INDUSTRIAL TRAINING REPORT An Organizational Study ofBharti-AXA Life Insurance Co. Ltd. & Risk Analysis of Bharti-AXA Life Insurance ULIP Funds – A Study This Industrial Training Report is submitted in partial fulfillment of the requirements for the award of the Degree ofMASTER OF BUSINESS ADMINISTRATION ofBANGALORE UNIVERSITY This training has been undertaken by Naina Monica Pranesh Lazarus Reg. No. 09VWCMA056 Under the guidance and support ofPoonam Nam Joshi M S Dilip Professor Agency ManagerAlliance Business Academy Bharti-AXA Life Insurance ALLIANCE BUSINESS ACADEMY BANGALORE-560 076 1
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Real GDP growth was 6.5% in 2009, down from 7.4% and 9% in 2008 and 2007,respectively. The largest contribution towards GDP came from the services sector,
which contributed 58.4% of the total GDP. The industry sector contributed 25.8% and
agriculture added 15.8% to the GDP. Services kept its position as the biggest employer
as well for the huge workforce of 467 million people. Services employed 62.6%, while
industry generated 20% and agriculture pitched in 17.5% of the total jobs.
b) Inflation
Through a strict credit policy and stringent fiscal arrangements, India could somewhat
evade the recession. However, inflation has been a cause of concern. The 2009 figure
confirmed inflation at 10.7%, up from 8.3% in 2008. With industrial growth at 7.6% in
2009, India ranked as the twelve most progressive countries in the world.
c) FDI
The modern and liberalized Indian economy is a hotspot for FDI (foreign direct
investment). Every year the volume seems to grow larger and 2009 was no exception.
With FDI growing from $123.4 billion in 2008 to $161.3 billion in 2009, the Indian
economy has become the favourite spot for global investors to hedge their investments
and make profits in an economy where disposable income is rising steadily.
d) Core Infrastructure
Growth in the overall core infrastructure sector increased from 3.8% in October 2009 to
9.4% in January 2010, compared to the low growth of 2% achieved during the
The issues weighing down on the Indian economy are its unemployment rate and arather constant poverty rate. The unemployment rate grew in 2009 to 10.7% from
10.4% in 2008 and almost 25% of the population lives under the poverty line. In order
to combat this, the Indian administration is keen on encouraging privatization and
improving the employment scenario. Privatization will also attract FDI that can help in
structural improvements and thus trigger growth.
1.2 INSURANCE INDUSTRY
1.2.1 MEANING OF INSURANCE
Insurance is a form of risk management primarily used to hedge against the risk of a
contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a
loss, from one entity to another, in exchange for payment.
Insurance is based on the law of large numbers. All who are exposed to a risk or a peril
contribute a relatively small sum to a common pool, which compensates the few who
An insurer is a company selling the insurance; an insured or policyholder is the personor entity buying the insurance policy. The insurance rate is a factor used to determine
the amount to be charged for a certain amount of insurance coverage, called the
premium.
The transaction involves the insured assuming a guaranteed and known relatively small
loss in the form of payment to the insurer in exchange for the insurer's promise to
compensate insured in the case of a large, possibly devastating loss. The insured
receives a contract called the insurance policy which details the conditions and
circumstances under which the insured will be compensated.
TYPES OF INSURANCE
Insurance is generally classified into three main categories:
1. Life Insurance
2. Health Insurance
3. General Insurance
1.2.2 FUNCTIONS OF INSURANCE
a) PRIMARY FUNCTIONS
Providing protection – The elementary purpose of insurance is to allow security
against future risk, accidents and uncertainty. Insurance cannot arrest the risk from
taking place, but can for sure allow for the losses arising with the risk. Insurance is
in reality a protective cover against economic loss, by apportioning the risk with
Collective risk bearing – Insurance is an instrument to share the financial loss. It isa medium through which few losses are divided among larger number of people. All
the insured add the premiums towards a fund, out of which the persons facing a
specific risk is paid.
Evaluating risk – Insurance fixes the likely volume of risk by assessing diverse
factors that give rise to risk. Risk is the basis for ascertaining the premium rate as
well.
