Index – Valuation of Indian Life Insurance Companies

Index

Account structure

Indian insurance companies

Balance Sheet, 9

Embedded Value Report, 9

non-par fund, 6–7

par fund, 6

profit and loss/shareholders’ non-technical account, 8

receipts and payments account, 9

red herring prospectus, 9–10

revenue/policyholders’ technical account, 7–8

schedules, 9

Affecting, factors, 107

Annualized Premium Equivalent (APE), 27

growth in, 35–36

share price, calculation of, 28–30

HDFC Life, 30–31

ICICI Pru, 31–33

SBI Life, 35

APE. See Annualized Premium Equivalent (APE)

Appraisal value

calculation of, 23–24

HDFC Life, 24

ICICI Pru, 24

SBI Life, 24–25

Balance Sheet

and Cash Flow statement, 40–46

reconciliation of

HDFC Life, 55–59

SBI Life, 55–59

and Revenue Account, 40

Bancassurance, 110

Capital injections, 11

in IRR, 12–17

net capital movement, 12

share price of, 17

Cash before Tax, 65

Cash Flow statement

advantages of, 37–38

analysis of

HDFC Life, 77–83

ICICI Pru, 83–89

SBI Life, 89–95

Balance Sheet, 40–46

financing activity, 39

investing activity, 39

investment income in, 65

new format, 65–68

operating activity, 38–39

ratio of

commission/premium, 61

reconciliation of

HDFC Life, 55–59

SBI Life, 55–59

regrouping of, 47–49

Revenue Account, 37–38, 40

signage in, 46–47

unclaimed amounts of, policyholders, 54–55

claims/ premium, 62

operating expenses, 62–63

premium, percentage increase in, 61

Cash margin, 65, 74–75

of HDFC Life, 104

of ICICI Pru, 104

of SBI Life, 104

Embedded value

affecting, factors of, 107

analysis of, 117

available of, 22

calculation of, 20–21

components of, 21–22

definition of, 19

of HDFC Life, 107

high-level view of, 112

of ICICI Pru, 107

one year, 116–119

of SBI Life, 107

share price of, 19–20, 23, 28–36

use of, 22

value of in force (VIF), 112–116

Embedded value of operating profits (EVOP), 119

EVOP. See Embedded value of operating profits (EVOP)

Group 1 reconciliation, 63–64

High-level view, 112

Indian insurance companies

account structure of, 6–10

APE, 27

information technology, 4–5

NBM, 27

versus other companies, 1

published information of, 5–6

selling, insurance, 2–3

VNB, 28

Indian insurance market

private insurance companies, history of, 3

size of, 3–4

Information technology (IT), 4–5

Insurance company

embedded value of, 19–20

Insurance Regulatory And Development Authority of India (IRDA), 3, 5, 6

Internal rate of return (IRR)

HDFC LIFE for, 13

ICICI Pru for, 14

SBI Life for, 14–15

share price of, 15–17

IRDA. See Insurance Regulatory And Development Authority of India (IRDA)

IRR. See Internal rate of return (IRR)

IT. See Information technology (IT)

Life insurance companies

taxation of, 99–101

HDFC Life, 100

ICICI Pru, 101–103

SBI Life, 102

Market capitalization

IRR of, 12

NBM. See New Business Margin (NBM)

Net current assets B, 65

New business margin (NBM), 27, 108–109

of HDFC Life, 109

of ICICI Pru, 109

of SBI Life, 109

share price, calculation of, 28–30

HDFC Life, 30–31

ICICI Pru, 31–33

SBI Life, 35

New business strain, 68–71

Non-par fund, 6–7

Operating Cash Flow

with PAT, 49–54

Operating return on embedded value (OREV), 119–122

OREV. See Operating return on embedded value (OREV)

Par fund, 6

PAT. See Profit after tax (PAT)

PER. See Price earnings ratio (PER)

Policy-by-policy approach, 21

Policyholders, unclaimed amount of, 54–55

Policyholders’ Revenue Account, 80, 101, 102

Policyholders’ Technical Account, 7–8, 100

Price earnings ratio (PER), 36

Private insurance companies

history of, 3

profit of, 5

Profit after tax (PAT), 80, 87, 107, 112–116

HDFC Life Reinsurance impact on, 97

ICICI Pru Reinsurance impact on, 98

with Operating Cash Flow, 49–54

SBI Life Reinsurance impact on, 99

Profit and loss account, 8

Profit signature, 68–71

Receipts and payments account, 9

Reconciliation

accounting numbers of, 55

Cash Flow statement, 40

HDFC Life, 55–59

SBI Life, 55–59

Red herring prospectus, 9–10

Reinsurance reserves, 95–99

Revenue Account, 7–8

Cash Flow statement, 37–38, 40

of HDFC Life, 108

of ICICI Pru, 108

of SBI Life, 108

Schedules, 9

SEBI. See Securities and Exchange Board of India (SEBI)

Securities and Exchange Board of India (SEBI), 6

Share price

components of, 17

composition of, 17

IRR for, 16–17

Share price of

embedded value, 19–20, 23, 28–36

multiple value of, 25–26

Shareholders’ Non-technical Account, 100, 101, 102

Shareholders’ non-technical account, 8

Unclaimed amounts, of policyholders, 54–55

Value of in force (VIF), 112–116

calculated growth rate, 115

of HDFC Life, 104, 115

of ICICI Pru, 104, 115

of SBI Life, 104, 115

Value of in-force policies, 72

Value of New Business (VNB), 28

share price, calculation of, 28–30

HDFC Life, 30–31

ICICI Pru, 31–33

SBI Life, 35

VIF. See Value of in force (VIF)

VNB. See Value of New Business (VNB)