INTRODUCTION

Insurance is quite simply protection against the risk of potential significant financial
loss in the future. Insurance is a way of buying financial peace of mind against the
uncertainties and risks in life such as untimely death, loss of property, serious health issues
requiring heavy expenditure and accidents among others.

Insurance policies cover the risk of life as well as other assets and valuables such as home
automobiles etc. On the basis of the risk they cover, insurance policies can be classified into
two categories:

a) Life Insurance
b) General Insurance

Life insurance products cover risk for the insurer against eventualities like death or disability.

Non-life insurance products cover risks against natural calamities, burglary, etc.

Insurance is system by which the losses suffered by a few are spread over many, exposed to
similar risks. With the help of Insurance, large numbers of people exposed to a similar risk
make contributions to a common fund out of which the losses suffered by the unfortunate
few, due to accidental events, are made good. Insurance is a protection against financial loss
arising on the happening of an unexpected event. Insurance policy helps in not only
mitigating risks but also provides a financial cushion against adverse financial burdens
suffered.

Insurance is defined as a co -operative device to spread the loss caused by a particular risk
over a number of persons who are exposed to it and who agree to ensure themselves against
that risk.
Risk is uncertainty of a financial loss. Insurance is also de fined as a social device to
accumulate funds to meet the uncertain losses arising through a certain risk to a person
injured against the risk. Insurance provides financial protection against a loss arising out of
happening of an uncertain event. A person can avail this protection by paying premium to
an insurance company. A pool is created through contributions made by persons seeking to
protect themselves from common risk. Any loss to the insured in case of happening of an
uncertain event is paid out of this pool. Life insurance has come a long way from the earlier

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days when it was originally conceived as a risk -covering medium for short periods of time,
covering temporary risk situations, such as sea voyages. As life insurance became more
established, it was realized what a useful tool it was for a number of situations that includes
temporary needs, threats, savings, investment, retirement etc. Insurance is a contract
between two parties whereby one party agrees to undertake the risk of another in exchange
for consideration known as premium and promises to pay a fixed sum of money to the
other party on happening of an uncertain event (death) or after the expiry of a certain
period in case of life insurance or to indemnify the other party on happening of an
uncertain event in case of general insurance. The party bearing the risk is known as the
'insurer' or 'assurer' and the party whose risk is covered is known as the 'insured' or
'assured'.

According to the U.S. Life Office Management Inc., “Life Insurance provides a sum of
money if the person who is insured dies whilst the policy is in effect.” The definition of
insurance can be seen from two viewpoints:

a) Functional Definition

b) Contractual Definition

(a) Functional Definition

Insurance is a co -operative device of distributing losses, falling on an individual or his

family over large number of persons each bearing a nominal expenditure and feeling
secure against heavy loss.
(b) Contractual Definition

Insurance may be defined as a contract consisting of one party (the insurer) who agrees to
pay to other party (the insured) or his beneficiary, a certain sum upon a given contingency
against which insurance is sought.

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FEATURES OF INSURANCE

An Agreement Enforceable in Law. Insurance is an agreement which is enforceable in law.

It cannot be otherwise. It is a non-transferable such an agreement which must satisfy all the
essentials of a contact, that is, the parties in contact should be competent to enter into
contract, they must freely agree and give their consent, they must agree for legal
consideration and lawful objectives and all legal formalities must have been completed.

 Two Parties one The Insurer and the Insured. An insurance contact, like others, must
have to parties and second the insurer who agrees to compensate whenever specified
event or events take place and the insured who agrees to pay the consideration as agreed
upon and abide by all the terms and conditions of the insurance contact.

 Utmost Good Faith. In insurance contact the insured is legally liable to disclose all the
materials facts (which may affect the very nature of the contact) to the insurer. It is on
this basis the insurer agrees to compensate, thereby cover the risk. Nothing should be
concealed. If, however, something is concealed, the insurer may back out on the place
that the principle of utmost good faith was not adhered to by the insured.

 Premium The insured agrees to pay either a single premium or a periodical premium for
which the insurer covers and in case the specified events happens he agrees to pay the
compensation specified therein specific events take place. This is a promise of indemnity
from a specific risk by the insurer.

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PRINCIPALS OF INSURANCE

Insurance is based upon:

(a) Principles of Co-operation

(b) Principles of Probability

(a) Principles of Co-operation

Insurance is a co -operative device. If one person is providing for his own losses, it cannot be
strictly insurance because in insurance the loss is shared by a group of persons who are
willing to co-operate.

(b) Principles of Probability

The loss in the form of premium can be distributed only on the basis of theory of
probability. The chances of loss are estimated in advance to affix the amount of premium.
Since the degree of loss depends upon various factors, the affecting factors are analysed
before determining the amount of loss. With the help of this principle, the uncertainty of
loss is converted into certainty. The insurer will not have to suffer loss as well as gain
windfall. Therefore, the insurer has to charge only so much of amount which is adequate to
meet the losses.

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The insurance, on the basis of past experience, present conditions and future prospects,
fixes the amount of premium. Without premium, no co -operation is possible and the
premium cannot be calculated without the help of theory of probability, and consequently
no insurance is possible.

FUNCTION OF INSURANCE

The functions of Insurance can be bifurcated into three parts:

a) Primary Functions

b) Secondary Functions

(a) Primary Functions

The primary functions of insurance include the following:

1) Provide Protection

The primary function of insurance is to provide protection against future risk, accidents and
uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for
losses of risk. Insurance is actually a protection against economic loss, by sharing the risk
with others.

2) Assessment of risk

Insurance determines the probable volume of risk by evaluating various factors that give rise
to risk. Risk is the basis for determining the premium rate also.

3) Collective bearing of risk

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Insurance is a device to share the financial loss of few among many others. Insurance is a
mean by which few losses are shared among larger number of people. All the insured
contribute premiums towards a fund, out of which the persons exposed to a particular risk
are paid.

4) Savings and investment

Insurance serves as a tool for savings and investment, insurance is a compulsory way of
savings and it restricts the unnecessary expenses by the insured. For the purpose of availing
income -tax exemptions, people invest in insurance also.

(b) Secondary Functions

The secondary functions of insurance include the following:

A. Prevention of Losses

Insurance cautions individuals and businessmen to ad opt suitable device to prevent

unfortunate consequences of risk by observing safety instructions; installation of automatic
sparkler or alarm systems, etc. Reduced rate of premiums stimulates more business and better
protection to the insured.

1) Small capital to cover large risks

Insurance relieves the businessmen from security investments, by paying small amount of
premium against larger risks and uncertainty.

2) Contributes towards the development of large industries

Insurance provides development opportunity to large industries having more risks. Even the
financial institutions may be prepared to give credit to sick industrial units which have
insured their assets including plant and machinery.

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3) Source of Earning Foreign Exchange

Insurance is an international business. The country can earn foreign exchange by way of
issue of insurance policies.

4) Risk Free Trade

Insurance promotes exports insurance, which makes the foreign trade risk free with the help
of different types of policies under marine insurance cover.

A businessman who gets insurance against all possible risk of business frees himself
form the risk against which has taken the insurance and thus makes himself available for
more important and pressing business work.
An insured businessman feels safe and free. Anyone who takes up life policy or general
policy like fire, natural calamity, accident etc. makes himself free not only free from family
liability but with greater enthusiasm and better vision can work for the society as a whole.
The society is benefitted. The nation gets responsible citizens who may be able to risk even
their life for the cause of the nation. Society gets an efficient worker. Nation gets a
responsible citizen. The business would get a devoted businessman. The insurer gets a
worthy insured. The economy gets a boost because small savings collected in the form of
premiums may be invested in nation building and economic progress. This brings a sense of
gratitude to the entire population prosperity, social advancement, political stability and
better commercial and industrial world may become the order of the day because of
insurance contact.

INSURANCE REPOSITORY 

Recently the Finance Minister of India announced the setting of insurance repository system.
An Insurance Repository is a facility to help policy holders buy and keep insurance policies
in electronic form, rather than as a paper document. Insurance Repositories, like Share
Depositories or mutual fund Transfer Agencies, will hold electronic records of insurance

7
policies issued to individuals and such policies are called “electronic policies” or “e
Policies”.

Foreign direct investment in Insurance Sector

Foreign direct investment (FDI) is a direct investment into production or business in a

country by an individual or company of another country, either by buying a company in the
target country or by expanding operations of an existing business in that country.

BENEFITS OF FDI IN INSURANCE

The Cabinet Committee on Economic Affairs headed by Prime Minister Narendra Modi has
today approved the limit of Foreign Direct Investment (FDI) in Insurance sector to 49 percent
from the existing 26 percent. The cabinet has cleared the FDI limit in insurance companies
through FIPB route which necessitates the management control with the Indian promoters.
This was a long due reform which the Modi government has undertaken and is surely bond to
benefit the insurance sector.

The stock market has reacted positively to the news and the shares of Reliance Capital and
Max India gained more than 4.5% in intra-day trade today. The higher FDI cap will
immensely help the insurance sector which is extremely short on investments.

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INTRODUCTION OF LIFE INSURANCE

The first life insurance policies were taken out in the early 18th century. The first
company to offer life insurance was the Amicable Society for a Perpetual Assurance
Office, founded in London in 1706 by William Talbot and Sir Thomas Allen. The
first plan of life insurance was that each member paid a fixed annual payment per
share on from one to three shares with consideration to age of the members being
twelve to fifty-five. At the end of the year a portion of the "amicable contribution"
was divided among the wives and children of deceased members and it was in
proportion to the amount of shares the heirs owned. Amicable Society started with
2000 members.

Amicable Society for a Perpetual Assurance Office, established in 1706, was the first
life insurance company in the world.

The first life table was written by Edmund Halley in 1693, but it was only in the
1750s that the necessary mathematical and statistical tools were in place for the
development of modern life insurance. James Dodson, a mathematician and actuary,
tried to establish a new company that issued premiums aimed at correctly offsetting
the risks of long- term life assurance policies, after being refused admission to the
Amicable Life 0Assurance Society because of his advanced age. He was
unsuccessful in his attempts at pro curing a charter from the government before his
death in 1757.

His disciple, Edward Rowe Mores was finally able to establish the Society for Equitable
Assurances on Lives and Survivorship in 1762. It was the world's first mutual insurer and it
pioneered age premiums based on mortality rate laying "the framework for scientific
insurance practice and development" and "the basis of modern life assurance upon which all
life assurance schemes were subsequently based". Mores also specified that the chief official

9
should be called an actuary the earliest known reference to the position as a business concern.
The first modern actuary was William Morgan, who was appointed in 1775 and served until \
1830. In 1776 the Society carried out the first actuarial valuation of liabilities and
subsequently distributed the first reversionary bonus (1781) and interim bonus (1809) among
its members. It also used regular valuations to balance competing interests. The Society
sought to treat its members equitably and the Directors tried to ensure that the policyholders
received a fair return on their respective investments. Premiums were regulated according to
age, and anybody could be admitted regardless of their state of health and other
circumstances.

The sale of life insurance in the U. S. began in the late 1760s. The Presbyterian Synods
in Philadelphia and New York founded the Corporation for Relief of Poor and Distressed
Widows and Children of Presbyterian Ministers in 1759; Episcopalian priests created a
comparable relief fund in 1769. Between 1787 and 1837 more than two dozen life
insurance companies were started, but fewer than half a dozen survived

Life Insurance is the fastest growing sector in India since 2000 as Government allowed
Private players and FDI up to 26% and recently Cabinet approved a proposal to increase it
to 49%. Life Insurance in India was nationalized by incorporating Life Insurance
Corporation (LIC) in 1956.
All private life insurance companies at that time were taken over by LIC.

In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map
for privatization of the life insurance sector.

While the committee submitted its report in 1994, it took another six years before the
enabling legislation was passed in the year 2000, legislation amending the Insurance Act of
1938 and legislating the Insurance Regulatory and Development Authority Act of 2000. The
same year the newly appointed insurance regulator-Insurance Regulatory and Development
Authority IRDA— started issuing licenses to private life insurers. Life Insurance is the
fastest growing sector in India since 2000 as Government allowed Private players and FDI
up to 26% and recently Cabinet approved a proposal to increase it to 49%. Life Insurance in
India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956.
All private life insurance companies at that time were taken over by LIC.

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In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map
for privatization of the life insurance sector.

While the committee submitted its report in 1994, it took another six years before the
enabling legislation was passed in the year 2000, legislation amending the Insurance Act of
1938 and legislating the Insurance Regulatory and Development Authority Act of 2000. The
same year the newly appointed insurance regulator-Insurance Regulatory and Development
Authority IRDA— started issuing licenses to private life insurers.

IMPORTANCE OF LIFE INSURANCE

Life Insurance encourages saving

The elements of protection and investment are present only in case of life insurance.
In property insurance, only protection element exists. In most of the life policies
elements of saving predominates. Systematic saving is possible because regular
premiums are required to be compulsorily paid. In insurance the deposited premium
cannot be withdrawn easily before the expiry of the term of the policy. The
compulsion to pay premium in insurance is so high that if the policy -holder fails to
pay premiums within the days of grace, he subjects his policy to causation and may
get back only a very nominal portion of the total premiums paid on the policy.
For the preservation of the policy, he has to try his level best to pay the premium.