Provide Certainty – Insurance is a device, which assists in changing uncertainty to
certainty.
b) SECONDARY FUNCTIONS
Preventing losses – Insurance warns individuals and businessmen to embraceappropriate device to prevent unfortunate aftermaths of risk by observing safety
instructions; installation of automatic sparkler or alarm systems, etc.
Covering larger risks with small capital – Insurance assuages the businessmen
from security investments. This is done by paying small amount of premium against
larger risks and dubiety.
Helps in the development of larger industries – Insurance provides an opportunityto develop to those larger industries which have more risks in their setting up.
Is a savings and investment tool – Insurance is the best savings and investmentoption, restricting unnecessary expenses by the insured. Also to take the benefit of
income tax exemptions, people take up insurance as a good investment option.
Medium of earning foreign exchange – Being an international business, any
country can earn foreign exchange by way of issue of marine insurance policies and
real estate. In the business level, in the daily conduct of its affairs, every businessestablishment faces decisions that entail an element of risk. The decision to venture
into a new market, purchase new equipments, diversify on the existing product line,
expand or contract areas of operations, commit more to advertising, borrow additional
capital, etc., carry risks inherent to the business. The outcome of such speculative risk
is either beneficial (profitable) or loss. Speculative risk is uninsurable.
Pure or Static Risk
The second category of risk is known as pure or static risk. Pure (static) risk is a
situation in which there are only the possibilities of loss or no loss, as oppose to loss or
profit with speculative risk. The only outcome of pure risks are adverse (in a loss) or
neutral (with no loss), never beneficial. Examples of pure risks include premature
death, occupational disability, catastrophic medical expenses, and damage to property
due to fire, lightning, or flood.
Types of Pure Risk
The major types of pure risk that are associated with great economic and financial
insecurity include:
1. Personal risk
2. Property risk
3. Liability risk
Personal risks are risks that directly affect an individual. They involve the possibility
of loss or reduction of income, of extra expenses, and the elimination of financial
Premature death risk is defined as the risk of the death of the head of a household
with unfulfilled financial obligations. These can include dependents to support, a
mortgage to be paid off, or children to educate.
Old age is a risk of insufficient income during retirement. When older workers retire,
they lose their normal amount of earnings. Unless they have accumulated sufficient
assets from which to draw on, they would be facing a serious problem of economic
insecurity.
Risk of poor health includes both catastrophic medical bills and the loss of earned
income. The cost of health care has increased substantially in recent years. The loss of
income is another major cause of financial instability. In cases of severe long termdisability, there is a substantial loss of earned income, medical bills are incurred,
employee benefits may be lost, and savings depleted.
The risk of unemployment is another major threat to most families. Unemployment
can be the result of an industry cycle downswing, economic changes, seasonal factors
and frictions in the labour market. Regardless of the cause, unemployment can create
financial havoc in the average families by way of loss of income and employmentbenefits.
Property risk is the risk of having property damaged or loss from numerous perils.
Property loss can occur as a result of fire, lightning, windstorms, hail, and a number of
other causes.
Liability risks are another important type of pure risk that many people face. More than
ever, we are living in a litigious society. One can be sued for any frivolous reason. Onehas to defend himself when sued, even when the suit is without merit.
Nevertheless, risks can be reduced or managed. ‘Risk Management’ is an integrated
process that identifies, classifies, analyses & quantifies the financial impact of various
risks involved in running a business. It is a tool that recognizes the potential threats to
the business’s objectives and allows management to make informed decisions on the
appropriate course of action, be it to mitigate, transfer or allocate capital to the risk.
Risk management is not a new concept in life insurance and many of the basic
principles are as old as the insurance industry itself. The majority of companies already
have some form of risk management process in place. However, over recent years, there
has been significant progress in developing and formalizing these processes and even in
• Life insurance also encourages 'forced thrift'. This means that the insured is made to
pay his/her premiums by saving his/her money, which he/she might not do in the
regular course of life.
• Some life insurance policies often allow insured to take loans against his policy,
should he require money to meet any unforeseen expenditure. What's more, some life
insurance policies also allow saving on taxes
1.2.5 BRIEF HISTORY OF INDIAN INSURANCE SECTOR
The insurance sector in India has completed all the facets of competition – from being
an open competitive market to being nationalized and then getting back to the form of a
liberalized market once again. The history of the insurance sector in India reveals that ithas witnessed complete dynamism for the past two centuries approximately.
