IDBI Federal breaks even in Five years

• Posts maiden profit of Rs 9.24 crore

IDBI Federal Life Insurance has achieved break-even in 2012-13, its fifth year of operations. The company has reported a maiden profit of Rs 9.24 crore in 2012-13, thus making it one of the fastest to break-even in the Life Insurance industry. In an industry challenged by falling margins, shrinking new business volumes, high cost ratios and low profitability, this is a significant achievement.

IDBI Federal started its operations in March 2008 and is amongst the most successful start-ups in the Indian Life Insurance market. A pioneer in product innovation, IDBI Federal’s approach is very innovative and reflects a fresh way of looking at and thinking about life insurance. The Company’s innovative products with trademarked names such as WealthsuranceTM, IncomesuranceTM, RetiresuranceTM, etc have been well-received by its customers and have been an important contributing factor to its success.

IDBI Federal’s New Business Premium (APE) grew by 23% in 2012-13, which compares with the negative growth of -15% posted by the industry. The company also witnessed a 44% increase in the number of new business policies sold as compared to the previous year. IDBI Federal has also been driving profitability through the right product mix.

Mr Aneesh Khanna, Head Marketing & Product Management (right) congratulates
Mr G V Nageswara Rao, Company's MD & CEO on crossing the unique milestone

The product mix has continuously been shifted to long-term, traditional products. Share of traditional products in the new business premium increased to 83% as compared to 67% in the previous year. Share of regular premium products increased to 78% as compared to 69% in the previous year.

Mr. G V Nageswara Rao, Managing Director & CEO, IDBI Federal Life Insurance, said, “I am extremely happy to announce that IDBI Federal has recorded its maiden profit of Rs 9.24 crore in 2012-13. Achieving break-even in the fifth year is a significant landmark. We have pursued profitable growth as our company strategy. Our new business premium growth of 23% compares with negative growth of -15% reported by the industry. Our growth rate is one of the highest in the industry, with a large number of companies posting negative growth. What is even more satisfying is the fact that this achievement comes at a time when the entire Life Insurance industry is facing many challenges and growth is hard to come by.”

IDBI Federal has a healthy solvency ratio at 491% as against the regulatory requirement of 150%. Mr. Rao said, “I am delighted to say that IDBI Federal enjoys a comfortable solvency ratio to take care of its next phase of growth. As we have reached the profit-making state, we will not require any further capital infusion. Our AUM has moved up by 24% from Rs. 2,208 crores to Rs 2,732 crores during the current year.” IDBI Federal has paid-up share capital of Rs 800 crore.

The company recorded a 13th month persistency rate of 76% which is among the top 5 in the industry. In terms of 25th, 37th and 49th month persistency rates, IDBI Federal is among the top 3. IDBI Federal’s strong persistency record is testimony to the quality of its sales and the confidence the customers have shown in the company’s products and its investment performance. For the calendar year 2012, IDBI Federal’s Equity Fund raked No 1 in its investment performance among the 72 ulip funds in the industry against which it is benchmarked internally. IDBI Federal’s customer complaints, as reported by IRDA, is among the lowest in the industry.

A strong focus on cost discipline ensured a drop in IDBI Federal’s cost ratio from 26% in 2011-12 to 24% in 2012-13, which is among the lowest expense ratios in the industry.

IDBI Federal Life Insurance’s performance has been a result of its better than industry business growth, better persistency experience, more profitable product-mix, robust investment performance as well as lower cost ratio. In a fast-changing industry landscape, IDBI Federal was quick to realize the challenges and act on them. Today’s announcement validates its success in meeting these challenges.

“A customer centric approach is at the heart of IDBI Federal. We have introduced various measures to ensure that the policyholder’s interests are upheld at all times. We recognize the role of long term planning through life insurance and thus focus our efforts in selling regular premium long term products. Pre-Issuance calling to confirm all sales ensures that the customer is being sold the right product as per his needs. All this has resulted in value creation for the customer and is reflected in our high persistency rates. In fact, as a result, our customer complaints are also much lower than the industry average,” Mr. Rao said.