Life Insurance provides profitable investment

Individuals unwilling or unable to handle their own funds are pleased to find an outlet for
their investment in life insurance policies. The elements of investment i.e. regular saving,
capital formation, and return of capital along with certain additional return are perfectly
observed in life insurance. Life insurance fulfils all these requirements at a low cost.

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TYPES OF LIFE INSURANCE POLICIES

A life insurance policy could offer pure protection (insurance), another variant could
offer protection as well as investment while some others could offer only investment.
In India, life insurance has been used more for investment purposes than for protection
in one’s overall financial planning. Followings are the types of life insurance policy:

 Term Life Insurance Policy

As its name implies, term life insurance policy is for a specified period. It depends on the
length of time. It has one of the lowest premiums among insurance plans and also carries an
added advantage of fixed payments that do not increase during the term of the policy. In case
of the policy holder's untimely demise, the benefit amount specified in the insurance
agreement goes to the nominees.

 Whole Life Insurance Policy

Whole life insurance policies do not have any fixed term or end date and is only payable to
the designated beneficiary after the death of the policy holder. The policy owner does not get
any monetary benefits out of this policy. Because this type of insurance involves fixed known
annual premiums, it's a good option to ensure guaranteed financial benefits for surviving
family members.

 Money Back Plan:

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With a money back plan, policyholder receives periodic payments, which are a
percentage of the entire amount insured, during the lifetime of policy. It's a plan that
offers insurance coverage along with savings. These policies provide for periodic
payments of partial survival benefits during the term of the policy itself. A unique
feature associated with this type of policies is that in the event of death of the insured
during the policy term, the designated beneficiary will get the full sum assured without
deducting any of the survival benefit amounts, which have already been paid as
money-back components.

 Pension Plan

Pension plans are different from other types of life insurance because they do not
provide any life insurance cover, but ensure a guaranteed income, either for life or
for a certain period. The Policyholder makes the investment for a pension plan either
with a single lump sum payment or through instalments paid over a certain number
of years. In return, he gets a specific sum every year, every half-year or every month,
either for life or for a fixed number of years. In case of the death of the insured, or
after the fixed annuity period expires for annuity payments, the invested annuity fund
is refunded, usually with some additional amounts as per the terms of the polices

 Endowment Policy

It is the most popular life insurance plan. This policy combines risk cover with
objective of savings and investment. If the policy holder dies during the policy
period, he will get the assured amount. Even if he survives, he will receive the
assured amount. The advantage of this policy is if the policy holder survives after the
completion of policy tenure, he receives assured amount plus additional benefits like
bonus from the insurance company. Designed primarily to provide a living benefit,
along with life insurance protection, the endowment policy makes a good investment
if policyholder wants coverage, as well as some extra money.

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There are two types of Endowment policy:

a) Without-profit endowment plan

b) With- profit endowment plan

(a) Without profit endowment plan

These plans do not participate in the profits the insurance company makes each year.
Apart from the sum assured, the policyholder could possibly get a loyalty bonus, which
is a oneTime pay-out.

(b) With-profit endowment plan

These plans share the profits the insurance company makes each year with the
policyholder, so they offer more returns than without -profit endowment plans and are
more expensive i.e. the premiums will be higher than without-profit endowment plans.

Unit-linked insurance plan (ULIP)

Unit-linked insurance plans gives a policyholder greater control on where premium

can be invested. The annual premium is invested in various types of funds that invest
in debt and equity in a proportion that suits all types of investors. A policyholder can
switch from one fund plan to another freely and can also monitor the performance of
his plan easily. ULIP is suitable for those who understand the stock market well.

FEATURES OF LIFE INSURANCE CONTRACT

Human life is an income generating asset. This asset can be lost through unexpected
death or made non-functional through sickness or disability caused by an accident. On
the other hands there is a certainty that death will happen, but its timing is uncertain.
Life insurance protects against loss. Life insurance contract may be defined as the
contract, whereby the insurer in consideration of a premium undertakes to pay a certain

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sum of money either on the death of the insured or on the expiry of a fixed period. The
definition of the life insurance contract is enlarged by Section (2) of the Insurance Act
1938 by including annuity business. Since, the life insurance contract is not an
indemnity contract; the undertaking on the part of the insurer is an absolute one to
pay a definite sum on maturity of policy at the death or an amount in
instalments for a fixed period or during the life.

 Term Insurance Policies

The basic premise of a term insurance policy is to secure the immediate needs of
nominees or beneficiaries in the event of sudden or unfortunate demise of the policy
holder. The policy holder does not get any monetary benefit at the end of the policy
term except for the tax benefits he or she can choose to avail of throughout the tenure
of the policy. In the event of death of the policy holder, the sum assured is paid to his
or her beneficiaries. Term insurance policies are also relatively cheap to acquire
compared to other insurance products.

 Money-back Policies

Money back policies are basically an extension of endowment plans wherein the policy
holder receives a fixed amount at specific intervals throughout the duration of the policy. In
the event of the unfortunate death of the policy holder, the full sum assured is paid to the
beneficiaries. The terms again might slightly vary from one insurance company to another.

 Unit-linked Investment Policies (ULIP)

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Unit linked insurance policies again belong to the insurance -cum-investment category
where one gets to enjoy the benefits of both insurance and investment. While a part of
the monthly premium pay-out goes towards the insurance cover, the remaining money
is invested in various types of funds that invest in debt and equity instruments. ULIP
plans are more or less similar in comparison to mutual funds except for the difference
that ULIPs offer the additional benefit of insurance.

 Pension Policies

Pension policies let individuals determine a fixed stream of income post retirement. This
basically is a retirement planning investment scheme where the sum assured or the
monthly pay- out after retirement entirely depends on the capital invested, the investment
timeframe, and the age at which one wishes to retire. There are again several types of
pension plans that cater to different investment needs. Now it is recognized as insurance
product and being regulated by IRDA.

LIFE INSURANCE INDUSRIES OVERVIEW

All life insurance companies have to comply with the strict regulations laid out by
Insurance Regulatory and Development Authority.

Life Insurance Corporation (LIC), the stat owned behemoth, remains by far the largest
player in the market. The private companies have come out with products called
ULIPs (Unit Linked Investment Plans) which offer both life cover as well as scope for
savings or investment options as the customer desires. These types of plan are subject
to a minimum lock -in period of three years to prevent misuse of the significant tax
benefits offered to such plans under the Income Tax Act. Comparison of such
products with mutual funds would be erroneous.

Commission / intermediation fees

The maximum commission limits as per statutory provisions are:

Agency commission for retail life insurance business:

 7- 25% for 1st year premium if the premium paying term is more than 20years

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 7- 10% for 1st year premium if the premium paying term is more than 15 years
 7- 10% for 1st year premium if the premium paying term is less than 10 years
 7% - year 2nd and 3rd year and 3.5% - thereafter for all premium paying terms.

In case of Mutual fund related - Unit linked policies it varies between 1.5%to 6% on the
premium paid.

Agency commission for retail pension

 7.5% for 1st year premium and 2.5% thereafter

 Maximum broker commission - 30%
 Referral fees to banks – Max 55% for regular premium and 10% for single premium.
However, in any case this fee cannot be more than the agency commission as filed under
the product.
 However, the above commission may be further subject to the product wise limits
specified by IRDA while approving the product.
MEANING AND DEFINITION OF PROFITABILITY

The word 'profitability' is composed of two words, namely; profit and ability. The
term profit has already been discussed at length in detail. The term ability indicates the
power of a firm to earn profits. The ability of an enterprise also denotes its earning power
or operating performance.
Also, that the business ability points towards the financial and operational ability of
the business. So, on this basis profitability may be defined as the ability of a given
instrument to earn a return from its use’ 1 Weston and Brigham defines profitability
as "the net surplus of a large number of policies and decisions." Profit being an
absolute figure fails to indicate the adequacy of income or changes inefficiency
resulting from financial and operational performance of an enterprise. Much
difficulty and confusion come home while interpreting the absolute figures of profit
in case of historical or inter -firm comparisons due to variation in the size of
investment or volume of sales etc. Such problems are handled by relating figures of
profit either with the volume of sales or with the level of investment. A quantitative
relationship is thereof established either in the form of ratios or percentages. Such
ratios are name s as profitability ratios. Thus, profitability may be regarded as a

17
relative term measurable in terms of profit and its relation with other elements that
can directly influence the profit. No doubt, profit and profitability are closely related
and mutually interdependent, yet they are two different concepts. "The accounting
concept of profit measures what have been accumulated, the analytical concept of
profitability is concerned with future accumulation of wealth. "Profit of an enterprise,
reports about the financial and operational efficiency of the business. Whereas,
profitability interprets the term profit in relation to other elements likely to affect
these profits in order to help in decision- making. Profit is regarded as an absolute
connotation as against profitability, which is regarded as a relative concept. Where
profit is the residual income left after meeting all manufacturing, administrative
expenses; profitability is the profitmaking ability of an enterprise. The profit figure
indicates the amount of earning of a business during a special period. While,
profitability denotes whether these profits are constant or improved or deteriorated,
how and to what extent they can be improved. Profit in two separate business
concerns may be identical, yet, at many times, it usually happens that their
profitability varies when measure in terms of size of investment. It has been aptly
remarked that the role played by profits and profitability in a business enterprise is
identical to the function carried out by blood and pulse in the human body
profitability is the ability to earn profit from all the activities of an enterprise. It
indicates how well management of an enterprise generates earnings by using the
resources at its disposal. In the other words the ability to earn profit e.g. profitability,
it is composed of two words profit and ability. The word profit represents the absolute
figure of profit but an absolute figure alone does not give an exact idea of the
adequacy or otherwise of increase or change in performance as shown in the financial
statement of the enterprise. The word ‘ability’ reflects the power of an enterprise to
earn profits, it is called earning performance. Earnings are an essential requirement to
continue the business. Some can say that a healthy enterprise is that which has good
profitability. According to Hermanson Edward and salmon son ‘profitability is the
relationship of income to some balance sheet measure which indicates the relative
ability to earn income on assets employed.

CONCEPT OF PROFITABILITY

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Accounting Profitability

Profitability is a measure of evaluating the overall efficiency of the business. The best
possible course for evaluation of business efficiency may be input-output analysis.
Profitability can be measured by relating output as a proportion of input or matching it with
the results of other firms of the same industry or results attained in the different periods of
operations. Profitability of a firm can be evaluated by comparing the amount of capital
employed i.e. the input with income earned i.e. the output. This is popularly known as return
on investment or return on capital employed. It is regarded as the overall profitability ratio
and has two components; net profit ratio and turnover ratio. That is

Return on Investment = Net Profit Ratio X Turnover Ratio or,

Return on Investment = Operating Profit x Sales, Sales Capital Employed Or

Return on Investment = Operating Profit Capital Employed

This method is increasingly accepted as an indicator of performance and capability. This is

the reason for viewing operational and financial performance in relation to the scale of
resources of funds required in production. That is, "a given amount of profit return should be
evaluated in terms of the percentage profit return on the investment of funds." 5 Moreover,
"the return on capital used depicts the effectiveness of all the operating decisions from the
routine to the critical, made by the management at all levels of the organization from shop
foreman to President.

MEASUREMENT OF PROFITABILITY

Profitability is measured by an “income statement” that maintains a record of income and

expenses over an interval of time. Businesses cannot survive without profitability, and a
highly profitable business rewards its owners with a considerable return on their investment.
Business managers are responsible for increasing a firm’s profitability, by subjecting each
process under scrutiny, the aim is to point out changes that improve profitability. These
changes can be examined with pro forma income statement, also referred to as, Partial

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Budget, allowing one to analyse the impact of these modifications on profitability, before
implementing it.

TYPES OF PROFITABILITY RATIOS

Profitability ratios are very important ratios because they show the amount of profit
made by the company on the sales done by the company and also return earned on the
assets or capital employed by the company. Profitability ratios can be compared with
the pulse of a human being just like by measuring the pulse one can get the idea
whether everything is right with the human body or not, in the same way looking at
profitability ratios one can get an idea whether everything is good or not with the
company. There are many types of profitability ratios, given below is the list of
profitability ratios.

1. Gross Profit Ratio

It is calculated as Gross profit/ Net sales 100 where gross profit is calculated as
Sales – Cost of goods sold and net sales is calculated as total sales
Sales return. This ratio comes in percentage form and higher the ratio the better it is for the
company.
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2. Net Profit Ratio

It is calculated as Net Profit/ Net sales 100 where net profit figure comes after deducting all
operating and non-operating expenses from gross profit figure and adding non-operating and
operating income to gross profit figure and net sales figure remain same as used in gross
profit formula. Higher the ratio the better it is; however, this ratio will always be lower than
gross profit ratio.

3. Operating Profit Ratio

It is calculated as Operating Profit/ Net sales 100 where operating profit is calculated by
adding non-operating expenses and deducting non-operating income from net profit. This
ratio typically measures the operating performance and efficiency of the company. A
higher ne t profit ratio but lower operating profit ratio is indicative of the poor
operational performance of the company as profit has increased due to other income and
not due to operating or business income.
4. Return on Assets

It is calculated as Net profit/ Average total assets where net profit is same as calculated
in net profit ratio while average total assets can be calculated as total assets in the
beginning plus total assets at the end divided by a higher ratio implies that company
has been utilizing its asset productively and efficiently whereas a lower ratio would
mean that company has not been able to use its asset base judiciously.