I. IMPORTANT MILESTONES IN THE INDIAN LIFE INSURANCE
BUSINESS
With the establishment of the Oriental Life Insurance Company in Kolkata, the business
of Indian life insurance started in the year 1818.
1912: The Indian Life Assurance Companies Act came into force for regulating the life
insurance business.
1928: The Indian Insurance Companies Act was enacted for enabling the government to
collect statistical information on both life and non-life insurance businesses.
Computerisation of operations and updating of technology to be carried out inthe insurance industry The committee emphasized that in order to improve the
customer services and increase the coverage of the insurance industry should be
opened up to competition.
But at the same time, the committee felt the need to exercise caution as any failure on
the part of new players could ruin the public confidence in the industry. Hence, it was
decided to allow competition in a limited way by stipulating the minimum capital
requirement of Rs.100 crores. The committee felt the need to provide greater autonomy
to insurance companies in order to improve their performance and enable them to act as
independent companies with economic motives. For this purpose, it had proposed
setting up an independent regulatory body.
1.2.7 MAJOR POLICY CHANGES
Insurance sector has been opened up for competition from Indian private insurance
companies with the enactment of Insurance Regulatory and Development Authority
Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory
and Development Authority (IRDA) was established on 19th April 2000 to protect the
interests of holder of insurance policy and to regulate, promote and ensure orderly
growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private
players into the insurance market which was hitherto the exclusive privilege of public
sector insurance companies/ corporations. Under the new dispensation Indian insurance
companies in private sector were permitted to operate in India with the following
conditions:
• Company is formed and registered under the Companies Act, 1956;
The aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed 26%, paid up
equity capital of such Indian insurance company;
• The company's sole purpose is to carry on life insurance business or general
insurance business or reinsurance business.
• The minimum paid up equity capital for life or general insurance business is
Rs.100 crores.
• The minimum paid up equity capital for carrying on reinsurance business has
been prescribed as Rs.200 crores.
1.2.8 IRDA
The Insurance Regulatory and Development Authority Act of 1999 brought aboutseveral crucial policy changes in the insurance sector of India. It led to the formation of
the Insurance Regulatory and Development Authority (IRDA) in 2000. The Authority
has its Head Quarters at Hyderabad.
The Authority is a ten-member team consisting of
a. Chairman; b. five whole-time members; c. four part-time members
All these positions are appointed by the Government of India.
The goals of the IRDA are to safeguard the interests of insurance policyholders, as well
as to initiate different policy measures to help sustain growth in the Indian insurance
The Authority has notified 27 Regulations on various issues which include Registrationof insurers, Regulation on insurance agents, Solvency Margin, Re-insurance, Obligation
of Insurers to Rural and Social sector, Investment and Accounting Procedure,
Protection of policy holders' interest etc. Applications were invited by the Authority
with effect from 15th August, 2000 for issue of the Certificate of Registration to both
life and non-life insurers. In 2010, the Government of India ruled that the Unit Linked
Insurance Plans (ULIPs) will be governed by IRDA, and not the market regulator
Securities and Exchange Board of India
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.
DUTIES, POWERS AND FUNCTIONS OF IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA
1. Subject to the provisions of this Act and any other law for the time being
in force, the Authority shall have the duty to regulate, promote and ensure
orderly growth of the insurance business and re-insurance business.
2. Without prejudice to the generality of the provisions contained in sub-
section (1), the powers and functions of the Authority shall include,
1. issue to the applicant a certificate of registration, renew, modify,
withdraw, suspend or cancel such registration;
2. protection of the interests of the policy holders in matters
concerning assigning of policy, nomination by policy holders, insurable
more familiar with different insurance products, this growth can only increase, with theperiod from 2010 - 2015 projected to be the 'Golden Age' for the Indian insurance
industry.
Indian insurance companies offer a comprehensive range of insurance plans, a range
that is growing as the economy matures and the wealth of the middle classes increases.
The most common types include: term life policies, endowment policies, joint life
policies, whole life policies, loan cover term assurance policies, unit-linked insurance
plans, group insurance policies, pension plans, and annuities. General insurance plans
are also available to cover motor insurance, home insurance, travel insurance and health
insurance.
