for guaranteeing fair conduct and sound business patterns.

1968: The Insurance Act improved for regulating investments and set minimal solvency
levels and the Tariff Advisory Committee was set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India. It was with effect from 1st January 1973.

107 insurers integrated and grouped into four companies, viz. the National Insurance
Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance

25
Company Ltd. and the United India Insurance Company Ltd. GIC was incorporated as a
company.

1.2.6 INDIAN INSURANCE SECTOR REFORM

The formation of the Malhotra Committee in 1993 initiated reforms in the Indian
insurance sector. The aim of the Malhotra Committee was to assess the functionality of
the Indian insurance sector. This committee was also in charge of recommending the
future path of insurance in India.

The Malhotra Committee attempted to improve various aspects of the insurance sector,
making them more appropriate and effective for the Indian market.

The recommendations of the committee put stress on offering operational autonomy to

the insurance service providers and also suggested forming an independent regulatory
body.

In 1994, the committee submitted the report and some of the key recommendations
included:

1) Structure

• Government stake in the insurance Companies to be brought down to 50%.

• Government should take over the holdings of GIC and its subsidiaries so that
these subsidiaries can act as independent corporations.
• All the insurance companies should be given greater freedom to operate.

26
2) Competition

• Private Companies with a minimum paid up capital of Rs.1bn should be allowed

to enter the industry.
• No Company should deal in both Life and General Insurance through a single
entity.
• Foreign companies may be allowed to enter the industry in collaboration with
the domestic companies.
• Postal Life Insurance should be allowed to operate in the rural market.
• Only One State Level Life Insurance Company should be allowed to operate in
each state.

3) Regulatory Body

• The Insurance Act should be changed.

• An Insurance Regulatory body should be set up.
• Controller of Insurance (Currently a part from the Finance Ministry) should be
made independent.

4) Investments

• Mandatory Investments of LIC Life Fund in government securities to be

reduced from 75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time).

5) Customer Service

• LIC should pay interest on delays in payments beyond 30 days.

• Insurance companies must be encouraged to set up unit linked pension plans.

27
 • Computerisation of operations and updating of technology to be carried out in
the insurance industry The committee emphasized that in order to improve the
customer services and increase the coverage of the insurance industry should be
opened up to competition.

But at the same time, the committee felt the need to exercise caution as any failure on
the part of new players could ruin the public confidence in the industry. Hence, it was
decided to allow competition in a limited way by stipulating the minimum capital
requirement of Rs.100 crores. The committee felt the need to provide greater autonomy
to insurance companies in order to improve their performance and enable them to act as
independent companies with economic motives. For this purpose, it had proposed
setting up an independent regulatory body.

1.2.7 MAJOR POLICY CHANGES

Insurance sector has been opened up for competition from Indian private insurance
companies with the enactment of Insurance Regulatory and Development Authority
Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory
and Development Authority (IRDA) was established on 19th April 2000 to protect the
interests of holder of insurance policy and to regulate, promote and ensure orderly
growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private
players into the insurance market which was hitherto the exclusive privilege of public
sector insurance companies/ corporations. Under the new dispensation Indian insurance
companies in private sector were permitted to operate in India with the following
conditions:

• Company is formed and registered under the Companies Act, 1956;

28
 • The aggregate holdings of equity shares by a foreign company, either by itself or
through its subsidiary companies or its nominees, do not exceed 26%, paid up
equity capital of such Indian insurance company;
• The company's sole purpose is to carry on life insurance business or general
insurance business or reinsurance business.
• The minimum paid up equity capital for life or general insurance business is
Rs.100 crores.
• The minimum paid up equity capital for carrying on reinsurance business has
been prescribed as Rs.200 crores.

1.2.8 IRDA

The Insurance Regulatory and Development Authority Act of 1999 brought about
several crucial policy changes in the insurance sector of India. It led to the formation of
the Insurance Regulatory and Development Authority (IRDA) in 2000. The Authority
has its Head Quarters at Hyderabad.

The Authority is a ten-member team consisting of

a. Chairman; b. five whole-time members; c. four part-time members
All these positions are appointed by the Government of India.

The goals of the IRDA are to safeguard the interests of insurance policyholders, as well
as to initiate different policy measures to help sustain growth in the Indian insurance
sector.

29
The Authority has notified 27 Regulations on various issues which include Registration
of insurers, Regulation on insurance agents, Solvency Margin, Re-insurance, Obligation
of Insurers to Rural and Social sector, Investment and Accounting Procedure,
Protection of policy holders' interest etc. Applications were invited by the Authority
with effect from 15th August, 2000 for issue of the Certificate of Registration to both
life and non-life insurers. In 2010, the Government of India ruled that the Unit Linked
Insurance Plans (ULIPs) will be governed by IRDA, and not the market regulator
Securities and Exchange Board of India

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.

DUTIES, POWERS AND FUNCTIONS OF IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA

1. Subject to the provisions of this Act and any other law for the time being
in force, the Authority shall have the duty to regulate, promote and ensure
orderly growth of the insurance business and re-insurance business.
2. Without prejudice to the generality of the provisions contained in sub-
section (1), the powers and 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 in matters
concerning assigning of policy, nomination by policy holders, insurable

30
 interest, settlement of insurance claim, surrender value of policy and
other terms and conditions of contracts of insurance;
3. specifying requisite qualifications, code of conduct and practical
training for intermediary or insurance intermediaries and agents;
4. specifying the code of conduct for surveyors and loss assessors;
5. promoting efficiency in the conduct of insurance business;
6. promoting and regulating professional organisations connected
with the insurance and re-insurance business;
7. levying fees and other charges for carrying out the purposes of
this Act;
8. calling for information from, undertaking inspection of,
conducting enquiries and investigations including audit of the insurers,
intermediaries, insurance intermediaries and other organisations
connected with the insurance business;
9. control and regulation of the rates, advantages, terms and
conditions that may be offered by insurers in respect of general
insurance business not so controlled and regulated by the Tariff
Advisory Committee under section 64U of the Insurance Act, 1938 (4
of 1938);
10. specifying the form and manner in which books of account shall
be maintained and statement of accounts shall be rendered by insurers
and other insurance intermediaries;
11. regulating investment of funds by insurance companies;
12. regulating maintenance of margin of solvency;
13. adjudication of disputes between insurers and intermediaries or
insurance intermediaries;
14. supervising the functioning of the Tariff Advisory Committee;
15. specifying the percentage of premium income of the insurer to
finance schemes for promoting and regulating professional
organisations referred to in clause (f);

31
 16. specifying the percentage of life insurance business and general
insurance business to be undertaken by the insurer in the rural or social
sector; and
17. exercising such other powers as may be prescribed

1.2.9 PRESENT SCENARIO OF THE INDUSTRY

 The US$ 41-billion Indian life insurance industry is considered the fifth largest
life insurance market, and growing at a rapid pace of 32-34 per cent annually,
according to the Life Insurance Council.
 Life Insurance Corporation of India (LIC) registered an 83 per cent increase in
new business income in March 2010, while private players posted a 47 per cent
growth in new business premium.
 Moreover, according to IRDA, insurers sold 10.55 million new policies in 2009-
10 with LIC selling 8.52 million and private companies 2.03 million policies. At
the end of March 2010, LIC held 65 per cent market share in terms of new
business income collection with the private sector contributing the remaining 35
per cent share in 2009-10.
 According to IRDA, total premium collected in 2009-10 was US$ 24.64 billion,
an increase of 25.46 per cent over US$ 19.64 billion collected in 2008-09.
 A growth of 18 per cent is expected in total premium income and is likely to
cross the US$ 64.93 billion mark.

India insurance is a flourishing industry, with several national and international players
competing and growing at rapid rates. Thanks to reforms and the easing of policy
regulations, the Indian insurance sector been allowed to flourish, and as Indians become

32
more familiar with different insurance products, this growth can only increase, with the
period from 2010 - 2015 projected to be the 'Golden Age' for the Indian insurance
industry.

Indian insurance companies offer a comprehensive range of insurance plans, a range

that is growing as the economy matures and the wealth of the middle classes increases.
The most common types include: term life policies, endowment policies, joint life
policies, whole life policies, loan cover term assurance policies, unit-linked insurance
plans, group insurance policies, pension plans, and annuities. General insurance plans
are also available to cover motor insurance, home insurance, travel insurance and health
insurance.

Due to the growing demand for insurance, more and more insurance companies are now
emerging in the Indian insurance sector. With the opening up of the economy, several
international leaders in the insurance sector are trying to venture into the India
insurance industry.

a. MARKET OVERVIEW

• The insurance industry in India is at an early stage with low penetration

and high potential.
• The total premium of the insurance industry has grown at a CAGR of
24.6 per cent from 2002–03 to 2008–09 to reach US$ 52.6 billion in
2008–09.
• The number of insurance players has increased from four and eight in
life and non-life sectors, respectively, in 2000 to 23 and 22, respectively,
as on January 2010.
b. GROWTH DRIVERS

33
 • There is a high demand for insurance products due to a growing middle
class, increasing working population, rising household savings and
increasing purchasing power.

• Penetration levels set to increase

• The increasing literacy rate, especially in rural India, has spread
awareness about the need for insurance.
• Between 2006 and 2026, the working population (25–60 years) is
expected to increase from 675.8 million to 795.5 million giving rise to a
favourable market for insurance companies.
• Projected per capita GDP is expected to increase from US$ 380.8 in
2000–2001 to US$ 2,097.5 in 2026, reflecting higher disposable income.
• Favourable government and regulatory initiatives are expected to
increase the contribution of the insurance industry to the overall
economic development of the country.

c. OPPORTUNITIES

• High potential demand for insurance products

• Since more than two-thirds of India’s population lives in rural areas, micro-
insurance is seen as the most suitable aid to reach the poor and socially-
disadvantaged sections of society.

• Favourable demographics, fast progression of medical technology and

increasing demand for better healthcare have facilitated a high growth in health
insurance.

• Growing demand for Indian insurance offshoring business

34
 • Total revenues from Indian offshore insurance business process outsourcing
(BPO) services are estimated to have increased from US$ 367 million in 2002–
03, US$ 790 million in 2006–07 to US$ 2 billion by 2009–2010.

• Employment is expected to more than double from 41,600 in 2005–06 to around

100,500 in 2009–2010

• Rising demand from semi-urban and rural population for micro-insurance

products

• The industry is also promoting micro-insurance as a viable business opportunity

and integrating the same with the poverty alleviation programmes of various
state governments.

• Poor insurance literacy and awareness, high transaction costs, inadequate

regulations and inadequate understanding of client needs and expectations have
restricted demand for micro-insurance products.