5. Return on Equity

It is calculated as Net profit after preference dividends/ Shareholders Equity where
shareholders equity is calculated by subtracting total liabilities from total assets. This
ratio measures how the company is using the shareholder’s fund and higher the ratio
the better it is as far as investors are concerned. Hence in a way this ratio is more
useful for investors than the company because it helps the investors in knowing
whether their capital is used properly or not.

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6. Debt/Equity (D/E) – Ratio

Calculated by dividing a company’s total liabilities by its stockholders' equity, is a
debt ratio used to measure a company's financial leverage. The D/E ratio indicates
how much debt a company is using to finance its assets relative to the value of
shareholders’ equity. The formula for calculating D/E ratios is:

“Debt/Equity Ratio = Total Liabilities / Shareholders' Equity”

The result can be expressed either as a number or as a percentage. The debt/equity ratio is
also referred to as a risk or gearing ratio.

7. Return on Capital Employed

Return on capital employed (ROCE) is a financial ratio that measures a company's
profitability and the efficiency with which its capital is employed. ROCE is calculated
as:
“ROCE = Earnings before Interest and Tax (EBIT) / Capital Employed

Components of 'Return on Capital Employed (ROCE)'

ROCE is a useful metric for comparing profitability across companies based on the
amount of capital they use. There are two metrics required to calculate the Return on
Capital Employed - earnings before interest and tax and capital employed. Earnings
before interest and tax (EBIT), also known as operating income, shows how much a
company earns from its operations alone without regard to interest or taxes. EBIT is
calculated by subtracting cost of goods sold and operating expenses from revenues.
Capital employed is the total amount of capital that a company has utilized in order to
generate profits. It is the sum of shareholders' equity and debt liabilities. Also, it can be
simplified as total assets minus current liabilities. Instead of using capital employed at
an arbitrary point in time, analysts and investors often calculate ROCE based on the
average capital employed, which takes the average of opening and closing capital
employed for the time period As one can see from the above that profitability ratio is
very important and if the company’s profitability ratios are not good then the company
can be in big problem as it is the profitability which decides the fate of company as
without profits no company can survive and grow.

22
 AVIVA LIFE INSURANCE COMPANY LTD.

Aviva Life Insurance Company Ltd. provides life and health insurance products and
services. It offers individual plans in the areas of savings, retirement, protection,
investments, health, and rural; individual plans for children; and group plans, such as
term plans, gratuity/leave encashment, and rural/credit protection plans. The company
also provides its products online. It serves customers through its sales force, including
financial planning advisors; and distribution networks in India. The company was

23
Life Insurance Company India Ltd. operates as a subsidiary of Dabur Invest Corp.
Life insurance concept is very old & deep rooted in the history. In the ancient Vedic
times, a mention of insurance concept can be traced in the writings of Manu who has
written a book which was a common man guide for day to day value-based living.
Insurance concept in the past existed as a tool to re- distributes vital recourses in times
of natural calamities. But as time evolved insurance concept also underwent evolution
in terms of product, which was developed and modified by human race from time to
time as a tool to counter the various risk faced by human beings in their life time. This
research tries to collect and review few important research articles on life insurance
concept in India in terms of product innovation, market growth, costumer’s service
and other vital elements revolving around insurance concept. This study is based on
the facts and findings of various articles which were selected for review for the
purpose of bring out the important facts about life insurance concept, few of the
statements are taken as it is to maintain the originality of the research articles under
review and few of the statement are written by the author in own words to draw
logical statement.

BENEFITS OF AVIVA LIFE INSURANCE POLICIES

 Life cover: The plans offer comprehensive life cover.

 Claim settlement ratio: This Company is synonymous with seamless and hassle-free

processing of claims and a commendable claim settlement ratio of 94.45%, as per 2017-
2018 data.

 Wealth creation: Aviva’s ULIP plans offer good returns by investing a portion of

premium payments of their customers in the capital market, thus providing investment
and protection.

 Tax benefits: Section 80C and 10(10D) under the Income Tax Act, provides tax
benefits on regular payment of premiums.

 Cost: Affordable term insurance plans, available at pocket-friendly rates, makes them

the most preferred term insurance company in India.

24
 Customer Service: This Company is equipped with a team of customer service
professionals who are experts in pre-sales as well as post-sales services.

 Death Benefit – Your nominee would get entire coverage amount (sum assured) in
case of death of the policy holder. The sum of all premiums paid by the policyholder
would also be paid along with the sum assured.

 Maturity Benefit – This plan is a variant of the pure term insurance plan. The
premiums paid by you would be returned to you if you survive till the end of the policy
term.

 Income Tax Benefit - Life Insurance premiums paid up to Rs. 1,00,000 are allowed as
a deduction from the taxable income each year under section 80C. The death benefits
your nominee receives from this plan is exempt from tax under section 10(10D).
TYPES OF AVIVA LIFE INSURANCE PLANS

1. Child Plans
This is an Individual Insurance Plan. Following are the different Aviva Child Insurance
Plans: 

Aviva Young Scholar Secure

It is a traditional plan that secures financially your child’s education at important milestones
of life

 Offers waiver of future premium in case of death of the parent

 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act 1961 on regular
payment of premiums
 Ensures security to child’s education
 Enables withdrawal of funds

Aviva Young Scholar Advantage

25
 It is a Unit-Linked Insurance Plan (ULIP) to secure your child’s education
 Offers lump sum amount in case of death of the parent
 Offers waiver of future premium in case of death of the parent
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act 1961 on regular
payment of premiums Aviva Family New Income Builder
 It is a savings as well as protection-oriented traditional plan, offering you financial
assistance by guaranteeing returns in the form of regular pay-outs for 12 years
 Offers double the amount of premiums paid
 Offers immediate guaranteed pay-out in case of death
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act, 1961 on
regular 

2. Saving Plans

This is an Individual Insurance Plan. Following are the different Aviva Savings Plans:
Aviva Family New Income Builder

 It is a savings as well as protection oriented traditional plan that offers financial assistance
by guaranteeing returns in the form of regular pay-outs for 12 years
 Offers double amount of the premiums paid
 Offers immediate guaranteed pay-out in case of death
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act 1961 on regular
payment of premiums

Aviva Life Bond Coverage

 This is a Unit-Linked Insurance Plan (ULIP) that helps in wealth growth

26
  Offers to invest in lump sum for long and medium term together with life cover
 Offers flexibility to access your funds post completion of 5 years
 It has single premium option with ULIPs
 Offers flexibility to withdraw post completion of 5 years
 Offers flexibility to switch between 7 funds
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act 1961 on regular
payment of premiums

Aviva Dhan Samruddhi

 In this plan, you simply have to save for a limited period but you reap the benefits by
getting your money back every 5 years
 Offers guaranteed yearly additions up to 9% of annualised premiums
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act, 1961 on regular
payment of premiums

Aviva Life Smart

 Offers liberty to choose your own investment decisions for long term growth
 It is a unit linked insurance plan
 Offers flexibility for choosing your policy term
 Offers 7 fund options right from 100% equity to 100% debt
 Offers free partial withdrawal post completion of 5 year
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act 1961 on regular
payment of premiums

3. Retirement Plans

This is an Individual Insurance Plan. Following are the different Aviva Retirement Plans:

27
Aviva Next Innings Pension Plans

 Offers guaranteed income stream for your retirement years

 Offers lump sum that is guaranteed of 210% of the premiums paid at maturity
 Offers protection for your beloved family post your death
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act, 1961 on regular
payment of premiums

Aviva Annuity Plus

 Offers guaranteed monthly income post your retirement

 Offers flexibility to choose from 7 annuity options
 Offers guaranteed annuity amount
 Offers flexibility that boosts the purchase price at inception for higher annuity instalment

Aviva New Family Income Builder

 It is a savings as well as protection-oriented traditional plan offering you financial

assistance by guaranteeing returns in the form of regular pay-outs for 12 years
 Offers double amount of the premiums paid
 Offers immediate guaranteed pay-out in case of death
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act, 1961 on regular
payment of premiums

Other comprehensive Retirement Plans include:

 Aviva Dhan Samruddhi

 Aviva I-Growth

28
 Aviva Wealth Builder
 Aviva Life Bond Advantage
 Aviva Dhan Vriddhi Plus
 Aviva Affluence

4. Protection Plans

This is an Individual Insurance Plan. Following are the different Aviva Protection Plans:

Aviva I-Life Term Insurance

 The sum assured is given to the nominee if the policyholder passes away during the
policy term
 Offers rebate in premium if you choose a higher range of sum assured
 Women earn a 5% discount in premiums than that of man

Aviva I-Shield Term Insurance

 On maturity of the term plan, 110% of the total premiums that the insured pays are
returned to back
 If the insured dies within first 10 years of the policy period, 100% of the sum assured is
given to the nominee. If the insured dies between the 11th and the 20th year of the policy
period, 110% of the sum assured of the policy is given to the nominee. If the insured dies
between the 21st and 25th year of the policy period, 120% of the sum assured is
compensated to the nominee
 Offers rebate in premium if a sum assured is chosen at the range of Rs. 20 lakhs and
above

29
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act, 1961 on regular
payment of premiums

Aviva Life Shield Advantage Plan

 Death benefit 1- If the insured dies within the policy period, the sum assured is paid to the
nominee immediately. Death benefit 2 – sum assured along with the premiums paid till
the death of the insured is paid to the nominee either on the death of the insured or if the
insured suffers a total and permanent disability due to an accident, whichever is sooner.
 If the insured outlives the policy, the total premiums paid are returned back
 Provides tax benefits under Section 80C and 10(10D) of Income Tax Act, 1961 on regular
payment of premiums

5. Rural Insurance Plans

This is an Individual Insurance Plan. Following are the different Aviva Rural Insurance
Plans:

Aviva Jana Suraksha

 Offers low cost life insurance

 Offers guaranteed amount in lump sum in case of death of the life assured during the
policy period
 Offers comprehensive protection to your dependents

Aviva Group Term Insurance Plans

This is a Group Insurance Plan. Following are the different Aviva Term Insurance Plans

 Aviva Group Credit Life

 Aviva Group Term Life
 Aviva Corporate Life Plus
 Aviva Corporate Shield Plus
 Aviva Credit Assure

30
6. Health Insurance Plans

Aviva Health Secure

 Offers you lump sum payment in case you are diagnosed with any of the 12 critical
illnesses
 Provides tax benefits under Section 80D of Income Tax Act, 1961 on regular payment of
premiums

AVIVA LIFE INSUNACE CUSTOMER SERVICES

1. Pay Premium

 Indexed premium (if applicable in your policy), increases the contribution to your fund to
beat inflation and proportionately increases your life cover.
 All the policies for which the premium payment can be made at this point of time have
been displayed above.

31
 Advance premium can be accepted if the due date is within financial year or 3 months in
advance if the due date is in next financial year.
 Service tax/GST or any other applicable taxes will be charged and/or deducted on /from
the premium /unit account at the prevailing rate. Tax laws are subject to change.
 International credit/debit cards (issued by banks outside India) are not accepted for
payments.
 Premium paid in advance will be updated in the policy on due date only.

2. e-Statement for Renewal Premium

 For Payments made after 3:00 pm PPC will be available on next day.
 Premium receipts will be available after 1 day of your premium due date.
 Premium Payments can be made only during simple revival period (up to 6 months from
premium due date in case of life products). In case of premium payments post simple
revival period, login using your e-pin.

3. Top Up Payment

 A top up is basically an addition to your contribution towards your insurance policy. It

gives you the flexibility as a policy holder to increase the value of investments over a
long term. A few things which need to be kept in mind while opting for a top up in your
policy:
 Top up can only be done if all premiums due for the policy till date have been paid.
Tax benefits
 Pension Policy: Tax benefits under the policy are subject to conditions under section
80CCC and 10(10A) of the Income Tax Act, 1961. Amount received on surrender or as
pension is taxable as income. The tax laws are subject to amendments from time to time.
 Life Policies: Tax benefits under the policy are subject to conditions under section 80C
and 10(10D) of the Income Tax Act, 1961.
The tax laws are subject to amendments from time to time and will be as per the
prevailing tax laws

32
 Partial withdrawal usually allowed after 3 years from the date of top-up without any
penalty (in case your policy has been issued post Sep 2010 then it is allowed after 5
years)

4. PAN Updation

your PAN Card details are updated, tax is deducted at lower rates. So, to avoid tax
deduction at a higher rate, we recommend that to update your PAN.
 Your Request will be processed post verification of PAN details.
 Pan Updation is applicable at Client level hence changes will be applicable for all the
policies of the client.
 PAN is not mandatory for permanent residents of Assam, Meghalaya, Jammu & Kashmir
and Non-Residents of India.

5. SMS Services
Updates on your life insurance policy are just an SMS away. Avail our SMS Service to get
quick updates on your life insurance policy-related queries. The glossary will guide you on
the relevant keyword for your query / service and SMS service number.