Due to the growing demand for insurance, more and more insurance companies are now
emerging in the Indian insurance sector. With the opening up of the economy, several
international leaders in the insurance sector are trying to venture into the India
insurance industry.
a. MARKET OVERVIEW
• The insurance industry in India is at an early stage with low penetration
and high potential.
• The total premium of the insurance industry has grown at a CAGR of
24.6 per cent from 2002–03 to 2008–09 to reach US$ 52.6 billion in
2008–09.
• The number of insurance players has increased from four and eight in
life and non-life sectors, respectively, in 2000 to 23 and 22, respectively,
• Online insurer ebix.com’s expansion into India is a major step for the companyto become a global supplier of internet-based insurance tools for consumers and
insurance professionals.
• In a diverse country such as India it is imperative that a universal insurance
infrastructure be created to maximize efficiency in the insurance industry.
• Online insurer ebix.com can offer the Indian market a business-to-consumer
internet portal where consumers have more choice while purchasing insuranceand an internet-based agency management system that will help agents work
more efficiently with multiple carriers.
• Foreign holding in Indian insurance companies is limited to 26 per cent. The
government wants to increase the cap to 49 percent, but its communist allies
oppose such a move.
• The market is moving beyond single-premium policies and unit linked insurance
products which are easier to sell.
• The agency model is the dominant sales channel accounting for more than 85
per cent of fresh premiums but overall inactivity and attrition is much higher at
50-55 per cent than the global average of 25 per cent.
• Opportunities include health insurance and pensions, the report said; adding
only 1.5-2 per cent of total healthcare expenditure in India was currently
• Management consultancy firm McKinsey has forecast that India’s life insuranceindustry will be double in the next five years from $40 billion to $80-100 billion
in 2012. This growth would improve the level of insurance penetration from
5.1% of gross domestic product to 6.2% in 2010-2012.
• The Indian life insurance industry could witness a rise in the insurance sector
premiums between 5.1% and 6.2% of GDP in 2012, from the current 4.1%.
Total market premiums are likely to more than double during this period, from
about $40 billion to $80-100 billion. This implies a higher annual growth in new
business annual premium equivalent (APE) of 19% to 23% from 2007 to 2012.
• The large part of the growth would come from second- and third-tier cities and
small towns. Based on MGI forecasts, 26 tier-II cities with population greater
than one million and 33 tier-III towns with the population of more than 5 lakh
will account for 25% of the middle class and newly bankable class in 2025.
Over 5,000 tier-IV small towns will account for as much as 40% of these two
classes in 2025.
• However, if an insurer decided to be a niche player and concentrated on metros
and their suburbs, they will have a big market, since 60% of the very rich
(annual income over Rs 10 lakh) would be concentrated in the top eight cities.
Although these consumers will be highly accessible, players will have to reckon
with intense competition that is only going to increase and extend to other
PEST analysis of any industry sector investigates the important factors that are affectingthe industry and influencing the companies operating in that sector. PEST is an
acronym for political, economic, social and technological analysis. Political factors
include government policies relating to the industry, tax policies, laws and regulations,
trade restrictions and tariffs etc. The economic factors relate to changes in the wider
economy such as economic growth, interest rates, exchange rates and inflation rate, etc.
Social factors often look at the cultural aspects and include health consciousness,
population growth rate, age distribution, changes in tastes and buying patterns, etc. The
technological factors relate to the application of new inventions and ideas such as R&D
activity, automation, technology incentives and the rate of technological change.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, whichis one of India's foremost financial services companies, and Prudential plc, which is a
leading international financial services group headquartered in the United Kingdom.
ICICI Prudential began the operations in December 2000. Today, this company has
over 2100 branches, which include 1,116 micro-offices, over 290,000 advisors and 18
banc assurance partners.
Max New York Life Insurance
Max New York Life Insurance Company Limited is a joint venture between Max India
Limited, which is a one of India's leading multi-business corporate, and New York Life
International, which is a Fortune 100 company & global expert in life insurance. Max
New York Life Insurance started its commercial operations in India in 2001. It is the
first life insurance company in India to be awarded the IS0 9001:2000 certification. The
company has around 133 offices all over the country.