• However, with the development of rural health insurance regulations and

growing awareness about micro-insurance products, focus of many private
players has shifted to these areas.

1.2.10 INDIAN INSURANCE INDUSTRY - CHALLENGES

1. NEW COMERS

With more companies coming up every day, and the growing demand of the industry
makes the market very competitive. Until and unless the existing companies make a
mark and create their very own brand name it would be quite tough to sustain their

35
position in the market. There is also a probability of big companies taking over the new
emerging companies.

2. SUPPLIER POWER

The people providing capital act as big terror as opportunity always lies in the big hands
and they can any day tempt good insurer from small companies to their own company.

3. BUYER POWER

Individuals never stand a chance in front of big corporate sectors as they dominate the
insurance industries with high potential of negotiation power.

4. PRESENCE OF SUBSTITUTES

The insurance industry is full of options and the large insurance companies offer the
same services as others, be it in any sector - home, commercial, auto, health or life.

Other key challenges include retention of talent, no benchmarks available for costing
and outdated risk tables and global level challenges like climate change, terrorism,
regulatory intervention, inflation, legal risks etc.

1.2.11 INDIAN INSURANCE INDUSTRY – GROWTH

36
  OUTLOOK

 Rising affluence is expected to increase the insurable population significantly by

2015. By then, 100 million people are estimated to be added to the working
population.

 The India insurance sector is likely to put its foot forward towards more
competition with growing importance and recognition.

 The Indian Insurance market is expected to be around US$52 billion

by 2010

 Expected CAGR of over 30% p.a.

 POTENTIAL OF THE INDUSTRY

o Largely untapped market with 17% of the world’s population

o Nearly 80% of the Indian population is without Life, Health and Non-life
insurance

o Strong economic growth with increase in affluence and rising risk awareness
leading to rapid growth in the insurance sector

o Innovative products such as Unit Linked Insurance Policies are likely to drive
future industry growth

o Investment opportunities exist in both life and non-life segments

o Total estimated investment opportunity of US$14-15 billion

37
  POTENTIAL OF LIFE INSURANCE BUSINESS

• India’s life insurance market has grown rapidly over the past six years, with new
business premiums growing at over 40% per year.

• The premium income of India’s life insurance market is set to double by 2012
on better penetration and higher incomes.

• Insurance penetration in India is currently about 4% of its GDP, much lower

than the developed market level of 6-9%. It could rise to 5.1-6.2 by 2012 in
tandem with the country’s demographic profile.

• In several segments of the population, the penetration is lower than potential.

For example, in urban areas, the penetration of life insurance in the mass market
is about 65%, and it’s considerably less in the low-income unbanked segment.
In rural areas, life insurance penetration in the banked segment is estimated to
be about 40%, while it is marginal at best in the unbanked segment.

• The total premium could go up to $80-100 billion by 2012 from the present $40
billion as higher per capita income increases per capita insurance intensity.

• The average household premium will rise to Rs 3,000-4,100 from the current Rs
1,300 as will penetration by the existing and new players.

• Considering the world’s largest population and an annual growth rate of nearly 7
per cent, India offers great opportunities for insurers.

• US based online insurance company ebix.com plans to enter the Indian market
following deregulation of its insurance sector.

38
• Online insurer ebix.com’s expansion into India is a major step for the company
to become a global supplier of internet-based insurance tools for consumers and
insurance professionals.

• In a diverse country such as India it is imperative that a universal insurance

infrastructure be created to maximize efficiency in the insurance industry.

• Online insurer ebix.com can offer the Indian market a business-to-consumer

internet portal where consumers have more choice while purchasing insurance
and an internet-based agency management system that will help agents work
more efficiently with multiple carriers.

• Foreign holding in Indian insurance companies is limited to 26 per cent. The

government wants to increase the cap to 49 percent, but its communist allies
oppose such a move.

• The market is moving beyond single-premium policies and unit linked insurance
products which are easier to sell.

• The agency model is the dominant sales channel accounting for more than 85
per cent of fresh premiums but overall inactivity and attrition is much higher at
50-55 per cent than the global average of 25 per cent.

• Opportunities include health insurance and pensions, the report said; adding
only 1.5-2 per cent of total healthcare expenditure in India was currently
covered by insurance.

 PENETRATION- LOWER THAN POTENTIAL

39
 • Management consultancy firm McKinsey has forecast that India’s life insurance
industry will be double in the next five years from $40 billion to $80-100 billion
in 2012. This growth would improve the level of insurance penetration from
5.1% of gross domestic product to 6.2% in 2010-2012.

• The Indian life insurance industry could witness a rise in the insurance sector
premiums between 5.1% and 6.2% of GDP in 2012, from the current 4.1%.
Total market premiums are likely to more than double during this period, from
about $40 billion to $80-100 billion. This implies a higher annual growth in new
business annual premium equivalent (APE) of 19% to 23% from 2007 to 2012.

• The large part of the growth would come from second- and third-tier cities and
small towns. Based on MGI forecasts, 26 tier-II cities with population greater
than one million and 33 tier-III towns with the population of more than 5 lakh
will account for 25% of the middle class and newly bankable class in 2025.
Over 5,000 tier-IV small towns will account for as much as 40% of these two
classes in 2025.

• However, if an insurer decided to be a niche player and concentrated on metros

and their suburbs, they will have a big market, since 60% of the very rich
(annual income over Rs 10 lakh) would be concentrated in the top eight cities.
Although these consumers will be highly accessible, players will have to reckon
with intense competition that is only going to increase and extend to other
segments as well.

1.2.12 PEST ANALYSIS

40
PEST analysis of any industry sector investigates the important factors that are affecting
the industry and influencing the companies operating in that sector. PEST is an
acronym for political, economic, social and technological analysis. Political factors
include government policies relating to the industry, tax policies, laws and regulations,
trade restrictions and tariffs etc. The economic factors relate to changes in the wider
economy such as economic growth, interest rates, exchange rates and inflation rate, etc.
Social factors often look at the cultural aspects and include health consciousness,
population growth rate, age distribution, changes in tastes and buying patterns, etc. The
technological factors relate to the application of new inventions and ideas such as R&D
activity, automation, technology incentives and the rate of technological change.

1) POLITICAL FACTORS

 Increased service tax on premium

 5% discount on corporate premium

 Hike in FDI limit

 Pricing control in general insurance

 Favourable regulation for rural insurance

2) ECONOMIC FACTORS

 Increase in Gross Domestic Savings

41
 Increased economic activities

 Interest rates

 Inflation rate

3) SOCIAL FACTORS

 Low insurance coverage

 Rise in elderly population

 Changing Indian perception

 Growth of Islamic insurance

 Increase in lifestyle diseases

 Level of education

 Level of earnings

4) TECHNOLOGICAL FACTORS

 Automation of processes

 Increase in CRM solutions

42
  Internet driven information era

 Business Process Monitoring (BPM)

1.2.13 LIFE INSURANCE COMPANIES IN INDIA

1) Life Insurer in Public Sector

Life Insurance Corporation of India

2) Life Insurers in Private Sector

 SBI Life Insurance

 Metlife India Life Insurance

 ICICI Prudential Life Insurance

 Bajaj Allianz Life

 Max New York Life Insurance

 Sahara Life Insurance

 Tata AIG Life

 HDFC Standard Life

 Birla Sunlife

 Kotak Life Insurance

43
 Aviva Life Insurance

 Reliance Life Insurance

 ING Vysya Life Insurance

 Shriram Life Insurance

 Bharti AXA Life Insurance Co Ltd

 Future Generali Life Insurance Co Ltd

 IDBI Fortis Life Insurance

 AEGON Religare Life Insurance

 DLF Pramerica Life Insurance

 Canara HSBC Oriental Bank of Commerce Life Insurance

Chart 1.1

Chart showing market share of life insurance companies

44
MAJOR PLAYERS

 Life Insurance Corporation of India (LIC)

Life Insurance Corporation of India (LIC) is a Government of India enterprise, and is

said to be the largest life insurance company and also the largest investor of the country.
LIC had been established on the 1st of September, 1956, after the Life Insurance
Corporation Act had been passed by the Parliament of India in the same year. The
corporation is aimed at providing life insurance services primarily to the rural masses
and the socially & economically backward sections of the Indian society. It also aims at

45
promoting the people for saving their money, and offers attractive savings features
along with various insurance policies.

 HDFC Standard Life Insurance

Established on 14th August 2000, HDFC Standard Life Insurance Co. Ltd. is a joint
venture between Housing Development Finance Corporation Limited (HDFC Limited)
- India's leading housing finance institution, and a Group Company of the Standard Life
Plc, UK. The Company is one of leading private insurance companies, offering a range
of individual and group insurance solutions, in India. Being a joint venture of top
financial services groups, HDFC Standard Life has adequate financial expertise to
manage long-term investments safely and resourcefully.

 Bajaj Allianz

Bajaj Allianz Life Insurance Co. Ltd. is a joint venture between Allianz SE, one of the
world's largest insurance companies, and Bajaj Finserv. Allianz SE is a leading
insurance corporation globally and one of the largest asset managers in the world, that
manage assets worth over a Trillion. With over 115 years of financial experience,
Allianz SE is present in over 70 countries around the world. Bajaj Allianz is into both
life insurance and general insurance. Today, Bajaj Allianz is one of India's leading and
fastest growing insurance companies. Currently, it has presence in more than 550
locations with over 60,000 Insurance Consultants.

 ICICI Prudential Life Insurance

46
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, which
is one of India's foremost financial services companies, and Prudential plc, which is a
leading international financial services group headquartered in the United Kingdom.
ICICI Prudential began the operations in December 2000. Today, this company has
over 2100 branches, which include 1,116 micro-offices, over 290,000 advisors and 18
banc assurance partners.

 Max New York Life Insurance

Max New York Life Insurance Company Limited is a joint venture between Max India
Limited, which is a one of India's leading multi-business corporate, and New York Life
International, which is a Fortune 100 company & global expert in life insurance. Max
New York Life Insurance started its commercial operations in India in 2001. It is the
first life insurance company in India to be awarded the IS0 9001:2000 certification. The
company has around 133 offices all over the country.

 Reliance Life Insurance

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd., a part of
Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India's leading
private sector financial services companies, which ranks among the top 3 private sector
financial services and banking companies. Reliance Life Insurance is not only one of
India's fastest growing life insurance companies, but also counts among the top 4
private sector insurers. In just 2 years, the Company has crossed the mark of 1.7 Million
policies.