6. Click to Call
Get an immediate response to your life insurance-related query on our Click-to-Call page.
Enter your phone number, name and policy number (in case of existing customers) to receive
a call from customer care executive.

HISTORY

33
 Aviva can trace its history back to the establishment of the Hand in Hand Fire & Life
Insurance

Society in London in 1696. It was created by a merger of two British insurance firms,
Norwich
Union and CGU plc (itself created by the 1998 merger of Commercial Union and General
Accident) as CGNU in 2000. The Aviva name was adopted in July 2002. Thereafter, most
of the group operations, except for some strong local brands, were carried out under the
uniform brand "Aviva".

During March 2005 Aviva acquired the RAC plc breakdown recovery operation for around

£1.1 billion. In July 2006, Aviva greatly increased its presence in the United States by
acquiring Amer Us Group, a Des Moines -based financial services company founded in
1896 in a $2.9 billion (£1.6 billion) deal. Amer Us Group was rebranded as Aviva USA
when the acquisition was completed.

The Company continued to use the Norwich Union name as a trading name i n the UK
until 1 June 2009 when it became formally known as Aviva within the United
Kingdom. The launch was supported by a £9 million advertising campaign to promote
the rebranding (one of the most expensive ever in the UK insurance field), with the
participation of celebrities including Bruce Willis and Alice Cooper. In June 2009 the
Company decided to dispose of Navigator, its Australian wealth management
business, to National Australia Bank for an $825 million (£401 million).

In October 2009 the company decided to focus on its commercial insurance sector and
demonstrate its commitment to brokers by launching their 'find a broker' facility, using
the
British Insurance Brokers Association search engine. To help them with this endeavour,
Paul Whitehouse was recruited to play the part of a successful hairdresser running three
salons. The message of the campaign focused on business insurance through insurance
brokers. The closing line of the campaign was "We're in business to keep you in
business". In September 2011, Aviva completed the sale of RAC plc breakdown
recovery operation for
£1.0 billion to The Carlyle Group.

34
 In February 2012, Aviva sold its occupational health business to the British support
services company Capita.
In July 2012, Aviva announced plans to sell or close 16 non -core businesses in order
to simplify its activities and boost shareholder returns. As part of the plans Aviva
announced the sale of its operations in South Korea and the closure to new business of
its bulk -buying annuity unit in the United Kingdom.

In August 2012, Aviva announced that up to 800 jobs would be lost following a
reorganization caused by further turmoil in the Eurozone.

In December 2012, Aviva agreed to sell Aviva USA Corporation to Athene Holding for
US$1.8 billion (£1.1 billion) as part of a plan to improve shareholder returns and
reduce the group's capital requirements. Athene subsequently sold the life insurance
business of Aviva to Global Atlantic.

Aviva Life Insurance Company Management Team

Name Designation

35
 TR Ramachandran Chief Executive Officer and Managing Director

Rishi Piaraiya Director, Bancassurance

Rajeev Arora Director, Finance and Actuarial

Sandip Mallik Director, HR

Monica Agarwal Director, Corporate Initiatives and Business Development

Jyoti Vaswani Chief Investment Officer and Director, Fund Management

Gaurav Rajput Director, Marketing

Sanjeev Kumar Appointed Actuary

Sumit Behl Chief Risk Officer

Snehal Gambhir Chief Operating Officer

Ravi Bhadani Company Secretary and Director – Legal and Compliance

Vijayalakshmi Natarajan Director, Operations

Munish Sharda Director, Direct Sales Force

Vision 
"The journey of a thousand miles begins with a single step".

On the way to create a solid internal strength and build long-term trust from
customers, Aviva relentlessly strives to achieve our vision of "Becoming the most
admired life insurance company".

36
Mission
The most wonderful gift that life brings is the beauty of the dawn. We believe it will be
more wonderful if that's the dawn of peace. Aviva is here to perform its mission, which
is " Kill the fear from the uncertainty."

BALANCE SHEET OF AVIVA FINANCE COMPANY

2018-19 2017-18
PARTICULARS (RS. IN CR.) (RS. IN CR)

SOURCES OF FUNDS

37
Total Share Capital 1.50 1.50
Equity Share Capital 1.50 1.50
Reserves 2.94 2.86
NETWORTH 4.44 4.36
Secured Loans 0.19 0.00
Unsecured Loans 0.00 0.09
TOTAL DEBT 0.19 0.09
TOTAL LIABILITIES 4.63 4.45
Gross Block 1.35 1.46
Less: Accum. Depreciation 0.00 0.11
NET BLOCK 1.35 1.35
Capital Work in Progress 0.00 0.00
INVESTMENTS 0.84 0.84
Inventories 0.00 0.00
Sundry Debtors 0.25 0.16
Cash and Bank Balance 0.05 0.06
Total Current Assets 0.30 0.22
Loans and Advances 2.28 2.22
Total CA, Loans & Advances 2.58 2.44
Current Liabilities 0.10 0.13
Provisions 0.06 0.05
Total CL & Provisions 0.16 0.18
NET CURRENT ASSETS 2.42 2.26
TOTAL ASSETS 4.61 4.45
Contingent Liabilities 0.00 0.00
Book Value (Rs) 29.62 29.06

PROFIT AND LOSS ACCOUNT OF AVIVA COMPANY

2018-19 2017-18
PARTICULARS (RS. IN CR.) (RS. IN CR.)

38
INCOME
REVENUE FROM OPERATIONS [GROSS] 0.00 1.36

Less: Excise/Service Tax/Other Levies 0.00 0.00

REVENUE FROM OPERATIONS [NET] 0.00 1.36

TOTAL OPERATING REVENUES 0.00 1.36

Other Income 0.17 0.03
TOTAL REVENUE 0.17 1.39
EXPENSES
Cost of Materials Consumed 0.00 0.00
Operating and Direct Expenses 0.00 0.00
Changes in Inventories Of FG, WIP And Stock-In 0.00 0.00
Trade
Employee Benefit Expenses 0.05 0.05
Finance Costs 0.00 0.00
Depreciation and Amortisation Expenses 0.00 0.00
Other Expenses 0.04 0.10
TOTAL EXPENSES 0.09 1.36
PROFIT/LOSS BEFORE EXCEPTIONAL, 0.08 0.02
EXTRAORDINARY ITEMS AND TAX

Exceptional Items 0.00 0.00

PROFIT/LOSS BEFORE TAX 0.08 0.02
TAX EXPENSES-CONTINUED OPERATIONS

Current Tax 0.00 0.00

Less: MAT Credit Entitlement 0.00 0.00
Deferred Tax 0.00 0.00
Tax for Earlier Years 0.00 0.00
TOTAL TAX EXPENSES 0.00 0.00
PROFIT/LOSS AFTER TAX AND BEFORE 0.08 0.02
EXTRAORDINARY ITEMS
PROFIT/LOSS FROM CONTINUING 0.08 0.02
OPERATIONS
PROFIT/LOSS FOR THE PERIOD 0.08 0.02

39
OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 0.57 0.16
Diluted EPS (Rs.) 0.57 0.16
VALUE OF IMPORTED AND INDIGENIOUS
RAW MATERIALS STORES, SPARES AND
LOOSE TOOLS

Imported Raw Materials 0.00 0.00

Indigenous Raw Materials 0.00 0.00
STORES, SPARES AND LOOSE TOOLS

Imported Stores and Spares 0.00 0.00

Indigenous Stores and Spares 0.00 0.00
DIVIDEND AND DIVIDEND PERCENTAGE

Equity Share Dividend 0.00 0.00

Tax on Dividend 0.00 0.00
Equity Dividend Rate (%) 0.00 0.00

KEY FINANCIAL RATIOS OF AVIVA COMPANY

2018-19 2017-18
PARTICULARS (RS. IN CR.) (RS. IN CR.)

PER SHARE R ATIOS

Basic EPS (Rs.) 0.57 0.16
Diluted EPS (Rs.) 0.57 0.16
Cash EPS (Rs.) 0.57 0.16

40
Book Value [ExclRevalReserve]/Share (Rs.) 29.62 29.06

Book Value [InclRevalReserve]/Share (Rs.) 29.62 29.06

Dividend / Share (Rs.) 0.00 0.00

Revenue from Operations/Share (Rs.) 0.00 9.04
PBDIT/Share (Rs.) 0.57 0.18
PBIT/Share (Rs.) 0.57 0.18
PBT/Share (Rs.) 0.57 0.16
Net Profit/Share (Rs.) 0.57 0.16
PROFITABILITY RATIOS
PBDIT Margin (%) 0.00 1.94
PBIT Margin (%) 0.00 1.94
PBT Margin (%) 0.00 1.81
Net Profit Margin (%) 0.00 1.81
Return on Net worth / Equity (%) 1.90 0.56
Return on Capital Employed (%) 1.85 0.58
Return on Assets (%) 1.77 0.53
Total Debt/Equity (X) 0.04 0.02
Asset Turnover Ratio (%) 0.00 29.26
LIQUIDITY RATIOS
Current Ratio (X) 6.26 7.42
Quick Ratio (X) 6.26 7.42
Inventory Turnover Ratio (X) 0.00 0.00
Dividend Pay-out Ratio (NP) (%) 0.00 0.00
Dividend Pay-out Ratio (CP) (%) 0.00 0.00
Earnings Retention Ratio (%) 0.00 0.00
Cash Earnings Retention Ratio (%) 0.00 0.00
VALUATION RATIOS
Enterprise Value (Cr.) 1.93 2.00
EV/Net Operating Revenue (X) 0.00 1.48
EV/EBITDA (X) 22.75 75.92
Market Cap/Net Operating Revenue (X) 0.00 1.46
Retention Ratios (%) 0.00 0.00
Price/BV (X) 0.40 0.45
Price/Net Operating Revenue 0.00 1.46

41
Earnings Yield 0.05 0.01

BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD.

42
Bajaj Allianz Life Insurance Company Limited provides life insurance and general insurance
in India. The company operates through Participating, Non-Participating, and Linked
segments. It offers life insurance, health insurance, and pensions to individual and group
customers across the traditional and unit-linked platforms. The company’s product portfolio
varies across participating life non-participating l inked, non -linked life, health, and variable
insurance, annuity, and pension products. It distributes its products through individual agents,
corporate agents, banks, brokers, and direct sales channels, as well as online through the
company’s Website. Bajaj Allianz Life Insurance Company Limited was incorporated in
2001 and is headquartered in Pune, India. Bajaj Allianz Life Insurance Company Limited is a
subsidiary of Bajaj Finserv Limited. Internal control and its adequacy. The company has in
place adequate systems of internal control commensurate with its size and nature of business.
This Internal Control architecture has been summarized below: Board oversight on
organisation structure, policies and procedures Control Committee Internal Financial
Controls (IFC) Statutory Audit Internal and Concurrent Audit Risk Management Committee
Audit Committee Board oversees the internal control governance structure. Head of
departments (HOD) ensure control activities are performed at all levels within their functions,
at various stages within business processes, and over the technology environment.
Observations of statutory, internal and concurrent auditors are presented before the audit
committee for corrective and preventive actions. A pre audit committee is in place to go
through, in great detail, each aspect impacting the control environment. The Audit Committee
deliberates upon auditors’ views on the adequacy of internal control systems and monitors the
progress of open items through action taken report. The risk management process identifies
risks surrounding the Company’s activities. Risk management is integrated into the
Company’s culture by way of an effective policy and a program led by the most senior
management. Departmental policies and procedures are an effective way to maintain a strong
system of internal controls. All the departments have documented policies and procedures of
critical processes in their respective functions and ensure operating level controls through
clear delegation of authority and segregation of duties. Further, financial reporting control
framework reasonably assures that the Company’s financial statements are reliable and
prepared in compliance with the accounting standards as prescribed in the Companies Act,
2013, in accordance with the provisions of the Insurance Act, 1938 and the practices
prevailing in the insurance industry in India. As required under the Companies Act 2013,
Company has implemented Internal Financial Control (IFC) considering the essential
43
components of internal control stated in the Guidance Note on Audit of Internal Financial
Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.
Various other policies and committees support a robust internal control structure which
include the Whistle Blower policy, Ethics Committee and Claims Review Committee. (k)
Material developments in human resources Human Resource function continues to be a
strategic business partner and change catalyst. It plays a pivotal role in change management
and creates triggers for unlocking human potential which results in organization
transformation and success. With change and transformation characterized by ambiguity and
complexity, we in BALIC have a two-pronged approach -successfully leveraging the
experiential wisdom of our tenured employees as well as infusing high quality talent who
bring in multiplicity of experience/ 18th ANNUAL REPORT 2018-19 29 Management
Discussion and Analysis exposure and encouraged to challenge status-quo. HR plays a
pivotal in this in terms of systems, practices and policies encouraging talent attraction and
talent retention. The collaborative deliberations and decisions of the organization leadership,
supported by the stakeholders and enabled by the people managers, have resulted in various
new initiatives having been implemented towards enabling change and transformation as well
as enhancing a positive performance and learning culture. The following are key game
changing practices, process and digital enablement which have been affected in the year
2018-19 which we believe would lay a strong foundation towards “re-imagining the
employee value proposition and experience” and augment our journey to becoming a “Best
Employer/Great Place to Work”.