Reliance Life Insurance
Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd., a part of
Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India's leading
private sector financial services companies, which ranks among the top 3 private sector
financial services and banking companies. Reliance Life Insurance is not only one of
India's fastest growing life insurance companies, but also counts among the top 4
private sector insurers. In just 2 years, the Company has crossed the mark of 1.7 Million
global leader in financial protection and wealth management. AXA's operations arediverse geographically, with major operations in Western Europe, North America and
the Asia/Pacific area. It also has operations in Australia, New Zealand, Hong Kong,
Singapore, Indonesia, Philippines, Thailand, China, India and Malaysia.
Bharti AXA Life Insurance has a 74% stake from Bharti and 26% stake of AXA in the
joint venture. In December 2006, the Company launched its operations in India. At
present, it has more than 5200 employees working over 12 states in the country. With
the continuous expansion, Bharti AXA Life Insurance is making itself proactive to cater
to insurance and wealth management needs of people.
2.1.1 PROMOTERS
1) BHARTI ENTERPRISES
Bharti Enterprises is one of India’s leading business groups with operations in over 21
countries across the globe with interests in telecom, financial services, retail, fresh and
processed foods, and real estate.
Bharti started its telecom services business by launching mobile services in Delhi
(India) in 1995. Bharti Airtel, the group's' flagship company, has emerged as one of the
top telecom companies in the world and is amongst the top five wireless operators in
the world. Through its global telecom operations Bharti group has presence in 21
countries across Asia, Africa and Europe - India, Sri Lanka, Bangladesh, Jersey,
Guernsey, Seychelles, Burkina Faso, Chad, Congo Brazzaville, Democratic Republic of
Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Sierra Leone,
distinction of being the world's largest tower company. Bharti Infratel has not onlypioneered the passive infrastructure space in the Indian telecom sector, but has also
continued to lead the industry in developing and providing innovative solutions and
setting service delivery benchmarks.
iii. Bharti Realty Limited
Bharti Realty Limited is a young, vibrant and dynamic realty company with expanding
interests in commercial, retail and residential real estate. It has grown from strength to
strength, constructing and managing over ten top of the line facilities for Bharti group
companies and third party clients. Spurred by its accomplished success and acquired
expertise, Bharti Realty Limited has now forayed into developing quality commercial
real estate in the central business district (CBD) areas of metropolitan cities, retail real
estate in the up-market localities of metropolitan cities and in a few prominent cities of
Punjab, and high end residential real estate in the Delhi NCR region, Mumbai and
Bangalore.
iv. Beetel Teletech Limited
Beetel Teletech Limited is a sales and distribution company with focus on emerging
markets of SAARC, Middle East, Africa, Latin America and is engaged into
distribution & marketing of wide range of products that include Smart Phones, High
quality cordless phones, Modems, Audio / video conferencing products, Free To Air Set
Top Boxes, Fixed Cellular Phones & Fixed Wireless Terminals.
v. Comviva
Comviva is a global player in offering mobile solutions beyond VAS. With an extensive
portfolio of products and solutions that encompass content, commerce and community-
related offerings, Comviva enables mobile operators to offer services that enrich users’
lives. Comviva enhances operator efficiencies and revenue performance by addingvalue at every stage of the customer lifecycle – from prepaid subscription and etop-up
to customer care, and from real-time promotions and loyalty management to billing
solutions. Comviva has extensive expertise in delivering and managing mobile
solutions that extend beyond VAS, powering solutions to mobile operators in more than
80 countries worldwide and reaching over 550 million subscribers globally.
vi. Jersey Airtel and Guernsey Airtel
Jersey Airtel and Guernsey Airtel are subsidiaries of Bharti group and offer mobile
services on the islands of Jersey and Guernsey respectively in the Channel Islands
(Europe). All services are offered under the Airtel-Vodafone brand under a partnership
to bring a range of Vodafone global products together with other exciting services from
Bharti to customers in Jersey and Guernsey.