47
  SBI Life Insurance

SBI Life Insurance offers a slew of products designed for various segments of society.
These include money back products, pension products, protection cum savings
products, and unit linked products. All these products cater to various requirements of
its end users.

 Birla Sun Life Insurance

Birla Sun Life Insurance Co. Ltd. is a joint venture between Aditya Birla Group, an
Indian multinational corporation, and Sun Life Financial Inc, a leading global insurance
company. Birla Sun Life Insurance is distinguished as the first company in the sector of
financial solutions to begin Business Continuity Plan. This insurance company has
pioneered the unique Unit Linked Life Insurance Solutions in India. Within 4 years of
its launch, BSLI became one of the leading players in the industry of Private Life
Insurance Scheme.

48
 CHAPTER 2

COMPANY PROFILE

2.1 INTRODUCTION

Bharti AXA Life Insurance Co. Ltd. is a joint venture between Bharti - one of India’s
leading business groups with interests in telecom, agri business and retail, and AXA -

49
global leader in financial protection and wealth management. AXA's operations are
diverse geographically, with major operations in Western Europe, North America and
the Asia/Pacific area. It also has operations in Australia, New Zealand, Hong Kong,
Singapore, Indonesia, Philippines, Thailand, China, India and Malaysia.

Bharti AXA Life Insurance has a 74% stake from Bharti and 26% stake of AXA in the
joint venture. In December 2006, the Company launched its operations in India. At
present, it has more than 5200 employees working over 12 states in the country. With
the continuous expansion, Bharti AXA Life Insurance is making itself proactive to cater
to insurance and wealth management needs of people.

2.1.1 PROMOTERS

1) BHARTI ENTERPRISES

Bharti Enterprises is one of India’s leading business groups with operations in over 21
countries across the globe with interests in telecom, financial services, retail, fresh and
processed foods, and real estate.

Bharti started its telecom services business by launching mobile services in Delhi
(India) in 1995. Bharti Airtel, the group's' flagship company, has emerged as one of the
top telecom companies in the world and is amongst the top five wireless operators in
the world. Through its global telecom operations Bharti group has presence in 21
countries across Asia, Africa and Europe - India, Sri Lanka, Bangladesh, Jersey,
Guernsey, Seychelles, Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of
Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone,

50
Tanzania, Uganda, and Zambia.

Over the past few years, the group has diversified into emerging business areas in the
fast expanding Indian economy. With a vision to build India's finest conglomerate by
2020 the group has forayed into the retail sector by opening retail stores in multiple
formats - small and medium - as well establishing large scale cash & carry stores to
serve institutional customers and other retailers. The group offers a complete portfolio
of financial services - life insurance, general insurance and asset management - to
customers across India. Bharti also serves customers through its fresh and processed
foods business. The group has growing interests in other areas such as telecom
software, real estate, training and capacity building, and distribution of telecom/IT
products.

 Partnerships

Over the years some of biggest names in international business have partnered Bharti.
Currently, Singtel, IBM, Ericsson, Nokia Siemens and Alcatel-Lucent are key partners
in telecom. Walmart is Bharti's partner for its cash & carry venture. Axa Group is the
partner for the financial services business and Del Monte Pacific for the processed
foods division.

 Vision
To build India's finest conglomerate by 2020.

51
  Values

 Empowerment
 Entrepreneurship
 Transparency
 Impact
 Flexibility

GROUP COMPANIES

i. Bharti Airtel

Bharti Airtel Limited is a leading emerging market telecom services provider with
operations in 18 countries across Asia and Africa. The company is structured into four
strategic business units - Mobile, Telemedia, Enterprise and Digital TV. The mobile
business offers services across 18 countries in Asia and Africa. The Telemedia business
provides broadband, IPTV and telephone services across India. The Enterprise business
provides end-to-end telecom solutions to corporate customers and national and
international long distance services to carriers. The Digital TV business provides DTH
services across India. All these services are provided under the Airtel brand.

ii. Bharti Infratel Limited

Bharti Infratel Limited is amongst India's leading telecom passive infrastructure service
providers. The company deploys, owns and manages telecom towers and
communication structures, for various mobile operators across 18 states of India. It has
a vast footprint of over 30,000+ towers and holds a 42% take in Indus Towers Ltd - a
Joint Venture between Bharti Infratel, Vodafone & Idea Cellular - that has the

52
distinction of being the world's largest tower company. Bharti Infratel has not only
pioneered the passive infrastructure space in the Indian telecom sector, but has also
continued to lead the industry in developing and providing innovative solutions and
setting service delivery benchmarks.

iii. Bharti Realty Limited

Bharti Realty Limited is a young, vibrant and dynamic realty company with expanding
interests in commercial, retail and residential real estate. It has grown from strength to
strength, constructing and managing over ten top of the line facilities for Bharti group
companies and third party clients. Spurred by its accomplished success and acquired
expertise, Bharti Realty Limited has now forayed into developing quality commercial
real estate in the central business district (CBD) areas of metropolitan cities, retail real
estate in the up-market localities of metropolitan cities and in a few prominent cities of
Punjab, and high end residential real estate in the Delhi NCR region, Mumbai and
Bangalore.

iv. Beetel Teletech Limited

Beetel Teletech Limited is a sales and distribution company with focus on emerging
markets of SAARC, Middle East, Africa, Latin America and is engaged into
distribution & marketing of wide range of products that include Smart Phones, High
quality cordless phones, Modems, Audio / video conferencing products, Free To Air Set
Top Boxes, Fixed Cellular Phones & Fixed Wireless Terminals.

v. Comviva

Comviva is a global player in offering mobile solutions beyond VAS. With an extensive
portfolio of products and solutions that encompass content, commerce and community-
related offerings, Comviva enables mobile operators to offer services that enrich users’

53
lives. Comviva enhances operator efficiencies and revenue performance by adding
value at every stage of the customer lifecycle – from prepaid subscription and etop-up
to customer care, and from real-time promotions and loyalty management to billing
solutions. Comviva has extensive expertise in delivering and managing mobile
solutions that extend beyond VAS, powering solutions to mobile operators in more than
80 countries worldwide and reaching over 550 million subscribers globally.

vi. Jersey Airtel and Guernsey Airtel

Jersey Airtel and Guernsey Airtel are subsidiaries of Bharti group and offer mobile
services on the islands of Jersey and Guernsey respectively in the Channel Islands
(Europe). All services are offered under the Airtel-Vodafone brand under a partnership
to bring a range of Vodafone global products together with other exciting services from
Bharti to customers in Jersey and Guernsey.

vii. Centum Learning Limited

Centum Learning Limited provides end-to-end learning and skill-building solutions that
enhance business performance to Bharti Group and several large corporates. Centum
Learning has received the Gold Award for "Excellence in Training" at the World HRD
Congress, 2010 and has been adjudged as one of the ' Top 15 Emerging Leaders in
Training Outsourcing' 2009 Worldwide. Centum Learning provides industry oriented
employability programmes through a network of 130 Centum Learning Centers spread
across 90 cities. It has also launched a new education initiative, Centum U – Institute
of Management & Creative Studies which offers UG and PG programmes in association
with world renowned institutions.

viii. Bharti Walmart

54
Bharti Walmart is a B2B joint venture between Bharti Enterprises and Walmart for
wholesale cash & carry and back-end supply chain management operations in India to
serve small retailers, manufacturers, institutions and farmers. The Company operates
Cash & Carry stores under the Best Price Modern Wholesale brand. A typical cash-and-
carry store stands between 50,000 and 100,000 square feet and sells a wide range of
fresh, frozen and chilled foods, fruits and vegetables, dry groceries, personal and home
care, hotel and restaurant supplies, clothing, office supplies and other general
merchandise items.

ix. Bharti Retail

Bharti Retail is a wholly owned subsidiary of Bharti Enterprises. The Company

operates easyday neighborhood stores and compact hypermarket stores called easyday
Market. Bharti Retail provides consumers a wide range of good quality products at
affordable prices. easyday stores are a one stop shop that cater to every family's day-to-
day needs. Merchandise at easyday Market stores include apparels, home furnishings,
appliances, mobile phones, meat shop, general merchandise, fruits and vegetables
among others.

x. Bharti AXA Life Insurance

Bharti AXA Life Insurance is a joint venture between Bharti and AXA Group.The
company launched national operations in December 2006. Today, Bharti AXA Life has
a national footprint of distributors trained to provide quality financial advice and
insurance solutions to the large Indian customer base. Bharti AXA Life offers a range
of innovative products and services that cater to specific insurance and wealth
management needs of customers.

xi. Bharti AXA General Insurance

55
Bharti AXA General Insurance is a joint venture between Bharti Group and AXA
Group. The company is one of the fastest growing in the general insurance segment and
is the first in the industry to receive dual certifications of ISO 9001:2008 & 27001:2005
within the a year of launching operations. The company offers an extensive product
range for retail, rural and commercial clients with cashless facilities in over 4000
hospitals and 1600 garages as well as 24/7 multi-modal claims registration.

xii. Bharti AXA Investment Managers

Bharti AXA Investment Managers Private Limited is a joint venture between Bharti and
the AXA Group. With a presence in more than 34 locations across the country within
one year of the launch, Bharti AXA Investment Managers boasts one of the largest
footprints for any AMC in the country during launch. This indicates the retail focus of
the AMC. With best practices brought in from world leaders in financial protection,
Bharti AXA Investment Managers aim to be an aggressive player in the Indian Asset
Management Industry.

xiii. Indus Towers

Indus Towers, a JV between Vodafone Essar (42%), Bharti Group (42%) and Aditya
Birla Telecom Limited (16%) and is India’s leading mobile towers company. The
company, which operates in 16 telecom circles across India, provides services to all
telecom operators and other wireless service providers such as as broadcasters and
broadband service providers on non-discriminatory basis.

xiv. FieldFresh Foods Pvt. Ltd

56
FieldFresh Foods Pvt. Ltd, a joint venture company between Bharti Enterprises and Del
Monte Pacific Ltd. The company offers branded FieldFresh fruits & vegetables across
India and international markets, including Europe and the Middle East. The company
produces markets and distributes farm fresh products. FieldFresh Foods Pvt. Ltd, aims
to become one of the most trusted provider of premium quality fresh farm products,
processed foods and beverages.

2) AXA GROUP

AXA Group is a worldwide leader in Financial Protection. AXA’s operations are

diverse geographically, with major operations in Europe, North America and the
Asia/Pacific area. In 2009, total revenues amounted to Euro 90.1 billion and total
revenues underlying earnings to Euro 3.9 billion. AXA had Euro 1,014 billion in assets
under its management as of December 31, 2009.