BRAND PERFORMANCE-BRAND TRANSITION: Life Goals. Done. Bajaj Allianz

Life was featured amongst the Top-75 Most Valuable Indian Brands 2018 as per WPP Plc
and Kantar Millward Brown’s report and amongst the Top 10 Riser Brands 2018 l The
Company also ranked #3 amongst the most trusted private life insurer brands, as per
Nielsen and ET Brand Equity’s Most Trusted Brands survey l The Company initiated
‘#36SecPlankChallenge’, a digital engagement campaign promoting good health and
contributing for a noble cause. The campaign garnered 1.28 Lakh+ participants, 5 Lakh+
Likes, Shares, Comments and 1.1 Crore+ digital video views. ‘#36SecPlankChallenge’
culminated to an on-ground initiative – Bajaj Allianz Life Planation, where the Company
set a new Guinness World Records for ‘most people holding the abdominal plank position’
for 1 minute with 2,353 participants l Anchoring brand promise of good health enabler,

44
Bajaj Allianz Pune Half Marathon was conducted in the month of December 2018. It
turned out to be India’s largest inaugural edition for any marathon with 16,000+
participants across categories l Digital-led activities throughout the year led to an increase
in our website traffic to over 24 lakh users, witnessing a 27% growth l The brand also saw
an increase in its social media followers across all social media platforms over the year. As
on March 2019, we - Crossed 25 lakh followers on Facebook, growth of 115% - Crossed
159 thousand followers on Twitter, growth of 71% - Crossed 130 thousand followers on
LinkedIn, growth of 89% - Crossed 15 thousand followers on Instagram, growth of 102% l
Bajaj Allianz Life ranked 1 amongst all life insurers in PR Share of Voice in FY2019

RECOGNISATION AND AWAEDS

Your Company has been recognised with various awards and accolades from time to time.

During the year, Sanjiv Bajaj, Chairman was conferred the prestigious ‘Economic Times -
Business Leader of the Year Award’ for 2018. Here is a brief highlight of some of the
major awards your Company won during the year.

 l 'Best ULIP of the Year' award for Bajaj Allianz Life Goal Assure at the Business
Today-Money Today Financial Awards 2019
 l Set a new Guinness World Record for ‘Most people holding the abdominal plank
position’ together for one minute. The new world record was set as 2,353 people held
the abdominal plank together at Pune
 l Ranked amongst the Top-75 Most Valuable Indian Brands 2018 as per WPP and
Kantar Millward Brown’s report and amongst the Top 10 Riser Brands 2018
 l IDC Digital Transformation Award 2018 for ‘BOING’ under the Digital Transformer
category, and for ‘Single View of the Customer’ under the DX Leader category
 l ‘Best Digital Marketer of the Year – Insurance 2018’ award at IAMAI Digital
Marketers’ Award l Customer Service Excellence Award for ‘Best Use of Technology’
under the Enterprise category at NASSCOM BPM Strategy Summit 2018
 l ‘Silver’ for 36SecPlankChallenge under the ‘Best User-Generated Content
Marketing’ category, at the IAMAI 9th India Digital Awards 2019

45
OPPORTUNITIES

Economic stimulus: The economy is likely to sustain the rebound in FY2019 – growth is
projected to be in the 7.2% to 7.5% range and is estimated to remain upward of 7% for the
years ahead. The Indian Economy remains one of the fastest growing and possibly the
least affected by global turmoil.

Poverty to empowerment-Acceptable living standards for all: The income levels are rising
resulting in demand for better living habitat, water, sanitation, education, healthcare and
need for insurance and retirement planning. Demographic advantage and low insurance
penetration and mortality gap

Demographic factors such as large and growing population, growing middle class, high
mix of working population and young insurable population and growing awareness of the
need for protection and retirement planning will support the growth of Indian life
insurance. Further, high protection gap and low sum assured (to GDP) indicates significant
opportunities for the life insurance sector to expand their protection business. India’s life
insurance sector is one of the biggest in the world and is expected to increase at a CAGR
of 12-15% over the next five years. India currently accounts for less than 1.5% of the
world’s total insurance premiums and about 2% of the world’s life insurance premiums
despite being the second most populous nation. (Source: India Brand Equity Foundation
(IBEF), The Associated Chambers of Commerce of India (ASSOCHAM)

FOCUS AREA OF BAJAJ LIFE INSURANCE:

1) Healthcare: Good quality healthcare services are available to only a privileged few.
Over the last 4 years, we have partnered with various organizations to make healthcare
services accessible and affordable to all strata of society. Our financial support for
medicines and treatment and our grants for hospital equipment, especially in remote
geographies, ensure that people can access and afford good quality healthcare.
Children being our focus area, we support treatment of congenital heart disease, cleft,
and palate reconstruction surgeries, treatment for childhood cancers, epilepsy, Type II
diabetes, vision care, etc. for children.

46
2) Protection: Thousands of children in street situations battle hardships like
dysfunctional families, impoverishment, malnutrition, illness, and illiteracy. If these
roadblocks can be removed, these children can lead an independent and denied life and
contribute to the country as productive citizens. We support various partners that
provide shelter, education, as well as care for street children, abandoned children, and
children in vulnerable communities. We hope to create an inclusive environment that
channelizes the energies of these children towards productive purposes.

3) Education: We work with several partners to support projects like schools for children
with special needs, municipal schools, night schools, and open schools for children
who could not continue with their education. Through these initiatives, we hope to
provide an equal opportunity for all children to access education and shape a better
future for themselves.

4) Employability: Less than one-third of the country's graduates are found employable
by the corporate sector. The problem is more pronounced for resignation graduates and
graduates from smaller towns. The vast potential of India’s educated youth is under-
utilized as they are unable to and employment opportunities appropriate to their
academic qualification and have to settle for lower quality jobs. Our Certificate
Programme in Banking, Finance, and Insurance (CPBFI) is designed to build
capabilities (knowledge, skills, and attitude) and provide opportunities to graduates.
Bajaj Finserv partners with various colleges across locations to conduct CPBFI for
their students.

TYPES OF BAJAJ LIFE INSURANCE PLANS

1) Term Insurance plan: The new-age Unit Linked Insurance Plans enable you invest
systematically over long term to help you meet your long-term life goals. Take advantage
of the combination of wealth creation and protection in a single plan.
 long life goal
 goal assurance
 future gain
 future wealth
 gain fortune gain

47
2) Unit linked insurance plan: Term plans provide comprehensive coverage at affordable
rates, ensuring that your loved ones continue to pursue their life goals even in your
absence.
 Bajaj protect goal
 I-secured
 I-secured more
 I-secured load
 e-touch online term
 life secured

3) Group life insurance: Group insurance policies provide insurance solutions, including
life and retirement, to a group of people under one policy
 Pradhan Mantri Jeevan Jyoti Bima yojana
 Group term life
 Group employees care
 Group employee benefit
 Group annuity
 Group credit protection plus

4) Child plan: A crucial part of parenting involves prudent financial planning to secure your
child’s future needs even if something happens to you. A child insurance plan helps build
funds for your child’s education or marriage, or any other important milestone, while also
protecting your child in the absence of the parent.
 Lone life assures
 Young assures

5) Retirement plan: Start investing today to build a significant corpus for your retirement.
Retirement/pension plans provide you financial security and makes you financially

48
 independent even post retirement, so that you enjoy a relaxed and comfortable retired life
without compromising on your life goals.
 Pension guarantee

6) Investment plan: Grow your savings and avail tax benefits by investing in investment
plans. Chose a plan that best suits your needs to fulfil your life goals.
 Invest assure
 Elite assures

7) Saving plan: Savings plans provide the best of both insurance and savings to help you
realize your long-term life goals. It helps create a supplementary income by providing
returns with moderate risk on your investment.
 Guaranteed income goal
 Ash assures
 Super life assure
 Income assure

8) Health plan: Health plans take care of your financial needs when medical emergency
strikes, and ensures you are still on track to achieve your life goals without worrying
about erosion of your savings to meet the medical expenses.
 Health care goal

BAJAJ ALLIANZ LIFE INSURNCE CUSTOMER SERVICES

1. Life Assist Customer Portal

A one-stop online customer service portal for all your policy servicing requirements. Whether
you want to buy a new life insurance policy to achieve your life goals, pay premium for an
existing policy, track your claim application or get an update on your fund performance,
receive a fund statement or premium paid certificate, you will find all of it and more on this
portal.

49
2. WhatsApp Services
WhatsApp including view policy information, track fund value, easy premium payment,
download premium receipt & much more, instantly.

3. Click to Call
Get an immediate response to your life insurance-related query on our Click-to-Call page.
Enter your phone number, name and policy number (in case of existing customers) to receive
a call from customer care executive.

4. Online Renewal Premium Payment

the convenience of paying your renewal premium payment using several options such as
credit/debit card, net banking, e-wallet, UPI or auto-debit facility.

5. Application Tracker
Here you can track the status of your life insurance applications. All you need is your
application or proposer number and date of birth of the life assured.

6. NAV Details
Visit NAV Details page to check the historical performance of the fund your money is
invested in, which will enable you to get your life goals, done.

7. SMS Services
Updates on your life insurance policy are just an SMS away. Avail our SMS Service to get
quick updates on your life insurance policy-related queries. The glossary will guide you on
the relevant keyword for your query / service and SMS service number.

50
8. Bajaj Allianz Life Services TAT
provide the highest quality of services in the shortest time span. Find out more about our
Turn Around Time (TAT) for various policy-related procedures. 

9. Submit COE (Life Certificate)

Online option for submission of COE (Life Certificate). Avail our online service to submit
COE in easy steps and get timely disbursement of annuity pay-out.

10. Live Chat with BOING

Have a query on your investments towards your life goals? Get real-time inputs via BOING,
our AI-enabled chatbot, which is available in English, Hindi and other Indian regional
languages. BOING will help with a number of tasks including online life insurance premium
payment, updating personal details, claims settlement and much more. 

HISTORY

Allianz AG was founded in Berlin in 1890 and shifted its headquarters to Munich in
1949. The first step to become an international company started with the opening of a
branch office in London in the late 19th century. After World War II, global business
activities were gradually resumed. Allianz opened an office in Paris in the late 1950s,

51
and a management office for Italy in the 1960s. These expansions were followed in the
1970s by the establishment of business in
Great Britain, the Netherlands, Spain, Brazil and the United States. In 1986, Allianz acquired

Cornhill Insurance PLC, London, and the purchase of a stake in Reunion Adriatic
security (RAS), Milan, strengthened its presence in Western and Southern Europe in the
1980s. Recently, in February 08, 2006, RAS Shareholders approved the mergers with
Allianz. In 1990, Allianz started an expansion into eight Eastern European countries
with establishing a presence in Hungary. In the same decade, Allianz also acquired
Fireman’s Fund, an insurer in the United States, which was followed by the purchase of
Assurances Generals de France (AGF), Paris. These acquisitions were followed by the
expansion into Asia with several joint ventures and acquisitions in China and South
Korea. Around this time Allianz expanded its asset management business as well by
purchasing for example asset management companies in California. In 2001, Allianz
acquired Dresdner Bank, a large German bank. Allianz Group and Dresdner Bank
combined their asset management activities by forming Allianz Dresdner Asset
Management. In 2002 Michael Dikeman succeeded Henning Schulte-Noelle as CEO of
Allianz AG. The Allianz Group was reincorporated under a European Company Statute
and, as a result of the cross -border merger with RAS, Allianz converted into a
European Company (SE- Societal European) in
October 13, 2006.Allianz is now present in more than 70 countries with over 177,000
employees.

At the top of the international group is the holding company, Allianz SE, with its head
office in Munich. Allianz Group provides its more than 60 million customers worldwide
with a comprehensive range of services in the areas of property and casualty insurance. life
and health insurance, asset management and banking.

Bajaj Allianz Life Insurance Company Limited Management Team

NAME Designation

Mr. Tarun Chugh Managing Director and Chief Executive Officer

52
Mr. Ramandeep Sahni Chief Financial Officer

Mr Saisrinivas Dhulipala Appointed Actuary

Mr. Sampath Reddy Chief Investment Officer

Mr. Ruben Selvadoray Chief Human Resources Officer (CHRO)

Mr. Manish Sangal Chief Agency Officer

Mr. Anil P.M. Head - Legal & Compliance and Chief Compliance Officer

Mr. Venkata Krishna Chief Risk Officer

Narayana
Mr. Kayzad Hiramanek Head Operations & Customer Service

Mr. Rajesh shanoy Company Secretary

Vision

 To be the BEST Life Insurance Company in India to Buy From, Work for & Invest
 To be the first choice insured for customers.
 To be the preferred employer for staff in the insurance industry.

53
 To be the number one insurer for creating shareholder value.

Mission

As a responsible, customer focused market leader, we will strive to understand the

insurance needs of the consumers and translate it into affordable products that deliver
value for money.

A Partnership Based on Synergy Bajaj Allianz offers technical excellence in all areas
of General and Health Insurance, as well as Risk Management. This partnership
successfully combines Bajaj Fiserv’s in-depth understanding of the local market and
extensive distribution network with the global experience and technical expertise of
the Allianz Group. As a registered Indian Insurance Company and a capital base of
Rs. 110 crores, the company is fully licensed to underwrite all lines of insurance
business including health insurance.