Mr. Rao added, “This performance is testimony to our constant focus towards innovation, offering tailor-made financial solutions that create value for our customers and help them to realize their dreams and aspirations. We entered as the 18th player in the industry and differentiation was the key to our success. Our approach of product branding is unique in the industry and has helped us achieve a strong mindshare among target audiences.”

IDBI Federal launches insured wealth plan

§   Wealthsurance Dreambuider offers flexible, customized investment options

§   Covers 17 major diseases, hospitalization and accidental injuries

MUMBAI, August 8, 2011: Private life insurer IDBI Federal Life Insurance today announced the launch of its new ULIP called Wealthsurance® Dreambuilder Insurance Plan which will enable customers to save and build wealth under the protective cover of insurance.

Wealthsurance® combines wealth creation and insurance protection into one powerful financial solution. With a minimum premium amount of Rs 25,000 per year and maximum Rs. 1,00,000,  Wealthsurance® Dreambuilder Insurance Plan offers a wide range of insured wealth plans.

Announcing the launch of the new plan, Mr. G V Nageswara Rao, MD & CEO of IDBI Federal Life Insurance said “It is everyone’s dream to create wealth and enjoy quality life, but wealth creation does not happen by chance or accident. It needs a Plan. Wealthsurance® Dreambuilder Insurance Plan can help customers realize their dreams and enjoy the benefits during their lifetime. It is very flexible and can be customized to an individual’s needs with 13 different fund options to choose from. A key attribute of the Plan is that it can be insured not only against risk of death but against 17 major diseases, hospitalization, disability, accidental injuries etc so that you can feel confident that your financial goals can be reached despite the surprises life may throw up. To encourage long term investments, the plan boosts your funds through Guaranteed Loyalty Additions at the end of 10th policy year and every 5 years thereafter to reward customers for staying committed for the long term.”

Wealthsurance® Dreambuilder Insurance Plan offers a comprehensive suite of investment options which are designed to meet the needs of every customer depending upon his or her risk appetite. For instance, conservative customers can choose guaranteed return options which offer fixed, assured returns. Those who can take risks can opt for capital protected options where the entry NAV is guaranteed and returns depend upon the market. Customers who would like to get potential high returns of equity markets in the long-term and understand the risk can opt for market linked equity options.

IDBI Federal Wealthsurance® Dreambuilder Insurance Plan also provides a host of insurance benefits to protect the customers against uncertainties, so that they don’t have to break their investment to meet sudden financial demands and their money can keep compounding. In addition this Plan also offers partial withdrawals facility if funds are required before maturity.

The insurance benefits offered by the Plan include lump-sum cash amounts up to Rs. 20 lakhs to be paid upon diagnosis of any of 17 specified major diseases. These include heart attack, coronary bypass surgery, cancer, stroke, paralysis, coma, brain tumor, renal failure, major organ transplant etc.

“The plan offers a unique investment options called Asset Allocator Funds, where the company’s fund managers invest in equity or debt depending upon market conditions. This is a very useful option for those who do not have the time or expertise to monitor equity market and shift into debt or equity investments depending on market conditions. Moreover policyholder can boost their investments with Guaranteed Loyalty Additions which will be given at the end of specific terms as a reward for long-term investment. The Plan comes with attractive tax benefits. Premium contributions are eligible for tax deduction under Sec 80C. All benefits under the Plan are tax-free under Sec 10(10D),” Mr. Rao added

Another feature is Hospital Cash Benefit in which daily cash up to a maximum of Rs. 5000 per day will be paid for each day of hospitalisation, irrespective of the amount actually spent. The claim process is simple since no bills have to be submitted but only proof of hospitalization is enough. Other benefits include accidental death and disablement benefit and waiver of all future premiums upon death or disablement.