AXA is a French global insurance group headquartered in Paris. AXA is a

conglomerate of independently run business, operated according to the laws and
regulations of many different countries.

The AXA group of companies are engaged in life, health and other forms of insurance,
as well as investment management. The AXA group operates primarily in Western
Europe, North America and the Asia Pacific region and the Middle East.

57
The AXA Group encompasses five operating business segments: Life & Savings,
Property & Casualty, International Insurance (including reinsurance), Asset
Management and Other Financial Services.

AXA ranks as the 73rd largest company in the world (based on revenue) on the
2009 Fortune Global 500 list.

In the financial markets, AXA is positioned as a global leader in Financial Protection

with:

• 96 million clients worldwide

• 216 095 employees 400,000 individual shareholders
• 90.1 billion euros in revenues

Commitments

AXA aspired to do business responsibly, and to build trust-based relationships with its
stakeholders:

♦ Clients: Consistently deliver efficient local service and adapted solutions, while
adhering to the highest standards of professional conduct.
♦ Shareholders: Create lasting value by achieving operating performance that
ranks among the best in the industry, and provide transparency financial
information.
♦ Employees: Ensure professional fulfilment by offering a supportive and
respectful workplace where people are empowered and the continuous
development of competencies is encouraged.

58
 ♦ Suppliers: Maintain excellent supplier relationships by adhering to a set of
clearly defined procurement guidelines and promoting ongoing dialogue.
♦ Community: Act as a responsible corporate citizen by sharing our professional
expertise with the community and sponsoring philanthropic initiatives.
♦ Environment: Contribute to environmental preservation efforts by making
available our environmental risk management capability and promoting
environmentally sound practices in the workplace.

Strategy

To attain its leadership ambition, the AXA Group has built its strategy around a
business model and a set of clearly defined operational priorities.

AXA's business model entails fortifying, consolidating and developing organic growth-
retaining existing clients and acquiring new ones-to ensure that the Group is able to
seize genuine opportunities for external growth. AXA's development efforts are focused
on the most profitable segments, and the Group seeks to enhance its positioning in
developed or high-growth markets.

AXA has set five operational priorities or catalysts for change, which together are
known as the five cylinders of its growth:

• Product innovation: a source of differentiation that reflects AXA desire to offer

added value every time it introduces a new product in one of its markets.
• Core business expertise: AXA's goal is to offer the best service at the best price.

59
 • Distribution management: a second source of differentiation that reflects AXA's
aspiration of enhancing sales performance by lessening the administrative load
on its distributors.
• Quality of service.
• Productivity: AXA seeks to reduce operating costs and improve quality every
year. Cost reduction is an ongoing challenge, not a one-off reaction to a difficult
operating environment.

To achieve operational excellence in each of these key areas, AXA has adopted a
continuous process improvement program based on listening to the voice of the
customer.

Its global strategy is leveraged by the size and reach of the AXA Group, which
encourages local operating units to develop and exploit synergies.

GROUP COMPANIES

GIE AXA

AXA's group management services (finance, HR, communications, procurement, IT,

marketing, etc.) are grouped together as a GIE (economic interest group), based in
Paris. As the Group's head office, the GIE AXA is composed of about 500 employees.

AXA Assistance

An international network of assistance and services for Corporate and individual clients,
AXA Assistance is present in more than 30 countries, on 5 continents. It has a
workforce of 3,600 people worldwide.

60
The ones travelling to Schengen area and in Europe will find information on how to get
a visa, its required travel insurance for the consulates and the possibility to buy a
Schengen Travel Insurance online at Axa Schengen travel insurance.

AXA Bank Europe

Having defined a common, Europe-wide bank strategy, AXA has decided to dovetail all
its individual banking services via a European bank division:

AXA Bank Europe: A limited range of simple, attractive and innovative banking
products and services is on offer in the countries in which the banking and insurance
services answer to our customers' needs, particularly in terms of savings offerings.

AXA Corporate Solutions

AXA Corporate Solutions is the AXA Group subsidiary that provides property-casualty
insurance to large European corporations and marine and aviation insurance to
corporate clients worldwide.

In 2007, AXA Corporate Solutions generated revenues of 1.806 billion euros. Present in
90 countries, AXA Corporate Solutions has leading positions in its key markets. It
employs 1,300 people.

AXA Liabilities Managers

AXA Liabilities Managers is the AXA Group Company specializing in non-life (re)
insurance legacy business acquisition and management. The company operates in
Continental Europe, the UK and North America and manages close to 4 billion euros of
liabilities. It has 400 employees.

AXA Technology Services

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Fully-owned AXA Group subsidiary, providing AXA companies worldwide with IT
and telecommunications infrastructure management services.

MAXIS

Through the wider organizations of AXA and MetLife, MAXIS provides multinational
companies with international employee benefit solutions.

MAXIS is present in over 65 countries with more than 70 member companies: AXA
and MetLife subsidiaries, and independent members of the highest caliber.

3) AXA ASIA

AXA Asia Life is committed to become a preferred company in financial protection and
wealth management by 2012. AXA Asia Life, which is part of the AXA Group and
AXA Asia Pacific Holdings Limited, started operating in Asia in 1986. Since then, it
has grown rapidly and is today present in China, Hong Kong, Indonesia, India,
Malaysia, the Philippines, Singapore and Thailand. AXA Asia Life serves over 2.5
million customers, employs over 4,000 people, and has about 60,000 agents and
advisers across Asia. The Regional office is based in Hong Kong and is responsible for
supporting the Group’s operations in the 8 markets.

2.1.2 BRAND VALUE OF BHARTI AXA

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The brand focuses on delivering beyond just promises, by responding to client needs
with real and tangible proof, thus establishing an authentic relationship of trust with the
clients.

 Core Values

• Team Spirit
• Integrity
• Innovation
• Pragmatism
• Professionalism

Professionalism - A professional is a collegial discipline that regulates itself by means

of mandatory, systematic training. It has a base in a body of technical and specialized
knowledge that it both teaches and advances it sets and enforces its own standards and
it has a service rather than a profit orientation, enshrined in a code of ethics.

Innovation - Innovation is generally understood as the successful introduction of a new

thing or method. Innovation is the embodiment, combination, or synthesis of knowledge
in original, relevant, valued new products, processes, or services.

Team Spirit - team spirit is the spirit of a group that makes the members want the
group to succeed

Pragmatism - Pragmatism is the philosophy of considering practical consequences and

real effects to be vital components of meaning and truth.

Integrity - Integrity is consistency of actions, values, methods, measures, principles,

expectations and outcome. As a holistic concept, it judges the quality of a system in
terms of its ability to achieve its own goals.

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  Core Attitudes

These are at the heart of actions and commitments to clients.

• Attentive – Treating customer with empathy and consideration, provide

personalized advice along their lives and reward their loyalties

• Reliable – Delivering and keeping customers informed

• Available – Being there when customers need something

 Vision

“To be a leader and the preferred company for financial protection and wealth
management in India.”

 Strategy

• To achieve a market position among the top 5 in India through a multi-

distribution, multi-product platform
• To adapt AXA's best practice blueprints as a sound platform for efficient and
profitable growth
• To leverage Bharti's local knowledge, infrastructure and customer base
• To deliver high levels of shareholder return
• To build long term value with our business partners by enhancing the
proposition to their customers
• To be the employer of choice to attract and retain the best talent in India

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 • To be recognised as being close and qualified by our customers.

 Strategy Differentiators

• Strong partner Bharti - provides access to customer base of more than 130
million
• Multi channel execution capability
• Current Asia product range which is a strong match to products sold to the mass
and mass affluent
• Global scale providing cost effective and speedy re-use of systems, products and
business capability
• Strong AXA and Bharti brands which can be leveraged to attract and retain a
high quality management team

2.1.3 MANAGEMENT

1) Glenn Williams – Chief Executive Officer

He is the Chief Executive Officer and Managing Director for Bharti AXA Life
Insurance Co. Ltd. Prior to this, he was the Regional General Manager, Corporate
Development and Strategy for AXA Asia Life. In this position, Mr. Williams worked with

65
AXA Asia Life's senior management to expand operations across the region in markets
includingg Hong Kong, China, India, Indonesia, Malaysia, Singapore, Thailand and the
Philippines. Mr. Williams has been with AXA since 2002 and has held key positions in Hong
Kong and the Philippines. Mr. Williams has over 15 years of experience in the insurance
industry, particularly in the areas of product & pricing actuary, operations and finance.

2) Mark Gerard Meehan – Chief Operations Officer

He is currently the Chief Marketing and Operations Officer for Bharti AXA Life
Insurance Company Ltd. Mark’s previous role in AXA was that of CEO of Tynan
Mackenzie P/L, a professional investment services company. His role in Bharti AXA
Life as CMOO includes Marketing, Product Development, Customer Service,
Underwriting, Claims, Channel & Distribution Operations, Information Technology and
Systems, Six Sigma, Business Continuity and Client Persistency Management.

3) V Srinivasan – Chief Financial Officer

He is currently the Chief Financial Officer of Bharti AXA Life Insurance Company. He
started his career as a Chartered Accountant in 1989 and over the past two decades has
emerged as a stalwart in the financial sector. With over 8 years of rich experience in the
Life Insurance industry, today, he stands as a storehouse of financial knowledge and
expertise. His portfolio also boasts of extensive experience in diverse industrial
segments like manufacturing and oil & gas.

From April 1996 to February 2002, he has handled Corporate Finance and Tax at Cairn
Energy India Pvt Ltd. He has held responsibilities in Accounting and Project Reporting
at Kentz, Kuwait, Reliance and SRF Ltd. He has also functioned as the Senior Vice

66
President - Corporate Affairs at ICICI Prudential Life Insurance Company and CFO of
AMP Samar Life Insurance Company from February 2002 to December 2005.

4) Sushanto Mukherjee – Chief Distribution Officer

He is the Chief Distribution Officer for Bharti AXA Life Insurance Company Ltd. Prior
to this, he was Director & Head Partnership Distribution & Group Business at Max
New York Life Insurance He started his career with ITC-Welcomegroup hotels division
in 1989. He has subsequently worked in various reputed organizations such as Xerox,
Reliance Infocomm & Tata AIG in senior positions managing sales at Zonal & National
Levels.Sushanto has over 21 years of experience across Insurance, Telecom, Hospitality
and Office Automation.

