Sip Presentation in idbi federal

7/28/2019 Sip Presentation in idbi federal

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PRESENTATION

ON

SIP WORK ON

RISK MANAGEMENT

IN

IDBI FEDERAL LIFE INSURANCE CO. LTD.

SUBMITTED TO SUBMITTED BY:

Dr. R.K.Jena Pratik Gupta

2012215

PGDM(Fin.)


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OBJECTIVE

1. To do a research in financial risk management for IDBI FEDERAL

LIFE INSURANCE CO. LTD.

2. To conduct a survey for observing the investment pattern of

people.

3. To sell the insurance policies of IDBI FEDERAL LIFE INSURANCE CO.

LTD. Mainly Termsurance and Incomesurance.


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INTRODUCTION

What is a Risk?

What is Risk Management?

Why there is a need of risk management?

Why in insurance industry?


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TYPES OF RISK


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INDUSTRY HIGHLIGHTS

Indian insuranceindustry is a

flourishing

industry with

several national

and international

players

The annual growth

rate of the Indian

insurance industry

varies between

15% - 20%

FDI in insurance

industry in Indiahas hiked to 49%

Indian insuranceindustry

contributes 7% to

GDP.


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How does insurance work?


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COMPANY PROFILE IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, Indias

premier development and commercial bank, Federal Bank, one ofIndias leading

private sector banks and Ageas, a multinational insurance giant based out ofEurope.

In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own26% equity each. .

IDBI Federal breaks-even in Five years. Posts maiden profit of Rs 9.24 crore

New Business Premium ( APR1) grows by 23%, compared to industrys negative

growth of -15%. Achieves 44% increase in the number of new business policies sold.

Product mix further shifts to long-term traditional products, thereby drivingprofitability through product-mix. Traditional products account for 83% of newbusiness premium.

13th month persistency improves to 76%. Among top 5 companies in persistency

experience. AUM (Assets under Management) up by 24% to Rs 2,732 crore. For the calendar

year 2012, IDBI Federals Equity Fund ranked No 1 among 72 ULIP fundsbearing testimony to the companys fund management expertise.


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SWOT ANALYSISstrengths weaknesses opportunities threats

Superior customer

service

Insufficient

management cover

300 million people

uninsured

People trust Big

public sector

insurance

Products have

required

accreditations

Could extend to

overseas broadly. Very high

competitionprevailing in the

industry.

Lower response time New specialist

applications.

Could seek better

customer deals.

Vulnerable to

reactive attack by

major competitors

Skilled manpower Fast-track career

development

opportunities on an

industry-wide basis

Lack of infrastructure

in rural areas could

constrain investment


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SOME SUGGESTED TECHNIQUES1. Currency Forward Exchange

Eliminates risk by fixing the exchange rate at which future trade will takeplace. A future contract states the exchange rate for future payments at acurrent rate.

2. Currency Swaps

Manager borrows in a hard (strong) currency and finances the project inthe local currency. Thus, hard currency is swapped for the local currency,

allowing hard currency to financing.3. Use Local Currency

The use of local currency in developing countries to finance the projectscan be an advantage because it reduces reliance on foreign currency.

4. Interest Rate Forward Agreement (FRA)

These agreements are similar to future contracts. E. g. Manager borrows 5Mn. for six months, when the current loan has been paid, but managerexpects the interest rate to rise. This expected rise in interest rate can becompensated by FRA.


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Continued6. Interest Rate Swap

This is an agreement between two parties to pay each other a series ofcash flows, based on fixed or floating interest rate, in the same currency,over a given period of time.

7. RPI Swaps (Retail Price Index-linked)

Manager is in receipt of fixed cash flows. And the inflation is expected.Thus, manager makes this swap agreement and pays to other party cash

flows and receives cash flow that will have the same purchasing powerthrough time.


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RISK MANAGEMENT AT IDBI FEDERAL

GAP Analysis

Duration-GAPAnalysis

Value

at Risk (VaR)

Risk Adjusted

Rate of Returnon Capital(RAROC)

Securitization

Sensitivity

Analysis

Internal RatingSystem


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OBJECTIVE-II Survey for observing the investment pattern of people.

Questionaire was formed. How people were approached?

Locations where the people were approached.

Difficulties in the survey.

Observations done.


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OBJECTIVE-III To sell the insurance policies of IDBI FEDERAL LIFE

INSURANCE CO. LTD. Mainly Termsurance and Incomesurance. Termsurance plan

Incomesurance plan

How people were approached.

Difficulties faced in selling.

No. of policies sold.


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INTERPRETATIONS AND RESULTS Regarding use of risk management techniques, it is found that internal rating

system and risk adjusted rate of return on capital are important.

The effectiveness of risk measurement in banks depends on efficient

Management Information System, computerization and net working of the branch

activities.

Functions of risk management should actually be bank specific dictated by the

size and quality of balance sheet, complexity of functions, technical/ professional

manpower and the status of MIS in place in that bank.

From analysis of survey forms I found that small town and district level investor

invest there most of money in land and property. The second choice of their

investment is gold. So from these result I found that these investor want to play

safe and required good returns also.

Also, they invest in insurance plans just to get tax benefits.

Also, during selling I found that IDBI FEDERAL lacks the communication to its

target customers.


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LIMITATIONS AND RECOMMENDATIONS

Lack of proper database affected the search work.

To understand the overall working of insurance market, risk drivers theperiod of 60 days is not enough.

The data searched and used using online search engines cant be held true

as 100% Correct.

The study was conducted to understand risk management followed in the

organization as per data collected actual practices may differ within the

organization


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Documents

Sip Presentation in idbi federal