BALANCE SHEET OF BAJAJ ALLIANZ COMPANY

2018-19 2017-18
PATICULARS (RS. IN CR.) (RS. IN CR.)

EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 115.37 115.03

54
TOTAL SHARE CAPITAL 115.37 115.03
Reserves and Surplus 19,310.41 16,403.26
TOTAL RESERVES AND SURPLUS 19,310.41 16,403.26
TOTAL SHAREHOLDERS FUNDS 19,563.63 16,518.29
NON-CURRENT LIABILITIES
Long Term Borrowings 86,351.72 43,167.89
Deferred Tax Liabilities [Net] 0.00 0.00
Other Long-term Liabilities 337.50 487.53
Long Term Provisions 68.88 1,121.68
TOTAL NON-CURRENT LIABILITIES 86,758.10 44,777.10
CURRENT LIABILITIES
Short Term Borrowings 0.00 18,399.14
Trade Payables 766.33 453.99
Other Current Liabilities 1,411.81 3,292.07
Short Term Provisions 0.00 188.43
TOTAL CURRENT LIABILITIES 2,178.14 22,333.63
TOTAL CAPITAL AND LIABILITIES 108,499.8 83,629.02
7
ASSETS
NON-CURRENT ASSETS
Tangible Assets 495.84 343.87
Intangible Assets 158.49 120.79
Capital Work-In-Progress 0.00 0.00
FIXED ASSETS 654.33 464.66
Non-Current Investments 0.00 2,365.58
Deferred Tax Assets [Net] 660.83 386.41
Long Term Loans and Advances 0.00 79.91
Other Non-Current Assets 202.34 43,807.32
TOTAL NON-CURRENT ASSETS 1,517.50 47,103.88
CURRENT ASSETS
Current Investments 10,370.41 1,294.88
Inventories 0.00 0.00
Trade Receivables 891.97 34,203.92
Cash and Cash Equivalents 241.69 228.73
Short Term Loans and Advances 95,181.26 256.64
Other Current Assets 297.04 540.97
TOTAL CURRENT ASSETS 106,982.3 36,525.14

55
 7
TOTAL ASSETS 108,499.8 83,629.02
7
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES,
COMMITMENTS
Contingent Liabilities 1,997.94 1,432.74
CIF VALUE OF IMPORTS
Raw Materials 0.00 0.00
Stores, Spares and Loose Tools 0.00 0.00
Trade/Other Goods 0.00 0.00
Capital Goods 0.00 0.00
EXPENDITURE IN FOREIGN
EXCHANGE
Expenditure in Foreign Currency 35.39 31.54
REMITTANCES IN FOREIGN
CURRENCIES FOR DIVIDENDS
Dividend Remittance in Foreign Currency -- --
EARNINGS IN FOREIGN EXCHANGE
FOB Value of Goods -- --
Other Earnings -- --
BONUS DETAILS
Bonus Equity Share Capital 53.87 --
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market -- --
Value
Non-Current Investments Unquoted Book -- 1,776.37
Value
CURRENT INVESTMENTS
Current Investments Quoted Market Value -- --
Current Investments Unquoted Book Value 10,145.42 20.04

56
 PROFIT AND LOSS ACCOUNT OF BAJAJ ALLIANZ COMPANY
2018-19 2017-18
PARTICULARS (RS. IN CR.) (RS. IN CR.)

INCOME
REVENUE FROM OPERATIONS [GROSS] 17,383.9 12,240.3
7 2
Less: Excise/Service Tax/Other Levies 0.00 0.00
REVENUE FROM OPERATIONS [NET] 17,383.9 12,240.3
7 2
TOTAL OPERATING REVENUES 17,383.9 13,287.7
7 7

57
Other Income 16.88 41.45
TOTAL REVENUE 17,400.8 13,329.2
5 2
EXPENSES
Cost of Materials Consumed 0.00 0.00
Operating and Direct Expenses 2,237.41 0.00
Changes in Inventories Of FG, WIP And Stock-In 0.00 0.00
Trade

Employee Benefit Expenses 1,721.17 1,401.43

Finance Costs 5,938.85 4,584.74
Depreciation and Amortisation Expenses 137.37 101.96
Other Expenses 1,330.75 2,154.54
TOTAL EXPENSES 11,365.5 9,272.86
5
PROFIT/LOSS BEFORE EXCEPTIONAL, 6,035.30 4,056.36
EXTRAORDINARY ITEMS AND TAX

Exceptional Items 0.00 0.00

PROFIT/LOSS BEFORE TAX 6,035.30 4,056.36
TAX EXPENSES-CONTINUED OPERATIONS
Current Tax 2,043.73 1,427.00
Less: MAT Credit Entitlement 0.00 0.00
Deferred Tax 101.23 -17.34
Tax for Earlier Years 0.00 0.00
TOTAL TAX EXPENSES 2,144.96 1,409.66
PROFIT/LOSS AFTER TAX AND BEFORE 3,890.34 2,646.70
EXTRAORDINARY ITEMS

PROFIT/LOSS FROM CONTINUING 3,890.34 2,646.70

OPERATIONS

PROFIT/LOSS FOR THE PERIOD 3,890.34 2,646.70

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE

58
Basic EPS (Rs.) 67.52 47.05
Diluted EPS (Rs.) 66.95 46.57
VALUE OF IMPORTED AND INDIGENIOUS
RAW MATERIALS STORES, SPARES AND
LOOSE TOOLS

Imported Raw Materials 0.00 0.00

Indigenous Raw Materials 0.00 0.00
STORES, SPARES AND LOOSE TOOLS
Imported Stores and Spares 0.00 0.00
Indigenous Stores and Spares 0.00 0.00
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 231.19 197.96
Tax on Dividend 47.52 40.30
Equity Dividend Rate (%) 300.00 200.00

KEY FINANCIAL RATIOS OF BAJAJ FINANCE

2018-19 2017-18
PARTICULARS  (RS. IN CR.) (RS. IN CR.)

PER SHARE RATIOS

Basic EPS (Rs.) 67.52 47.05
Diluted EPS (Rs.) 66.95 46.57
Cash EPS (Rs.) 69.82 47.79
Book Value [ExclRevalReserve]/Share (Rs.) 339.15 287.20
Book Value [InclRevalReserve]/Share (Rs.) 339.15 287.20
Dividend / Share (Rs.) 6.00 4.00

59
Revenue from Operations/Share (Rs.) 301.36 231.03
PBDIT/Share (Rs.) 209.96 152.01
PBIT/Share (Rs.) 207.58 150.24
PBT/Share (Rs.) 104.63 70.53
Net Profit/Share (Rs.) 67.44 46.02
PROFITABILITY RATIOS
PBDIT Margin (%) 69.67 65.79
PBIT Margin (%) 68.88 65.03
PBT Margin (%) 34.71 30.52
Net Profit Margin (%) 22.37 19.91
Return on Net worth / Equity (%) 19.88 16.02
Return on Capital Employed (%) 11.26 14.09
Return on Assets (%) 3.58 3.16
Total Debt/Equity (X) 4.41 3.25
Asset Turnover Ratio (%) 16.02 15.88
LIQUIDITY RATIOS
Current Ratio (X) 49.12 1.64
Quick Ratio (X) 49.12 1.64
Inventory Turnover Ratio (X) 0.00 0.00
Dividend Pay-out Ratio (NP) (%) 5.94 7.47
Dividend pay-out Ratio (CP) (%) 5.73 7.20
Earnings Retention Ratio (%) 94.06 92.53
Cash Earnings Retention Ratio (%) 94.27 92.80
VALUATION RATIOS
Enterprise Value (Cr.) 260,598.5 155,297.6
0 4
EV/Net Operating Revenue (X) 14.99 11.69
EV/EBITDA (X) 21.52 17.76
Market Cap/Net Operating Revenue (X) 10.04 7.66
Retention Ratios (%) 94.05 92.52
Price/BV (X) 8.92 6.16
Price/Net Operating Revenue 10.04 7.66
Earnings Yield 0.02 0.03

60
 RESEARCH METHODOLOGY

Research methodology is the specific procedures or techniques used to identify, select,

process, and analyse information about a topic. In a research paper the methodology section
allows the reader to critically evaluate a study's overall validity and reliability.
This study was conducted as a survey that examined comparative study of
profitability and services provided by Bajaj Allianz and Aviva life insurance companies. The
methodology adopted in the study is both descriptive and analytical.

OBJECTIVES OF THE STUDY

 To understand the concept of Bajaj Allianz company and Aviva life insurance company
private life insurance companies.

 To know the services of Aviva life insurance and Bajaj Allianz life insurance companies.

61
 To study profitability of Aviva Life Insurance Company and Bajaj Allianz Life Insurance
Company.

 To study on perception of customers towards life insurance in current financial market.

 To know the present satisfactory level of insurance companies.

 To study the growth performance of Bajaj Allianz and Aviva life insurance companies.

SCOPE OF THE STUDY

The scope of present study is confined comparative study on Profitability and

services provided by Bajaj Allianz and Aviva life insurance companies. The study
mainly involves analysing the financial performance and profitability of Bajaj life
insurance company and Aviva life insurance company. Similar studies on this line may
be conducted to compare performance of private insurance companies. profitability
ratios play very important role by which any organization can be compare. The ratios
are helping in comparing the company’s ratios to know which company is more
profitable or which company is suffering from losses.
In today’s current scenario Bajaj Allianz Life Insurance Company is one of top
leading insurance company and also Aviva life insurance Company.

The present study is to attempt to compare the profitability ratios such as return
on asset, return on capital employed, total debt/equity and return on net worth. This
can be help to forecast which company is earning more profit or which one is in loss,
So the project has wide scope to help the managers as well as to the public to know
the status of the company.

62
SIGNIFICANCE OF THE STUDY

This study is useful and important for the major aspect such as:

 This study is important for the comparison of profitability of Bajaj Allianz Life
Insurance Company and Aviva life insurance Company.

 This study analyses the insurance sector.

 This study provides financial performance of the company as well as provides which
company is better or earning more profit and which company is suffering from losses.


 This study is very helpful for taking decisions.
SOURCES OF DATA:
There are mainly two important sources through which the whole data is collected

A. Primary data:
Are those which are collected a fresh and for the first time and thus happen to be original
in character and known as primary data. Primary data is collected by a researcher from first-
hand sources using survey methods, interview methods or experiments methods.

B. Secondary data:
The data collected from the other sources. Secondary data was collected from the existing
data sources, internet, magazine, journals, articles, websites etc. The information so collected
has been consolidated in a meaningful manner for the purpose. annuals of the company. The
financial data relating to the organisation has accounts detail a collected for the many years.

RESEARCH DESIGN

63
 A Research design is a plan of action to be carried out in connection with a research
project. It is the conceptual structure within which research Is conducted and it constitutes the
blue print for the collection, measurement and analysis of data. It is the specification of
methods and procedures for acquiring the information needed for solving the problem.
Decisions regarding what, where, when, how much, by what means concerning an inquiry or
a research study constitute a research design.

Sample size: The study consists of the 40 respondence.

Sample Area: The study covered in panvel city.

Sampling Technique: In this study using Convenient sampling method

HYPOTHESIS OF THE STUDY

Ho: There is no significant difference between Profitability to Return on Net worth, Return
on Capital Employed, Return on Assets and total debts/equity selected to private
companies.

H1: There is significant difference between profitability to Return on Net worth, Return on
Capital Employed, Return on Assets and total debts/equity selected to private companies.

LIMITATION OF THE STUDY

The present research work is undertaken to maximize objectivity and minimize the
errors. However, there are certain limitations of the study, which are to be taken in to
consideration for the present research work.

 The study covers Bajaj Allianz and Aviva life insurance companies so it may not
Generalize to whole population.

64
 The data which has been used for the study mainly secondary data, so limitation of
secondary data remains with it and also applies to this study

 The study covers only last 2 years.

 Four rations compared to show the profitability.

HYPOTHESISI TESTING

Hypothesis testing is an act in statistics were by an analyst tests an assumption

regarding a population parameter. The methodology employed by the analyst depend
on the nature of the data used and the reason for the analysis.

The tests are based on the statistics from the respondents.

Q.1. Are you aware about the insurance bonus of policies?

YES NO

48.4 51.6

Out of total population 51.6% customers are unaware about insurance bonus of the policy
and 48.4% customers are aware about insurance bonus of the policy.

65
Hypothesis-
Ho: Are you not aware about the insurance bonus of policies.
H1: Are you aware about the insurance bonus of policies.

H0 = P0 = 1
2

H1 = P1 ≠ 1
2

Significance level = 5% = 0.05 = 2.776

⸫Degree of Freedom = 5-1 = 4

T = P1-P0
√P0.q0
N

P0 = Population proportion = 20 = 0.5

40

P1 = Sample population proportion = 30 = 0.75

40

P 0 + q0 = 1
⸫q0 = 1 - P0
= 1 - 0.5
= 0.5

T = 0.75 - 0.5
√0.5 ˟ 0.5
40

= 0.25
√0.00625

66
= 0.25
0.079

= 3.165

T test rule = -2.776 < t > 2.776

= 3.165 > 2.776

Here H0 is rejected in favour of H1. Because the T-test (3.165) is highest than significance of
level (2.776) . we prove that the H1 is accepted. i.e. Are you aware about the insurance bonus
of policies Is accepted.