5) Priya Ranjan – Human Resources Director

He is Director - Human Resources at Bharti AXA Life Insurance Company. He brings

to the business over 15 years of HR experience in diverse fields spanning financial
services, information technology and manufacturing. He specialises in building large
scale businesses right from their project days. He also has an entrepreneurial venture to
his credit with Bangalore-based Team Excel, which specialised in recruitment and HR
consulting. His first assignment was with Tata Steel as Sr. Personnel Officer from 1991
to 1994, followed by Microland Ltd. as Manager - HR for two years.

6) G L N Sarma – Senior Vice President

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He became a part of the Bharti AXA Life family in mid-2006 and is currently Sr. Vice
President and Chief & Appointed Actuary of Bharti AXA Life Insurance Company. He
also plays the role of Chief Risk Officer at Bharti AXA Life. He carries with him 18
years of experience in Insurance, Reinsurance, Pensions and General Administration.
GLN started his career with LIC in 1991, handling policy servicing, underwriting,
claims and sales compensation. Additionally, he was also a part of the Pension and
Group Scheme Team handling LIC's superannuation funds at the corporate office. In
2001, he joined the start-up team of Birla Sun Life as a qualified Actuary and was
responsible for business planning, pricing, valuation and group business initiatives. This
was followed by a stint at Swiss Reinsurance, where he functioned as the Marketing
Actuary and managed clients across the Indian sub-continent.

2.1.4 SWOT ANALYSIS

Strengths

• It has very well established promoters, namely, Bharti Enterprises and the AXA
Group

• It has a range of innovative products

• It has a huge database of clients from promoter companies

• It has around 200 branches all over India

Weaknesses

• It is relatively new in the market

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 • It has a low market share

• It has a weak distribution system

Opportunities

• There is a huge untapped life insurance market in India

• The company could have tie-ups with agents and brokers

• The company could use the latest technology

Threats

• There is huge competition from various players in the market

• There is a threat of new entrants

• There are constant changes in the government policies that affect the insurance
companies

• New rules and regulations by the IRDA

2.1.5 PRODUCTS

Bharti AXA Life offers a range of innovative products and services that cater to specific
insurance and wealth management needs of customers.

Individual Plans

• Protection

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 • Wealth Creation with protection

• Retirement

• Health

Group Plans

• Life Insurance

• Credit Protection

• Health

I. INDIVIDUAL PLANS

1) Protection

• Bharti AXA Life Elite Secure – It is a pure life insurance cover

available at very competitive premiums. It gives the option to cover life
till 75 years with a unique to age 75 years term

• Bharti AXA Life Secure Confident – It is a simple life insurance

product and gives an option to enhance protection with the addition of
riders.

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2) Wealth Creation with Protection

 Child Plans

• Bharti AXA Life Bright Stars Plus – It provides comprehensive

financial protection to loved ones. It also provides a jumpstart benefit of
up to 7% of average fund value during the policy term.

Key features

o Choice of policy terms to suit your financial goals – 7, 10, 15, 20 or 25

year term
o 360 degree protection to your loved ones through comprehensive
protection in case of death
o Jumpstart Benefit (Special additions) up to 7% during the policy term to
provide enhanced value to your investments
o Flexible options like partial withdrawal, premium holiday, decrease in
premium, etc
o Option to enhance protection with choice of riders
o 12 free switches every policy year and 6 investment fund options

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 • Bharti AXA Life Swarna Bhavishya – Special additions and
guaranteed special additions are added to the policy fund value at regular
intervals.

Key features

o Unmatched flexibility for wealth creation

 Pay premium only for 15 years and enjoy the benefits till
maturity
 Option to take cover continuance in case you are unable to pay
future premiums
 Flexibility to meet unforeseen or planned economic requirement
through partial withdrawals
o A guaranteed special addition of 1.25 times of Annual Premium will be
credited to your account at the end of 15th policy year
o Tax benefits on the premium paid and the benefits received will be as
per the prevailing tax laws

 Guaranteed Plans

• Bharti AXA Life Spot Guarantee Builder – It has a simplified sign

up process – no lengthy documentation or medical check-ups. It
invests in the equity markets with the benefit of protection of capital.
The guarantee can also potentially grow every year to increase
protection.

Key features

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 o Just fill the application form and answer simple health questions
o Quick Cover - Get the advantage of faster, priority processing of your
application to start your insurance protection
o High Protection (on Maturity): Opportunity to participate in equity
markets over the long term while having the comfort of a Guaranteed
Maturity Value
o Get the reassurance that your Guaranteed Maturity Value may keep
increasing over time
o High Insurance Protection: Sum Assured + Fund Value
• Bharti AXA Life Save Confident - Premium payment is for 12
years, while benefits can be enjoyed for 15 years. It also provides
regular money back with guaranteed annual payments.

Key features

o A convenient product with premium payment for only 12 years and

benefits for 15 years
o Enhance savings through Annual Reversionary Bonuses and Terminal
Bonuses if declared
o Provides regular money back through guaranteed annual regular
payments
o Enhanced protection with an in-built accidental death benefit in addition
to the normal death benefit

 Other Market Linked Plans

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 • Bharti AXA Life Express Secure - Simplified sign up process - just
fill the application form and answer a few simple health related
questions. It provides up to 150% of first year premium guaranteed
back, depending on the option chosen.

Key features

o Quick Cover- Get the advantage of faster priority processing of your

application to start your life insurance protection
o Guaranteed Additions to your fund in the 10th or 15th year as per the
GSA option by you
o Special Additions to boost your Fund Value
o Flexibility of partial withdrawal
o Cover continuance, in case of discontinuance of premium
o Redirect your future premium into different investment

• Bharti AXA Life Aspire life Plus - Get higher of up to 250% of

annual premium or 7% of Average Fund Value as Guaranteed
Special Addition. The option to choose the year in which the
Guaranteed Special Addition will be paid.

Key features

o Guaranteed additions to your fund in the 20th or 25th year as per the
GSA option chosen by you
o Flexibility of partial withdrawal
o Cover continuance, in case of discontinuance of premium
o Redirect your future premium into different investment

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 • Bharti AXA Life Wealth Confident - Investment-oriented plan that
helps create wealth for over 10 years through higher allocation to
investment fund and special additions. Flexibilities are available to
take care of changing investment needs while providing life
insurance cover.

Key features

o Pay premiums for 5 years while your policy accumulates wealth for 10
years
o Higher allocation of your first year premium up to 88% for investment
o Special additions every year starting from 6th policy year to provide
enhanced value to your investments
o Flexible options like partial withdrawal, premium holiday, decrease in
premium, etc
o 12 free switches every policy year and 6 investment fund options

• Bharti AXA Life Merit Plus Edge - Financial protection till age 85.
First year premium paid is paid back with interest.

Key features

o A financial solution that provides complete, comprehensive protection to

you and your family.
o Option to choose life Insurance Benefit as:
 Sum Assured or Fund Value, whichever is higher
 Sum Assured PLUS Fund Value

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 o Flexible options like partial withdrawal, additional investments through
top-up, switching between the investment funds and many more.
o
3) Retirement

• Bharti AXA Life Dream Life Pension Plus - Systematically increases

investments through Accumulator Option. It has regular and single pay
options.

Key features

o Pay regular premiums or one time lump sum premium

o At inception, choose to systematically increase your premiums by 5 % or
8% each year with the Accumulator Option
o Increase / decrease premiums any time after the 2nd year
o Enhance your retirement wealth by paying unlimited top-up premiums
after first year
o Flexibility to change your retirement age any time
o Get liquidity through partial withdrawals after the completion of 5 years
o 12 free switches every policy year and 6 investment fund options
o Special additions added to the fund at the end of 10th year and every 5
years thereafter
• Bharti AXA Life Future Secure Pension - Flexible pension plan with
benefits till age 90, while you payment is for 10 years only. Also, special
additions are added to the fund, in order to boost it.

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 Key features

o Unmatched flexibility for wealth creation on retirement

 Pay premium for 10 years only and enjoy the benefits till your
retirement
 Flexibility to invest through any of the two investment options
designed for you - Age-based Asset Allocation and Self
Investment option
 Invest in equity through our Systematic Transfer Plan which
helps you average out the risks associated with equity Markets
 Flexibility to meet unforeseen or planned economic requirement
through partial withdrawals
o Future Secure Pension enhances your retirement kitty by providing
special additions at the end of the 10th and 15th policy year
o Tax benefits on the premium paid and the benefits received will be as
per the prevailing tax laws

• Bharti AXA Life Future Advantage Pension - Premium payment is for

just 3 years. There are no surrender charges throughout the policy term.

Key features

o Pay premium for 3 years only and enjoy the benefits till your retirement
o Get liquidity through partial withdrawals after the completion of 3 policy
years

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 o Enhance your retirement wealth by paying top-up premiums at any point
of time
o 12 free switches every policy year and 6 investment fund options
o No surrender charge applicable throughout the term of the policy
o Flexibility to change your retirement age any time during the Policy term
o Special additions added to the fund every 5 years

4) Health

• Bharti AXA Life Easy Health - Extremely affordable premiums

starting as low as Rs 3 per day. A range of Daily Hospital Cash Benefit
options, with additional benefits in case of accidental hospitalisation in
an ICU or otherwise.

Key features

o Extremely affordable protection with premiums starting as low as Rs 3

per day
o Easy health covers you with a single premium at one go for 3 years
o Daily Hospital Cash Benefit options of Rs 500, Rs 750, Rs 1000 and Rs.
1500 per day
o Cover your spouse, children and parents and avail of an attractive
discount of 10% on premium for each family member added
o Get additional protection in case of hospitalisation due to an accident
and for hospitalisation in an ICU

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 o Avail of Get Well Soon benefit for continuous hospitalisation of 7 days
or more
o Simple and easy to enroll. No need to fill up lengthy proposal forms or
take any medical tests or medical reports

II. GROUP PLANS

1) Life Insurance

• Bharti AXA Life Shield – It is a single premium group term life

insurance product. It is a simple, affordable life insurance solution that
financially secures the family of the group member by providing a life
insurance cover.

• Bharti AXA Life Sanjeevani – It is a single premium group term life

insurance product which provides financial security and protection to
loved ones. It is a simple, affordable plan to safeguard a family from
life's uncertainties.

2) Credit Protection

• Bharti AXA Life Credit Secure – It is a single premium group

reducing term life insurance product, that makes sure your family is
not burdened with your loan liability in your absence. Now you can
ensure that your family is protected from the uncertainties of life

79
 even as they enjoy a good lifestyle. In case of an eventuality, Bharti
AXA Life will pay an amount that can used to settle the outstanding
loan amount.

• Bharti AXA Life Mortgage Credit Shield – It is a group product

designed for the customers of Institutions/Banks - protecting the
family of the borrower in the event of death by paying an amount to
settle the outstanding loan.