vii. Centum Learning Limited
Centum Learning Limited provides end-to-end learning and skill-building solutions that
enhance business performance to Bharti Group and several large corporates. Centum
Learning has received the Gold Award for "Excellence in Training" at the World HRD
Congress, 2010 and has been adjudged as one of the ' Top 15 Emerging Leaders in
Training Outsourcing' 2009 Worldwide. Centum Learning provides industry oriented
employability programmes through a network of 130 Centum Learning Centers spread
across 90 cities. It has also launched a new education initiative, Centum U – Institute
of Management & Creative Studies which offers UG and PG programmes in association
Bharti Walmart is a B2B joint venture between Bharti Enterprises and Walmart for wholesale cash & carry and back-end supply chain management operations in India to
serve small retailers, manufacturers, institutions and farmers. The Company operates
Cash & Carry stores under the Best Price Modern Wholesale brand. A typical cash-and-
carry store stands between 50,000 and 100,000 square feet and sells a wide range of
fresh, frozen and chilled foods, fruits and vegetables, dry groceries, personal and home
care, hotel and restaurant supplies, clothing, office supplies and other general
merchandise items.
ix. Bharti Retail
Bharti Retail is a wholly owned subsidiary of Bharti Enterprises. The Company
operates easyday neighborhood stores and compact hypermarket stores called easyday
Market. Bharti Retail provides consumers a wide range of good quality products at
affordable prices. easyday stores are a one stop shop that cater to every family's day-to-
day needs. Merchandise at easyday Market stores include apparels, home furnishings,appliances, mobile phones, meat shop, general merchandise, fruits and vegetables
among others.
x. Bharti AXA Life Insurance
Bharti AXA Life Insurance is a joint venture between Bharti and AXA Group.The
company launched national operations in December 2006. Today, Bharti AXA Life has
a national footprint of distributors trained to provide quality financial advice and
insurance solutions to the large Indian customer base. Bharti AXA Life offers a range
of innovative products and services that cater to specific insurance and wealth
Bharti AXA General Insurance is a joint venture between Bharti Group and AXAGroup. The company is one of the fastest growing in the general insurance segment and
is the first in the industry to receive dual certifications of ISO 9001:2008 & 27001:2005
within the a year of launching operations. The company offers an extensive product
range for retail, rural and commercial clients with cashless facilities in over 4000
hospitals and 1600 garages as well as 24/7 multi-modal claims registration.
xii. Bharti AXA Investment Managers
Bharti AXA Investment Managers Private Limited is a joint venture between Bharti and
the AXA Group. With a presence in more than 34 locations across the country within
one year of the launch, Bharti AXA Investment Managers boasts one of the largest
footprints for any AMC in the country during launch. This indicates the retail focus of
the AMC. With best practices brought in from world leaders in financial protection,
Bharti AXA Investment Managers aim to be an aggressive player in the Indian Asset
Management Industry.
xiii. Indus Towers
Indus Towers, a JV between Vodafone Essar (42%), Bharti Group (42%) and Aditya
Birla Telecom Limited (16%) and is India’s leading mobile towers company. The
company, which operates in 16 telecom circles across India, provides services to all
telecom operators and other wireless service providers such as as broadcasters and
broadband service providers on non-discriminatory basis.
FieldFresh Foods Pvt. Ltd, a joint venture company between Bharti Enterprises and DelMonte Pacific Ltd. The company offers branded FieldFresh fruits & vegetables across
India and international markets, including Europe and the Middle East. The company
Distribution management: a second source of differentiation that reflects AXA'saspiration of enhancing sales performance by lessening the administrative load
on its distributors.
• Quality of service.
• Productivity: AXA seeks to reduce operating costs and improve quality every
year. Cost reduction is an ongoing challenge, not a one-off reaction to a difficult
operating environment.
To achieve operational excellence in each of these key areas, AXA has adopted a
continuous process improvement program based on listening to the voice of the
customer.
Its global strategy is leveraged by the size and reach of the AXA Group, which
encourages local operating units to develop and exploit synergies.
GROUP COMPANIES
GIE AXA
AXA's group management services (finance, HR, communications, procurement, IT,
marketing, etc.) are grouped together as a GIE (economic interest group), based in
Paris. As the Group's head office, the GIE AXA is composed of about 500 employees.
AXA Assistance
An international network of assistance and services for Corporate and individual clients,
AXA Assistance is present in more than 30 countries, on 5 continents. It has a
The ones travelling to Schengen area and in Europe will find information on how to geta visa, its required travel insurance for the consulates and the possibility to buy a
Schengen Travel Insurance online at Axa Schengen travel insurance.