LITERATURE REVIEW

The research literature on Life Insurance is vast and covers a number of dimensions.
The following section provides a brief summary of research in different areas of life
insurance research.

William Greene and dan Segal: In their research “Profitability and Efficiency in the U. S.
Life Insurance Industry” have discussed the relationship between cost inefficiency and
profitability in the U.S. life insurance industry. The life insurance industry is mature and
highly competitive, and cost efficiency may be the main driver of profitability. The authors
derive cost efficiency using the stochastic frontier (SF) method allowing the mean
inefficiency to vary with organizational form and the outputs. In addition, the estimation of
the cost efficiency measure takes into account the underlying accounting concepts. This study

67
suggests that cost inefficiency in the life insurance industry is substantial relative to earnings,
and that inefficiency is negatively associated with profitability measures such as the return on
equity.

Dr. Vikas Gairola: In his research study was to compare the performance of public and
private life insurers in terms of their number of new policies issued; total premium come and
market share in India. The secondary date has been collected from year 2000 -01 to 2015 -
16. In year 1993 Malhotra Committee emphasized on privatization of insurance business,
since then there was monopoly of LIC. In year 1999 the Insurance Regulatory and
Development was established to regulate and to protect the policyholder’s interest of the
insurance industry. It has been observed by the study that private life insurers put efforts to
improve its performance year after year and affected the LIC in many ways for initial first
decade. To overcome and compete with this situation LIC introduced new and attractive
insurance plans, put efforts for better customer relationship management and effective
advertising. There is very high potential in life insurance sector as the population of India is
very huge and still there is untapped life insurance market.

Asaf ali: The study Based on comparative study on profitability of HDFC SLIC is on the
upper side in the private life insurance companies in comparison to Birla sun life, Bajaj
Allianz. 60 HDFC SLIC based on the comparative study has many advantage in this segment
of product like fund management charge, switches facility and maximum number of
investment funds in offering (i.e., 5 namely Balanced fund, Defensive Managed fund, Safe
Managed fund, Liquid fund & Growth fund ) but the rest of the insurance player that is LIC,
Birla sun life Allianz are also not far behind HDFC SLIC.

68
Sonal Nena: In her study “Performance Evaluation of Life Insurance Corporation (LIC) of
India” has tried to analyse growth and performance of LIC. She analysed the major source of
income (Premium Earned) of the LIC, as well as the significant heads of expenses of LIC to
measure the performance. this study has proved that LIC has been success in terms of
creating value for its policyholders. The performance evaluation also showed consistent
increase in its business. During the study period there was no major change in the
performance of the LIC, so it was finally concluded that performance remained unchanged
and LIC has maintained the market value of their products.

Rajani m. shah: In her research Paper Presented at the C.D. Deshmukh Seminar on
“Creating Consumer Awareness in Life Insurance” has analysed as how to harness huge
untapped market potential for life insurance to the benefit of vast rural and semi urban
populace. The paper has quoted the famous line - “customer is business, business is
people, people are customers” in context of consumer awareness. The paper emphasises
that Consumer awareness will provide a new frame of reference for value creation as
also an opportunity for innovation and also have emphasised on campaigns to educate
rural and semi urban masses on the need for security that protects their livelihood,
security for produce and belongings and create feel-good feeling. In summary it states
that a new phenomenon will emerge where Market dynamics will rule and unfold a
stage through a process of evolution by co -creating unique value with customers will
merge as expounded by Prof. C.K. Praha lad in his later path -breaking Title “ The
Future of Competition : Co -creating Unique Value with Customers”.

Upadhyaya and badlani: In their research, attempt to identify the key success factors in the
life insurance industry, in terms of customer satisfaction so as to survive intense competition
and to increase the market share. The objective of the study is to identify the factors of
customer satisfaction in retail life Insurance in India and to study the importance of
technology in fulfilling Customer Satisfaction. Data was collected from 206 insurance
customers of the ten public and private sector life insurance companies from the major cities
of Rajasthan and Maharashtra state in India. The study concludes that despite high
satisfaction levels, there remains a lot to be done by the management of the retail life
Insurance companies to maximize their customer satisfaction and improve the quality of
service. The satisfaction of the customer with the services of the Life Insurance Companies
was found to be linked with the performance of the service.
69
Harpreet Singh and preeti Singh: In their research, “An Empirical Analysis of
Insurance Industry in India” have analysed the overall performance of Life Insurance
Industry of India between pre - and post-economic reform era and also measure the
current status, volume of competitions, challenges faced by the Life
Insurance Corporation of India and lastly to measure the effectiveness of investment
strategy of LIC over the period 1980 to 2009.They have highlighted the role of LIC as
a primary player in life insurance and how there is growth in performance of Indian
Life Insurance industry and LIC due to the policy of LPG. They have summarized that
Total investment of LIC rose from Rs.4587.7crores in 1979 to Rs.762891.7 crores in
2009. Proportion of premium collected by LIC out of total premium collected by life
insurance industry is declined from 97% in 2001 -02 to 74% in 2007 -08. It indicates
the increasing competition from private sector. ICICI prudential is becoming a stronger
and stronger player by taking over. a lot of business of LIC due.

Monika, Renuka & Sane Susan Thomas (2013): In their research article on “Estimating
losses to customers on account of mis-selling life insurance policies in India” have tried to
determine the loss to investors from mis-selling of insurance products. The approaches used
was analysing the number of lapsed policies from the annual reports of the insurance
regulator, IRDA &the second method used the persistence of premium payments that are
reported in the annual reports of individual insurance companies. The research has found out
that the estimated loss was Rs.1.5 trillion, or $28 billion, to investors owing to mis-selling
over the 2004-05 to 2011-12 periods. The authors concluded that there will be adverse
economic consequence for consumers if financial law and regulation does not focus upon
consumer protection, the existing policy environment has swung from a lack of focus on the
consumer interests where actually these interests are the foundation of policy
recommendations and regulatory changes.

70
Balaji (2015): In his research- Customer awareness and satisfaction of life insurance policy
holders with reference to Mayiladuthurai town tries to measure awareness among the urban
and rural consumer about the insurance sector and also the various policies involving various
premium rates. The study was conducted by examining around 100 sample respondents
which revealed that 100% of respondents are aware of the life insurance policies; where as
87% of the respondents came to know about insurance policies through agents. But it also
came to light that Most of the respondents are aware of government insurance company LIC
and in the private sector HDFC Standard Life insurance, Finally the research concludes that
the penetration level of insurance in India is only 2.3% when compared to 9-15% in the
developed nations, so there is a huge market for the Insurance products in the future in India.

Lavanya vedagiri Rao (2008): In her research “Innovation and New Service Development
in Select Private Life Insurance Companies” in Try to examine how service firms actually
innovate by interviewing Zonal managers of select 10private.

Monika, Halan Renuka & Sane Susan Thomas: In their research article on “Estimating
losses to customers on account if miss-selling life insurance policies in India” have tried to
determine the loss to investors from miss-selling of insurance products. The approaches used
was analysing the number of lapsed policies from the annual reports of the insurance
regulator, IRDA &the second method used the persistence of premium payments that are
reported in the annual reports of individual insurance companies. The research has found out
that the estimated loss was Rs.1.5trillion, or $28 billion, to investors owing to mis-selling
over the 2004 -05 to 2011-12 periods. The authors concluded that there will be adverse
economic consequence for consumers if financial law and regulation does not focus upon
consumer protection, the existing policy environment has swung from a lack of focus on the
consumer interests where actually these interests are the foundation of policy
recommendations and regulatory changes.

71
Rajni M. Shah (2007): In her research of Paper Presented at the C.D Deshmukh Seminar on
“Creating Consumer Awareness in Life Insurance” has analysed as how to harness huge
untapped market potential for life insurance to the benefit of vast rural and semi urban
populace. The paper has quoted the famous line - “customer is business, business is people,
people are customers” in context of consumer awareness. The paper emphasises that
Consumer awareness will provide a new frame of reference for value creation as also an
opportunity for innovation and also have emphasised on campaigns to educate rural and semi
urban masses on the need for security that protects their livelihood, security for produce and
belongings and create feel-good feeling. In summary it states that a new phenomenon will
emerge where Market dynamics will rule and unfold a stage through a process of evolution
by co-creating unique value with customers will merge as expounded by Prof. C.K. Prahalad
in his later path-breaking Title “The Future of Competition: Co-creating Unique Value with
Customers”.

C. Balaji (2015): In his research- Customer awareness and satisfaction of life insurance
policy holders with reference to Mayiladuthurai town tries to measure awareness among the
urban and rural consumer about the insurance sector and also the various policies involving
various premium rates. The study was conducted by examining around 100 sample
respondents which revealed that 100% of respondents are aware of the life insurance
policies; where as 87% of the respondents came to know about insurance policies through
agents. But it also came to light that Most of the respondents are aware of government
insurance company LIC and in the private sector HDFC Standard Life insurance, Finally the
research concludes that the penetration level of insurance in India is only 2.3% when
compared to 9-15% in the developed nations, so there is a huge market for the Insurance
products in the future

72
Vijay Maruti kumbhar (2013): In his article A Study of FDI in Life Insurance Sector in
India has tried to evaluate the concept of foreign direct investment and its role in life
insurance sector in India. The Insurance sector was opened up for private sector in 2000 after
the enactment of the Insurance Regulatory and Development Authority Act, 1999 (IRDA
Act, 1999) ,this Act permitted foreign shareholding in insurance companies to the extent of
26 per cent with an aim to provide better insurance coverage and to augment the flow of
long-term resources for financing infrastructure (Yashwant Sinha, 2013).The paper reveals
that out of 24 insurance companies including LIC overall FDI is 25.47 percent in 2012 & Rs.
6324.27 of equity capital is invested by the foreign investors in 22 life insurance companies
in India out of 23 private insurance companies except SAHARA Insurance and Rs. 18507.65
invested by Indian promoters. The paper concludes that on the bases of statistics received
from the IRDA indicates that there is better growth trend in FDI.

DATA ANALYSIS, INTERPRETATION AND PRESENTATION

TOOLS USED FOR DATA ANALYSIS

 PERCENTAGE ANALYSIS:
The tool used for data interpretation for the study is percentage analysis, by
converting the received data into percentage and interpreting the results.

 PRESENTATION OF DATA:

73
 The meaningful representation of the results obtained from the data’s we use
clustered column charts, bar charts, and pie charts.

PROFITABILITY RATIO:

[1] Return on Net worth

Ratio Bajaj Company Aviva Company

Return on net worth formula:

Net income/ Shareholders equity

Year 2018-19 19.88 1.90

74
Year 2017-18 16.02 0.56
 RETURN ON NET WORTH

25

20
PERCENTGAE

15

10

0
Year2018-19 year2018
YEARS

BAJAJ COMPANY Column1

Inference: From above diagram the year 2017-2018 to 2018-2019 the highest return on
net worth is 19.88 in the year 2018- 2019. and the least return on net worth is 0.56 in the
year 2017-18.

[2] Return on Capital Employed

Ratio Bajaj Company Aviva Company

Year 2018-19 11.26 1.85

Year 2017-18 14.09 0.58

75
 RETURN OF CAPITAL EMPLOYED
16

14

12

10
PERCENTAGE

0
year2018-19 year2017-18
YEARS
BAJAJ COMPANY Column1

Inference: From above diagram the year 2017-2018 to 2018-2019 the highest Return on
capital employed is highest 14.09 in the year 2017- 2018 of Bajaj Allianz life Insurance
Company. and least 0.58 in the year 2017-2018 of Aviva Life Insurance Company.

[3] Return on Asset

Ratio Bajaj Company Aviva Company

Return on Assets formula: EBIT- Net Assets

I Year 2019 3.58 1.77 nference: From

above diagram the
Year 2018 3.16 0.53
year 2017-2018 to
2018-2019 the
highest Return on assets of Bajaj Allianz Life Insurance Company is highest 3.58 in the year
and least 0.53 in the year 2017- 2018 of Aviva Life Insurance Company.

76
[4] Total Debt Equity

Ratio Bajaj Company Aviva Company

Total debt equity formula: Debt/Equity

Year 2019 4.41 0.04

Year 2018 3.25 0.02

TOTAL DEBT\ EQUITY

5
4.5
4
3.5
3
PERCENTAGE

2.5
2
1.5
1
0.5
0
year2018-19 year2017-18

BAJAJ COMPANY YEARS Column1

Inference: From above diagram the year 2017-2018 to 2018-2019 the highest Total debt
equity of Bajaj Allianz Life insurance company is 4.41 in the year 2018-2019. and Aviva life
insurance company in least 0.02 in the year 2017-18.

77
PRIMARY DATA COLLECTION:

1) GENDER?

GENDER RESPONDENCE(%) RESPONDENCE

FEMALE 42 13

MALE 58 27

TOTAL 100 40

Gender

42%

58%

male female

Inference: From the above diagram the male customers are 58% and females are 42%.

78
2) AGE?