• Bharti AXA Life Credit Shield – It is a group product which

protects the family of the borrower in the event of death by paying an
amount to settle the outstanding loan.

3) Health

• Bharti AXA Life Swasthya Sanjeevani – It is a single premium

group critical illness product helps you secure yourself financially
against 6 critical illnesses namely cancer, heart attack, coronary
artery bypass surgery, kidney failure, stroke and loss of limbs.

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 Chart 2.1

Chart showing organization structure

81
II.2 FUNCTIONAL DEPARTMENTS

82
MARKETING DEPARTMENT

The team here is responsible for an array of activities, such as making TV commercials,
press and outdoor hoardings, news articles, product brochures, direct mail or on ground
activities. They receive dozens of queries from the internal customers every day and
they aim to resolve some of the most common requests they receive.

1. FINANCE DEPARTMENT

• Internal Audit

This department is responsible for Risk management, Business continuity plan, best
practices policy manuals.

• Distribution Payouts

This department rolls out commission payouts, referral, bonuses, contest spends and
effectiveness.

• Investment Operations

This department manages the cash flow.

• Accounts

This department does Financial Accounting, Expense provisioning, Income accruals.

They strive on the excellence & transparency of systems & controls to keep the
auditors, customers and shareholders assured.

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 2. OPERATIONS DEPARTMENT

The functions performed by this operations department are:

• Allotting advisor codes.

• Makes entry relating to advisors applications.
• Conducts fundamental skill programmer for advisors.
• Devices programs relating to communications skills of advisors and convincing
techniques.
• Updating the bank accounts of advisors.

3. HUMAN RESOURCE DEPARTMENT

• Performance Management

This department is responsible for creating a performance driven culture through

effective management of performance to all staff members in a way that is mutually
beneficial. They drive the same by linking individual performance objectives to
business objectives and evaluating performance consistently and fairly.

• Training & Capability Development Programs:

The focus of Training & Capability Development Programs is to develop key

competencies and skills among staff members so as to facilitate attainment of full
people potential.

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 • HR Policies & Procedures:

The policies and procedures laid down here promote the philosophy of the company
with regard to standards of excellence, terms of employment; employee development
and employee services.

Chart 2.2

Chart showing the recruitment process

85
A) SEGMENTING THE MARKET

86
For insurance company the market was segmented into following different groups.

• Geographical region
• Demographic age
• Family life cycle
• Gender
• Income
• Occupation
• Education
• Social class

B) TARGETING THE MARKET

For an insurance company, targeting the most prospective candidate requires

segmenting of the market into:

Needs based Segmentation: This is the most preferred and positive target segment of
an insurance company because the most positive result comes from this segment, like

• Extra income need

• Job need

• Career need

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C) PROCESS OF CAPTURING ELIGIBLE CANDIDATE

1] Personal contacts

Direct contact with many people known to an agency manager may be worth
consideration as potential insurance advisor. Sources of direct contact include personal
friends, fellow members of the community, schoolmates; former business associates
personal contacts and business contacts of the branch office.

(a) Personal Activity

No research is needed for means of introduction. Friends, the new financial advisors
known to the recruiter serve as a good source.

(b) Personal Observation

This is done by increasing “recruiting awareness”. This is done in three steps - ask
yourself:

• Would this person be a good recruiting prospect?

• If the answer is yes decide the best method to approach- telephone, letter or face-to-
face

• Do it.

(c) Seminar Recruiting

Discuss career opportunities with various groups of people and then select individuals
with whom to speak in more details.

(d) The “no leg” Recruiting System

88
This includes newspaper, office clients, and city directory/office directory / commerce
directory/yellow pages, statistical bureaus government and public bodies.

2] Through nominators

This means to obtain help from people who have influence over others not known to
you. Nominators serve as extra “eyes and ears” for the branch office. There can be
numbers of nominators within an Agency Manager circle of friends, acquaintance,
community members, and sales staff is almost limitless.

For getting cooperation from the nominators:

• build prestige: personal, of the branch office and of the company

• give nominators adequate concept of opportunity for the right person
• invest time and effort necessary to earn prestige and to strengthen relationship

3] Impersonal Recruiting Methods

The best candidates from impersonal recruitment survive and produce as well as the
best candidates from personal recruitment.

(a) advertisement- classified ads, display ads, situation wanted ads

(b) Employment agencies

(c) Direct mail

D) FILLING OF I.S.F. FORM

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After completion of market survey, each and every survey data is again reentered in ISF
(Initial Screening Form) to get a clearer picture of the best among the prospective
candidates. This ISF form serves as a data base for company.

E) BASIC SHORTLISTING ON THE OF ‘Q’ SCORE

The Qs are 5 different criteria where the candidates are to be analyzed. These Qs are
five basic screening questions through which the company knows about the candidate
interest of work in an insurance company.

Q1- The candidate should have been a resident of Bangalore for at least five years.

Q2- He/ She should be married.

Q3- His/ Her annual income should be at least 1.2 to 1.5 lakhs.

Q4- He/ She should be a graduate.

Q5- Minimum age to be eligible for being a life advisor is 25.

The significance of Qs

A high Q score implies possibility of better performance by the candidate as a life

advisor (meaning better revenue generation ability). On an average only a candidate
with a score of Q4 or Q5 was interviewed.

A low Q score implies lesser possibility of such performance.

F) CONDUCT AN INTERVIEW

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In this session of recruitment process the probable adviser is given the idea of the job
profile and taken his response. He is also given a general idea of the product and the
commission on the product holds. In this whole selection process, the prospective
candidate is shown the career path.

G) BOP PRESENTATION

Once the prospective candidate is ready for doing the advisory job he is called to the
office for a BOP (Business Opportunity Presentation) process. In this process, the
prospective advisor is sent to Branch Sales Manager, where the manager tries to know
his interest in the insurance sector and in this process he also verifies his certificate and
him personally.

H) FILLING OF NAAF FORM

The NAAF form consists of terms and conditions under the following headings.

 advisor’s remuneration
 advisor’s obligations
 insurance proposals
 limitations on advisor’s authority
 collection and remittance of funds
 indemnity
 books and records
 confidentiality
 protection of the interests of the company

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  suspension
 termination

I) SIX DAYS IRDA TRAINING

Refresher training is the basic training given to the trainee advisors about what is
insurance, types of insurance, present scenario of life insurance in India and scope and
career growth in insurance with legal ideas related to insurance. As per provisions of
IRDA Act for training of life advisors, the applicant shall have to undergo at least 100
hours practical training in life or general insurance business which may be spread over
three to four weeks, where such applicant is seeking license for the first time to act as
an insurance agent. The training duration should be minimum 18 working days
excluding Sundays and holidays. No product training/market survey should be included
into this hundred 100 hours training. The product training, if any, to be given by the
insurance company should be over and above the minimum training hours prescribed by
the Authority.

J) CONDUCTION OF EXAMINATION

The test can be taken up in either of the two modes, online or offline. Normally
objective type multiple choice questions are asked. A candidate is required to secure at
least 50% marks to be declared successful.

K) TWO DAYS PRODUCT TRAINING

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Product training is the final dressing of an advisor. Once the advisor qualifies the IRDA
exam he is sent to next stage of enrichment where he is given product training. An
advisor’s main job is to sell products and for this reason he needs to have a sound
knowledge of each and every product the company provides. And once he gets through
these two days training he becomes a full-fledged advisor ready to work for the
company.

4. SALES DEPARTMENT

• Managers Utilities - In this section there are important announcements for

managers, tools like pre-recruitment profiling, manager related initiatives, etc.

• Advisor Utilities - This section holds advisor related tools like, Electronic
Benefit illustrations, Advisor initiatives, important announcements, statutory
changes that affect advisors, etc.

Chart 2.3

93
 Chart showing Sales Process

94
 Field Sales
Call Centre Agent Customer
Representative

Receive call list from

marketing campaign

Call customer & offer

new product

Show interest in
offered insurance

Create follow-up
opportunity for hot
lead

Receive new
opportunity
requesting customer
visit

Arrange appointment
with customer

Create several
quotations

Choose one quotation

& agree on creating
application
Send application to
the company

95
a) Receive call list from marketing campaign

The call centre agent receives from the marketing department a call list with high-
potential customers (leads) to call.

b) Call customers and offer new products

The call centre agent offers the new products to the customers, guided by a predefined
interactive script.

c) Create follow-up opportunity for hot lead

Because the customer is interested in the new product, the call centre agent creates a
follow-up opportunity for the hot lead, and sends a visit request to the respective field
sales representative.

d) Show interest in offered insurance

The customer is indeed interested in the insurance product offered and would like a
consultation with his personal field sales representative.

e) Choose one quotation and agree on creating application

The customer chooses one of the quotations offered and agrees on an application being
created.

f) Receive new opportunity requesting customer visit

The field sales representative receives a new opportunity and visit request as a result of
the call.

96
g) Arrange appointment with customer

The field sales representative prepares for a call by having a look at the partner
overview. Then the field sales representative calls the customer to fix a date for the
visit.

h) Send application to company

The field sales representative sends the signed application back to the company and
changes the status of the opportunity to "won".

i) Create several quotations

During the customer visit the field sales representative explains the product in detail
and sets up several quotations for the customer.

97
 CHAPTER 3

RESEARCH DESIGN

98
3.1 STATEMENT OF THE PROBLEM

The fund managers of insurance companies are investing the maximum fund in
stock market, which is very volatile. Thus the funds are exposed to huge risk; no matter
there is a high chance of return. They have to be very careful in allocating the fund in
different sectors to get a maximum return. The stock markets are volatile and hence
there is always a risk on the funds which we invest in the stock market.

However, how safe game they play the returns depends upon their asset
allocation pattern. They have to cover all the risk by managing asset allocation pattern
efficiently. So there comes a need for the study of value at risk of the funds.

This study helps us to analyse how volatile a fund is and also the risk associated
with each fund. This research is going to help the investors to know the maximum
amount of loss they might incur in future depending upon the value at risk of each fund.

3.2 TITLE OF THE STUDY

Risk Analysis of Bharti AXA Life Insurance ULIP funds

3.3 OBJECTIVES OF THE STUDY

• To calculate Value at Risk

99
 • To calculate maximum loss below expected loss

• To determine the worst daily loss

3.4 SCOPE OF THE STUDY

The scope of the study is to find the value at risk of six investment funds under ULIP
plan of Bharti AXA Life. The study will help the customers to know the maximum loss
that they might incur in the next six months depending upon the fund.

3.5 OPERATIONAL DEFINITIONS

Standard Deviation: In finance, standard deviation is applied to the annual rate of

return of an investment to measure the investment's volatility (risk). A volatile stock
would have a high standard deviation. In mutual funds, the standard deviation tells us
how much the return on the fund is deviating from the expected normal returns.

Normal Distribution: The normal distribution, a continuous probability distribution, is

the most commonly used probability distribution in finance. The normal distribution

100
resembles a bell shaped curve. It is completely characterized by just two parameters,
viz. Expected return and standard deviation of return. And it is a bell-shaped
distribution that is perfectly symmetric around the expected return.

Systematic Risk: The risk inherent to the entire market or entire market segment.
Also known as "un-diversifiable risk" or "market risk." Interest rates, recession and
wars all represent sources of systematic risk because they will affect the entire market
and cannot be avoided through diversification. Whereas this type of risk affects a broad
range of securities, unsystematic risk affects a very specific group of securities or an
individual security. Systematic risk can be mitigated only by being hedged.

Unsystematic Risk: Risk that affects a very small number of assets. It is sometimes
referred as specific risk. For example, news that is specific to a small number of stocks,
such as a sudden strike by the employees of a company you have shares in.

Value at Risk (VaR): It calculates the maximum loss expected (or worst case scenario)
on an investment, over a given time period and given a specified degree of confidence.

There are three methods of calculating VAR: the historical method, the variance-
covariance method and the Monte Carlo simulation.

1. Historical Method

101
The historical method simply re-organizes actual historical returns, putting them in
order from worst to best. It then assumes that history will repeat itself, from a risk
perspective.

2. Variance-Covariance Method

This method assumes that stock returns are normally distributed. In other words, it
requires that we estimate only two factors - an expected (or average) return and a
standard deviation - which allow us to plot a normal distribution curve.

3.6 RESEARCH METHODOLOGY

TYPE OF STUDY

It is an analytical study done to analyze the risk associated with the different funds of
the company.

TYPE OF DATA

To understand the performance and functioning of various funds, we have collected fact
sheets, performance measure statistics, and sector-wise allocation of selected funds as
the secondary data.

SOURCE OF DATA

Secondary data

1) Fact sheets and reports of the company

102
2) Information through websites

SAMPLING METHOD

Sampling method is convenience sampling as all the data is available as secondary

source.

SAMPLE SIZE

The sample size comprises of six different types of funds under Bharti AXA ULIP
plans. Out of this, three are equity funds, two are debt funds and remaining one is a
balanced fund.

METHOD OF DATA COLLECTION

All the data has been collected using the secondary sources like websites, plan
brochures, and research reports.

TECHNIQUES/TOOLS FOR ANALYSIS

To evaluate the Risk Analysis of Bharti-AXA Life Insurance funds using Covariance,
MS Excel was used. Descriptive Statistics was used for the purpose of calculating
frequency and standard deviation.

Variance - Covariance method was also used to calculate the maximum loss that a
customer might incur in future depending upon the value at risk of each fund.

103
LIMITATIONS

1) The study has been limited to only six funds

2) The data encompassing the performance of various funds was limited to only six
months. So the study may not hold good for all the time.

3) The study is done only for one ULIP product, Bright Stars Plus.

4) In order to generalize the results, a similar methodology would have to be

applied to monthly data for different months. This would have to be undertaken
in subsequent studies.

5) The inference has been drawn in general, because in all funds there are some
advantages as well as some disadvantages.

104
 CHAPTER 4

DATA ANALYSIS

4.1 INTRODUCTION

105
For the purpose of conducting the research, the following six funds were used:

Table 4.1

Table showing asset allocation & risk-return potential of the different funds

106
107
Variance-Covariance Analysis

The Value at Risk (VaR) is calculated using the formula:

Table 4.2

Table showing calculation of VaR

108
The standard deviation shows the volatility of the fund. The curves are based on the
standard deviation of the fund value.

Conversion of Value at Risk to Different Time Period

The maximum loss below the expected or average return is calculated using the formula

Table 4.3

Table showing conversion of VaR to a different time period

We are predicting the maximum loss that can occur in the next 6 months. Assuming that
there are 124 trading sessions in the next 6 months we calculate the maximum loss that
can occur.

109
4.2 ANALYSIS AND INTERPRETATION

1) STEADY MONEY FUND

Table 4.4a Table Max. returns in 0.1608

a day
showing range of
Min. returns in -0.0967
returns a day
Range 0.0754

Class Interval Frequency

-1.6 to -0.08 0
Table 4.4b Table -0.08 to 0 5

showing frequency 0 to 0.08 34

0.08 to 0.16 71
distribution
0.16 to 0.24 12
0.24 to 0.32 1
0.32 to 0.4 0
0.4 to 0.48 0
0.48 to 0.56 0
0.56 to 0.64 0
0.64 o 0.72 0

110
Historical Method

From the table above, the number of days when we get a return less than or equal to
zero is 5. So we can say that approximately (5/124*100) = 4.03% of the times the daily
returns will be less than 0. Thus we can say with a 95.97% confidence level that the
daily return on this fund will not exceed -0.08%

Graph 4.1 Graph showing distribution of daily returns

111
Variance-Covariance Method

Table 4.4c Table showing standard deviation, value at risk & maximum loss

Standard Deviation 0.12385

Value at Risk
95% -0.20435
99% -0.28857

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 Maximum Loss Below Expected
Average for next 6 months
95% -2.27557
Max. returns in 1.5399
a day 99% -3.21338
Min. returns in -1.2132
a day
Range 0.8060

Interpretation

At 95% we get the VaR value as -0.20435% and at 99% we get the VaR value as
-0.28857%

The maximum loss that can occur at 95% confidence is -2.27557% and at 99%
confidence the maximum loss is -3.21338%

2) SAVE ’N’ GROW MONEY FUND

Table 4.5a Table showing range of returns

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 Table 4.5b Table showing frequency distribution

Class Interval Frequency

-4 to -3.2 0
-3.2 to -2.4 0
-2.4 to -1.6 0
-1.6 to -0.8 0
-0.8 to 0 4
0 to 0.8 47
0.8 to 1.6 68
1.6 to 2.4 4
2.4 to 3.2 0
3.2 to 4 0
4 to 4.8 0

Historical Method

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From the table above the number of days when we get a return less than or equal to zero
is 4. So we can say that approximately (4/124*100) = 3.23% of the times the daily
returns will be less than 0. Thus we can say with a 96.77% confidence level that the
daily return on this fund will not exceed -0.8%

Graph 4.2 Graph showing distribution of daily returns

115
Variance-Covariance Method

Table 4.5c Table showing standard deviation, value at risk & maximum loss

Standard Deviation 0.271034

Value at Risk
95% -0.44721
99% -0.63151

Maximum Loss Below Expected

Average for next 6 months
95% - 4.9787
99% -7.03218

Interpretation

At 95% we get the VaR value as -0.44721% and at 99% we get the VaR value as
-0.6351%

The maximum loss that can occur at 95% confidence is -4.9787% and at 99%
confidence the maximum loss is -7.03218%

116
3) SAFE MONEY FUND
Max. returns in 0.5022
Table 4.6a Table a day
showing range of Min. returns in -0.0215
a day
returns
Range 0.0203

Class Interval Frequency

-0.12 to -0.09 0
-0.09 to -0.06 0
Table 4.6b Table
-0.06 to -0.03 0
showing frequency
-0.03 to 0 0
distribution
0 to 0.03 1
0.03 to 0.06 96
0.06 to 0.09 26
0.09 to 0.12 0
0.12 to 0.15 0
0.15 to 0.18 0

117
Historical Method

From the table above the number of days when we get a return less than or equal to zero
is 0. So we can say that approximately (0/124*100) = 0% of the times the daily returns
will be less than 0. Thus we can say with a 100% confidence level that the daily return
on Safe Money Fund will not exceed -0.03%

Graph 4.3 Graph showing distribution of daily returns

118
Variance-Covariance Method

Table 4.6c Table showing standard deviation, value at risk & maximum loss

Standard Deviation 0.063951

Value at Risk
95% -0.10552

119
 99% -0.14901

Maximum Loss Below Expected

Average for next 6 months
Max. returns in 95%
3.3046 -1.17502
a day 99% -1.65927
Min. returns in -2.7804
a day
Range 1.7816

Interpretation

At 95% we get the VaR value as -0.10552% and at 99% we get the VaR value as
-0.14901%

The maximum loss that can occur at 95% confidence is -1.17502% and at 99%
confidence the maximum loss is -1.65927%

4) GROW MONEY PLUS FUND

Table 4.7a Table showing range of returns

120
 Table 4.7b Table showing frequency distribution

Class Interval Frequency

-9 to -7.2 0
-7.2 to -5.4 0
-5.4 to -3.6 0
-3.6 to -1.8 0
-1.8 to 0 4
0 to 1.8 49
1.8 to 3.6 67
3.6 to 5.4 2
5.4 to 7.2 1
7.2 to 9 0
9 to 9.8 0

121
Historical Method

From the table above, the number of days when we get a return less than or equal to
zero is 4. So we can say that approximately (4/124*100) =3.23% of the times the daily
returns will be less than 0. Thus we can say with a 96.77% confidence level that the
daily return on this fund will not exceed -1.8%.