AGE (YEARS) RESPONDENCE (%) RESPONDENCE

19 TO 25 50 20

26 TO 30 20 8

30 TO 34 30 12

TOTAL 100 40

AGE
60

50
50

40
PERSENTAGES

30
30

20
20

10

0
19 TO 25 26 TO 30 31 TO 34
YEARS

Inference: From the above diagram age in 19 to 25 customers are 50%, age in 26 to 30 is
20% customers and remaining 30% customers are in 31 to 34.

79
3) YOU ARE INSURED?

INSURED PEOPLES RESPONDENCE (%) RESPONDENCE

YES 59 25

NO 41 15

TOTAL 100 40

INSURED?

41%

59%

YES NO

Inference: From the above diagram 59% peoples are insured and 41% peoples are not
insured.

80
4) FROM WHICH INSURANCE COMPANY YOU ARE INSURED?

INSURANCE RESPONSE IN (%) RESPONDNCE

COMPANIES
AVIVA LIFE 30 10
INSURANCE
BAJAJ ALLIANZ LIFE 53.3 18
INSURANCE
OTHERS 33.3 12

TOTAL 100 40

INSURANCE COMPANIES
60

50 53.3

40
PERCENTAGES

30 33.3
30

20

10

0
COMPANIES

AVIVA LIFE INSURANCE BAJAJ ALLIANZ LIFE INSURANCE OTHERS

81
Inference: From the above diagram most of the peoples are insured in Bajaj Allianz. People
are insured in Bajaj Allianz is 53.3%, in Aviva company insured peoples is 30%. And
remaining customers are insured in others companies.

5) HOW MANY INSURANCE POLICIES YOU HAVE?

INSURANCE POLICIES RESPONCE (%) RESPONDENCE

UP TO 2 37.9 16

MORE THAN 6 34.5 13

3 TO 6 27.6 11

TOTAL 100 40

INSURANCE POLICIES
40 37.9
34.5
35

30 27.6

25
PERCENTAGAES

20

15

10

0
POLICIES
PERIOD

UP TO 2 MORE THAN 6 3 TO 6

82
Inference: From the above diagram customer prefer up to 2 or more than 6 policies (35.7%).

6) FOR WHAT YOU HAVE INSURED YOUR SELF?

INSURED YOUR SELF RESEPONCE(%) RESPONDENCE

FOR SAVING 40 13

FOR COVERING RISK 10 3

TO LIFE
FOR TAX BENEFIT 16.7 5

FOR SECURITY TO 36.7 12

FAMILY
ALL OF THE ABOVE 20 6

NONE OF THE ABOVE 3.3 1

TOTAL 100 40

83
 INSURED YOUR SELF?
FOR SAVINGS 40

FOR COVERSING RISK TO LIFE 10

FOR TAX BENEFIT 16.7

POLICIES

FOR SECURITY TO FAMILY 36.7

ALL OF THE ABOVE 10

NONE OF THE ABOVE 3.3

0 5 10 15 20 25 30 35 40 45
PERCENTAGES

Inference: From the above diagram 40% customers are insured for saving, 36.7% customers
are insured for security to family,16.7% customers are insured for tax benefits and 10% for
covering risk and remaining for all of them
7) WHICH OF YHE FOLLOWING POLICIES YOU HAVE?

POILICIES RESPONDENCE (%) RESPONDEMCE

ENDWOMENT POLICY 6.9 2

SINGLE PREMIUM 44.8 15

POLICY
CHILDREN POLICY 13.8 5

PENSION PLAN 17.2 6

POLICY
MONEY BACK 34.5 12
POLICY
TOTAL 100 40

84
 INSURANCE POLICIES

ENDWOMENT POLICY 6.9

SINGLE PREMIUM POLICY 44.8

POLICIES

CHILDREN POLICY 13.8

PENSION PLAN POLICY 17.2

MONEY BACK POLICY 34.5

0 5 10 15 20 25 30 35 40 45 50
PERCENTGAES

Inference: From the above diagram most of the customer choose single premium policy
(44.8%) then money back policy (34.5%) then pension plan policy (17.2%) then children
policy (13.8%) and remaining for endowment policy (6.9%).

8) ARE YOU AWARE ABOUT THE INSURANCE BONUS OF THE POLICES?

AWARE ABOUT RESPONSE (%) RESPONDENCE

INSURANCE BONUS
POLICIES
YES 48.4 10

NO 51.6 30

TOTAL 100 40

85
 BONUS POLICIES

48.4
51.6

YES NO

Inference: From the above diagram 51.6% customers are unaware about insurance bonus of
the policy and 48.4% customers are aware about insurance bonus of the policy.

9) HAVE YOU RECEVIED SURVIVAL BENEFITS SO FOR AGAINST MONEY

BACK POLICY?

RECEVIED SURVIVAL RESEPONCE (%) RESPONDENCE

BENEFITS SO FOR
AGAINST MONEY
BACK POLICY
YES 43.3 15

86
 NO 56.7 25

TOTAL 100 40

RECEIVED SURVIVAL BENEFITS

43.3

56.7

YES NO

Inference: From the above diagram43.3% customers are received survival benefits so for
against money back policy and 56.7% customers are not received survival benefits so for
against money back policy.
10) IF YES, HOW MANY TIMES YOU HAVE RECIVED IT?

TIMES RESEPONCE (%) RESPONDENCE

1 42.3 15

2 42.3 15

87
 3 15.4 10

TOTAL 100 40

HOW MANY TIMES YOU HAVE RECEIVED SURVIVAL BENEFITS

45
42.3 42.3

40

35

30
PERCENTGAES

25

20
15.4
15

10

0 1 2 3
TIMES

Inference: From the above diagram customers mostly received 1 and 2time (42.3%) survival
benefits so for against money back policy.

11) HAVE YOU RECEIVED ANY INCENTIVES FROM INSURANCE AGENT ON

INSURANCE PREMIUM?
RECEIVED ANY RESPONCES (%) RESPONDENCE
INCENTIVES FROM
INSURANCE AGENT
ON INSURANCE
PREMIUM?

88
 YES 63.3 31

NO 36.7 9

TOTAL 100 40

RECEIVED ANY INCENTIVES FROM INSURANCE AGENT ON

INSURANCE PREMIUM?

37%

63%

YES NO

Inference: From the above diagram 63% customers are received incentives from insurance
agent on insurance premium and 37% customers are not received any incentives.

12) IF YES, UPTO WHAT PERCENTAGE?

WHAT PERCENTAGE RESPONCES (%) RESPONDENCE

RECEIVED ANY
INCENTIVES FROM
INSURANCE AGENT

89
 ON INSURANCE
PREMIUM?
10 26.9 9

26 TO 50 42.3 20

ABOVE 50 30.8 11

TOTAL 100 40

WHA T PE R C EN TA GE R E C EIV ED A N Y IN C E N TIV E S FR OM

IN SU R A N C E A GE N T ON IN SU R A N C E PR EMIU M?

10 26.9
PERCENTAGES

26 TO 50 42.3

ABOVE 50 30.8

0 5 10 15 20 25 30 35 40 45

Inference: From the above diagram about 42.3% customers are received 26 to 50 %
incentives from insurance agent on insurance premium and about 30.8% customers are
received more than 50 % incentives from insurance agent on insurance premium and
remaining 26.9% customers are received 10% incentives from insurance agent on insurance
premium.

FINDING, SUGGESTIONS AND CONCLUSIONS

FINDING

90
 Return on net worth of Bajaj Allianz Life Insurance Company is more than Aviva Life
Insurance Company from the year2017-18 to 2018-19.

 From the year 2017-2018 to 2018-2019 the highest return on net worth is 19.88 in the
year 2018- 2019. and the least return on net worth is 0.56 in the year 2017-18.

 Return on assets of Bajaj Allianz Life Insurance Company is more than Aviva life
insurance Company from the year of 2017-2018 to 2018-2019.

 From the year 2017-2018 to 2018-2019 the highest Return on assets of Bajaj Allianz Life
Insurance Company is highest 3.58 in the year and least 0.53 in the year 2017- 2018 of
Aviva Life Insurance Company.

 Total debt equity of Bajaj Allianz Life Insurance Company is more than Aviva Life
Insurance Company from the year 2017-2018 to 2018- 2019.


 From the year 2017-2018 to 2018-2019 the highest Total debt equity of Bajaj Allianz
Life insurance company is 4.41 in the year 2018-2019. and Aviva life insurance company
in least 0.02 in the year 2017-18.

 Return on capital employed of Bajaj Allianz Life Insurance Company is more than Aviva
Life Insurance Company from the year2017- 2018 to 2018-2019.

 From the year 2017-2018 to 2018-2019 the highest Return on capital employed is highest
14.09 in the year 2017- 2018 of Bajaj Allianz life Insurance Company. and least 0.58 in
the year 2017-2018 of Aviva Life Insurance Company.

 The 59% peoples are insured and 41% peoples are not insured.

91
 43.3% customers are received survival benefits so for against money back policy and
56.7% customers are not received survival benefits so for against money back policy.

 most of the peoples are insured in Bajaj Allianz. People are insured in Bajaj Allianz is
53.3%, in Aviva company insured peoples is 30%. And remaining customers are insured
in others companies.

 customers mostly received 1 and 2time (42.3%) survival benefits so for against money
back policy.

 63.3% customers are received incentives from insurance agent on insurance premium and
36.7% customers are not received any incentives.

 42.3% customers are received 26 to 50 % incentives from insurance agent on insurance

premium and about 30.8% customers are received more than 50 % incentives from
insurance agent on insurance premium and remaining 26.9% customers are received 10%
incentives from insurance agent on insurance premium.

SUGGESTIONS

92
 Aviva Life Insurance Company must have to increase profitability by increasing return on
Net Worth, Return on Asset, Return on Capital Employed and Total debt equity.


 Bajaj Allianz Life Insurance Company must have to maintain good image and earn
goodwill in the market by earning more and more profit.

 Aviva life insurance company need to increasing their performance and efficiency.

 Bajaj life insurance company creates new policies for customers satisfaction and
customers’ needs.

 The best way to motivate the customer to use the Aviva life insurance plans.

 Aviva life insurance company creates new customer services.

CONCLUSION

93
 Bajaj Allianz Life Insurance Company is best in the profitability because every year Bajaj
Allianz Insurance Company is higher as compare to Aviva Life Insurance Company.

 In every year Bajaj Allianz Life Insurance Company's return on net worth, return on
asset, return on capital employed and total debt /equity is higher than Aviva Life
Insurance Company.

 The 61.3% peoples are insured and 38.7% peoples are not insured.

 42.3% customers are received 26 to 50 % incentives from insurance agent on insurance

premium and about 30.8% customers are received more than 50 % incentives from
insurance agent on insurance premium and remaining 26.9% customers are received 10%
incentives from insurance agent on insurance premium.

 Most of the insured customers are prefer Bajaj Allianz life insurance companies.

 customers mostly received 1 and 2time (42.3%) survival benefits so for against money
back policy.

 Every company must have to keep certificate of IRDA.

 63.3% customers are received incentives from insurance agent on insurance premium and
36.7% customers are not received any incentives.

94
 BIBLOGRAPHY

Sr. Author\editors Name of the book\publisher Edition

No

1 Agarwala, A .N. Life Insurance in India: A 1961

Historical and Analytical
Study. Allahabad: Allahabad
Law Journal Press.

2 Bawa, Suminder Life Insurance Corporation of 2007

Kaur India – Impact of
Privatisation and
Performance, Regal
Publications, New Delhi

3 Patel, N. C. All Life Insurance Products, 2006

Bima Gyan, Ahmedabad

4 Ray, R M. Life Insurance In India 1982

Perspectives In Social
Security. New Delhi: Indian
Institute of Public
Administration.

5 Joshi, L.D. Study of the Life Insurance 1970

Funds Investments in India
During the first decade of the
existence of the Life
insurance

Websites
 https://www.moneycontrol.com/
 https://www.wikipedia.org/
 https://www.investopedia.com/
 https://www.irdai.gov.in/
 http://euroasiapub.org/

 Journals
International journal of research in financial & marketing.

95
 APPENDIX
QUATIONNER:
A COMPARATIVE STUDY ON PROFITABILITY AND SERVICES PROVIDED
BY BAJAJ ALLIANZ LTD. AND AVIVA LIFE INSURANCE LTD.
(please fill the form)

1. Name: ………….

2. Age: _____

3. Gender:
o Male
o Female

4. Are you insured?

o Yes
o No

5. From which insurance company you are insured?

o Aviva life insurance company
o Bajaj Allianz life insurance company
o Other

6. How many insurance policies you have?

o Up to 2
o More than 6
o 3 to 6

96
7. For what you have insured yourself?
o For saving
o For covering risk to life
o For tax benefits
o For security of family
o All of the above
o None of the above

8. Which are the following policies you have?

o Endowment policy
o Single premium policy
o Children policy
o Pension plan policy
o Money back policy

9. Are you aware about the insurance bonus of policies?

o Yes
o No

10. Have you received survival benefits so for against money back policy?
o Yes
o No

11. If yes how many times you received it?

o 1
o 2
o 3

12. Have you received any incentives from insurance agent on insurance premium?
o Yes
o No

97
13. If yes up to what percentage?
o 10
o 26-50
o Above

98