Graph 4.4 Graph showing distribution of daily funds

122
Variance-Covariance Method

Table 4.7c Table showing standard deviation, value at risk & maximum loss

Standard Deviation 0.37434

Value at Risk
95% -0.61766

123
 99% -0.87221
Maximum Loss Below Expected
Average for next 6 months

Max. returns in a 95%3.1129 -6.87799

day 99% -9.71255
Min. returns in a -2.7867
day
Range 1.7273

Interpretation

At 95% we get the VaR value as -0.61766% and at 99% we get the VaR value as
-0.87221%

The maximum loss that can occur at 95% confidence is -6.87799% and at 99%
confidence the maximum loss is -9.71255%

5) GROWTH OPPORTUNITIES PLUS FUND

Table 4.8a Table showing range of returns

124
 Table 4.8b Table showing frequency distribution

Class Interval Frequency

-9 to -7.2 0
-7.2 to -5.4 0
-5.4 to -3.6 0
-3.6 to -1.8 0
-1.8 to 0 3
0 to 1.8 49
1.8 to 3.6 70
3.6 to 5.4 1
5.4 to 7.2 0
7.2 to 9 0
9 to 9.8 0

125
Historical Method

From the table above the number of days when we get a return less than or equal to zero
is 3. So we can say that approximately (3/124*100) =2.42% of the times the daily
returns will be less than 0. Thus we can say with a 97.58% confidence level that the
daily return on this fund will not exceed -1.8%

Graph 4.5 Graph showing distribution of daily returns

126
Variance-Covariance Method

Table 4.8c Table showing standard deviation, value at risk & maximum loss

Standard Deviation 0.358992

Value at Risk
95% -0.59234
99% -0.83645
127 Maximum Loss Below Expected
Average for next 6 months
95% -6.59599
99% -9.31434
 Max. returns in 3.1749
a day
Min. returns in a -2.8003
day
Range 1.7495

Interpretation

At 95% we get the VaR value as -0.59234% and at 99% we get the VaR value as
-0.83645%

The maximum loss that can occur at 95% confidence is -6.59599% and at 99%
confidence the maximum loss is -9.31434%

6) BUILD INDIA FUND

Table 4.9a Table showing range of returns

128
 Table 4.9b Table showing frequency distribution

Class Interval Frequency

-9 to -7.2 0
-7.2 to -5.4 0
-5.4 to -3.6 0
-3.6 to -1.8 0
-1.8 to 0 4
0 to 1.8 49
1.8 to 3.6 69
3.6 to 5.4 1
5.4 to 7.2 0
7.2 to 9 0
9 to 9.8 0

129
Historical Method

From the table above the number of days when we get a return less than or equal to zero
is 4. So we can say that approximately (4/124*100) =3.23% of the times the daily
returns will be less than 0. Thus we can say with a 96.77% confidence level that the
daily return on this fund will not exceed -1.8%

Graph 4.6 Graph showing distribution of daily returns

130
Variance-Covariance Method

Table 4.9c Table showing standard deviation, value at risk & maximum loss

Standard Deviation 0.993187

Value at Risk
95% -1.63876
99% -2.31413

Maximum Loss Below Expected

Average for next 6 months
95% -18.2485
99% -25.769

Interpretation

At 95% we get the VaR value as -1.63876% and at 99% we get the VaR value as
-2.31413%

The maximum loss that can occur at 95% confidence is -18.2485% and at 99%
confidence the maximum loss is -25.769%

131
 CHAPTER 5

FINDINGS,
SUGGESTIONS AND
CONCLUSION

132
5.1 SUMMARY OF FINDINGS

Objective 1: To calculate Value at Risk

The value at risk for the six funds varies as follows:

Steady Money Fund

At 95% it is -0.20435%

At 99% it is -0.28857%

Save ‘n’ Grow Money Fund

At 95% it is -0.44721%

At 99% it is -0.63151%

Safe Money Fund

133
At 95% it is -0.10552%

At 99% it is -0.14901%

Grow Money Plus Fund

At 95% it is -0.61766%

At 99% it is -0.87221%

Growth Opportunities Plus Fund

At 95% it is -0.59234%

At 99% it is -0.83645%

Build India Fund

At 95% it is -1.63876%

At 99% it is -2.31413%

Objective 2: To calculate maximum loss below expected loss

The maximum loss that one might incur in the next six months is as follows:

For Steady Money Fund, at 95% confidence it is -2.27557% and at 99% confidence it is
-3.21338%

134
For Save ‘n’ Grow Money Fund, at 95% confidence it is -4.9787% and at 99%
confidence it is -7.03218%

For Safe Money Fund, at 95% confidence it is -1.17502% and at 99% confidence it is
-1.65927%

For Grow Money Plus Fund, at 95% confidence it is -6.87799% and at 99% confidence
it is -9.71255%

For Growth Opportunities Plus Fund, at 95% confidence it is -6.59599% and at 99%
confidence it is -9.31434%

For Build India Fund, at 95% confidence it is -18.24855% and at 99% confidence it is
-25.769%

Objective 3: To determine the worst daily loss

The worst daily loss possible was -1.8% for Grow Money Plus Fund, Growth
Opportunities Plus Fund and Build India Fund. For Steady Money Fund and Save ‘n’
Grow Money Fund it was -0.08%. For Safe Money Fund it was -0.03%.

5.2 SUGGESTIONS

ULIPs as an investment avenue and as an asset class has gained immense popularity
among the financially savvy Indian investors in the last decade due to many factors
such as objective based investment, professional management, investor protection,
favorable returns, liquidity, etc. Given the mushrooming Indian insurance industry and
the increasing number of life insurance companies and various insurance schemes and
products this sector is regarded as a perfect substitute for direct investment in the capital

135
markets for the “small”, “medium” and “large” investors both individuals and
corporates.
Although, it depends on the investor ability to take risk and invest in funds; however,
the recommendations would include:

 ULIP investment is one of the best available investment alternatives available

for the investors who want to make more returns by taking comparatively lower
levels of risk.
 All the funds have not performed well. It is suggested to do a careful study
about the fund before deciding about investing in them.
 Fund manager should be very careful about the asset holding as it makes the
impact on the fund’s performance.
 Lastly, since there has been an increase in the cost of living, investors should
start saving early so as to get maximum returns. An investor can easily achieve
this, if right investment is made in the right kind of ULIP thus helping him to
trade off between risk and return and life security.
5.3 CONCLUSION

This study entitled “Risk Analysis of Bharti AXA Life Insurance ULIP funds” was
carried out from the investor’s point of view to help them in selecting the funds which
suits their investment objectives in these highly volatile markets. The objectives of the
study were to calculate value at risk, calculate maximum loss below expected loss and
to determine the worst daily loss. It was found that allocation, as well as sector-wise
allocation has a great impact on performance of the fund, be it an equity fund, a debt
fund or a balanced fund. It was found from descriptive statistics that the Equity had the
highest Standard Deviation i.e. the risk involved is very high, thus investment should be
made with care in the Equity. On the other hand, Standard Deviation of Debt and
Balanced is low i.e. both these instruments are safe to invest in.

136
MY LEARNING

 I got an insight of how an organization works and the factors that influence it.
 During the internship, I learnt about the insurance industry, present market and
the future potential of this particular sector. I got a clear knowledge about the
functioning of ULIP, the process, benefits, and boundaries of life insurance as
an investment avenue. I also understood the various types of life insurance
products available.
 The project also provided me with the information regarding allocation of
different funds in different sectors. It also gave me an opportunity to analyze
various schemes, the risk and the returns associated with every scheme.
 As I have undergone the process of research in a systematic way, I clearly
understood how to carry out a research. I understood various aspects of research
in a more practical manner, starting from identifying a problem to eliciting the
solutions to that problem.

BIBLIOGRAPHY

BOOKS

 Research Methodology – C. R. Kothari (New Age International

Publishers)

137
WEBSITES

 www.bharti-axalife.com
 www.bharti.com
 www.axa.com
 www.investopedia.com
 www.irda.gov.in
 www.economywatch.com

OTHER SOURCES

Company’s internal records have also been referred to get the required information.

ANNEXURE
Net Asset Values of the six funds for six months

138
Created Date Steady Money Save`n`Grow Safe Money Grow Money Growth Build India
Fund Money Fund Fund Plus Fund Opportunities Fund
Plus Fund

08-12-2010 13.2281 14.7075 10.409 11.0631 10.833 11.0312

08-11-2010 13.2294 14.6988 10.4077 11.0191 10.7754 11.011

08-10-2010 13.2204 14.7417 10.4064 11.0777 10.8121 11.0774

08-09-2010 13.2203 14.7705 10.4051 11.1082 10.841 11.0886

08-06-2010 13.216 14.7151 10.4011 11.0011 10.7474 10.975

08-05-2010 13.2057 14.7171 10.3998 11.0132 10.7511 10.9702

08-04-2010 13.2181 14.7426 10.3984 11.041 10.763 11.0092

08-03-2010 13.2165 14.7133 10.3971 11.0014 10.7275 10.9793

08-02-2010 13.2113 14.6946 10.3958 10.9904 10.7079 10.9598

07/30/2010 13.2206 14.6222 10.3919 10.88 10.6036 10.8239

07/29/2010 13.2314 14.6704 10.3905 10.9138 10.631 10.8067

07/28/2010 13.2442 14.6593 10.3892 10.8937 10.6162 10.8129

07/27/2010 13.2553 14.694 10.3879 10.9042 10.616 10.8431

07/26/2010 13.2638 14.6857 10.3866 10.8971 10.6088 10.8396

07/23/2010 13.2597 14.7205 10.3826 10.9818 10.6937 10.9358

07/22/2010 13.2574 14.7108 10.3813 10.993 10.7067 10.9467

07/21/2010 13.2517 14.6582 10.38 10.915 10.6241 10.8517

07/20/2010 13.2563 14.6286 10.3786 10.8548 10.567 10.7755

07/19/2010 13.2607 14.6561 10.3773 10.8924 10.6033 10.7894

07/16/2010 13.252 14.6544 10.373 10.8894 10.5948 10.7876

07/15/2010 13.2536 14.6366 10.3719 10.8481 10.5508 10.7567

07/14/2010 13.2538 14.646 10.3706 10.8711 10.5912 10.8114

07/13/2010 13.2628 14.6651 10.3693 10.8821 10.5937 10.8209

07-12-2010 13.2639 14.6447 10.3679 10.8392 10.5499 10.7388

07-09-2010 13.2562 14.6059 10.364 10.7923 10.5209 10.6715

07-08-2010 13.2606 14.5504 10.3627 10.7092 10.4453 10.5768

07-07-2010 13.2616 14.4795 10.3614 10.599 10.3412 10.4806

07-06-2010 13.2545 14.5295 10.3601 10.6705 10.3993 10.5435

07-02-2010 13.2583 14.4636 10.3549 10.5681 10.3119 10.4687

07-01-2010 13.2561 14.4846 10.3535 10.5992 10.3306 10.4964

06/30/2010 13.2494 14.5482 10.3522 10.6892 10.4064 10.5815

06/29/2010 13.2375 14.4789 10.3508 10.6058 10.3194 10.4984

06/28/2010 13.2356 14.5565 10.3495 10.7085 10.4124 10.5953

06/25/2010 13.225 14.4763 10.3456 10.5892 10.3028 10.4622

06/24/2010 13.2354 14.5436 10.3443 10.6819 10.3712 10.5459

139
06/23/2010 13.2267 14.5318 10.343 10.6753 10.367 10.572

06/22/2010 13.2263 14.52 10.3417 10.646 10.3294 10.5782

06/21/2010 13.2237 14.5584 10.3404 10.6965 10.3637 10.6326

06/18/2010 13.2133 14.447 10.3367 10.535 10.2226 10.4663

06/17/2010 13.2047 14.4527 10.3354 10.5553 10.2422 10.4943

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