AXA Bank Europe
Having defined a common, Europe-wide bank strategy, AXA has decided to dovetail all
its individual banking services via a European bank division:
AXA Bank Europe: A limited range of simple, attractive and innovative banking
products and services is on offer in the countries in which the banking and insurance
services answer to our customers' needs, particularly in terms of savings offerings.
AXA Corporate Solutions
AXA Corporate Solutions is the AXA Group subsidiary that provides property-casualty
insurance to large European corporations and marine and aviation insurance tocorporate clients worldwide.
In 2007, AXA Corporate Solutions generated revenues of 1.806 billion euros. Present in
90 countries, AXA Corporate Solutions has leading positions in its key markets. It
employs 1,300 people.
AXA Liabilities Managers
AXA Liabilities Managers is the AXA Group Company specializing in non-life (re)
insurance legacy business acquisition and management. The company operates in
Continental Europe, the UK and North America and manages close to 4 billion euros of
The brand focuses on delivering beyond just promises, by responding to client needswith real and tangible proof, thus establishing an authentic relationship of trust with the
clients.
Core Values
• Team Spirit
• Integrity
• Innovation
• Pragmatism
• Professionalism
Professionalism - A professional is a collegial discipline that regulates itself by means
of mandatory, systematic training. It has a base in a body of technical and specialized
knowledge that it both teaches and advances it sets and enforces its own standards and
it has a service rather than a profit orientation, enshrined in a code of ethics.
Innovation - Innovation is generally understood as the successful introduction of a new
thing or method. Innovation is the embodiment, combination, or synthesis of knowledge
in original, relevant, valued new products, processes, or services.
Team Spirit - team spirit is the spirit of a group that makes the members want the
group to succeed
Pragmatism - Pragmatism is the philosophy of considering practical consequences andreal effects to be vital components of meaning and truth.
Integrity - Integrity is consistency of actions, values, methods, measures, principles,
expectations and outcome. As a holistic concept, it judges the quality of a system in
AXA Asia Life's senior management to expand operations across the region in marketsincludingg Hong Kong, China, India, Indonesia, Malaysia, Singapore, Thailand and the
Philippines. Mr. Williams has been with AXA since 2002 and has held key positions in Hong
Kong and the Philippines. Mr. Williams has over 15 years of experience in the insurance
industry, particularly in the areas of product & pricing actuary, operations and finance.
2) Mark Gerard Meehan – Chief Operations Officer
He is currently the Chief Marketing and Operations Officer for Bharti AXA Life
Insurance Company Ltd. Mark’s previous role in AXA was that of CEO of Tynan
Mackenzie P/L, a professional investment services company. His role in Bharti AXA
Life as CMOO includes Marketing, Product Development, Customer Service,
Underwriting, Claims, Channel & Distribution Operations, Information Technology and
Systems, Six Sigma, Business Continuity and Client Persistency Management.
3) V Srinivasan – Chief Financial Officer
He is currently the Chief Financial Officer of Bharti AXA Life Insurance Company. He
started his career as a Chartered Accountant in 1989 and over the past two decades has
emerged as a stalwart in the financial sector. With over 8 years of rich experience in the
Life Insurance industry, today, he stands as a storehouse of financial knowledge and
expertise. His portfolio also boasts of extensive experience in diverse industrial
segments like manufacturing and oil & gas.
From April 1996 to February 2002, he has handled Corporate Finance and Tax at Cairn
Energy India Pvt Ltd. He has held responsibilities in Accounting and Project Reporting
at Kentz, Kuwait, Reliance and SRF Ltd. He has also functioned as the Senior Vice
President - Corporate Affairs at ICICI Prudential Life Insurance Company and CFO of AMP Samar Life Insurance Company from February 2002 to December 2005.
4) Sushanto Mukherjee – Chief Distribution Officer
He is the Chief Distribution Officer for Bharti AXA Life Insurance Company Ltd. Prior
to this, he was Director & Head Partnership Distribution & Group Business at Max
New York Life Insurance He started his career with ITC-Welcomegroup hotels division
in 1989. He has subsequently worked in various reputed organizations such as Xerox,
Reliance Infocomm & Tata AIG in senior positions managing sales at Zonal & National
Levels.Sushanto has over 21 years of experience across Insurance, Telecom, Hospitality
and Office Automation.
5) Priya Ranjan – Human Resources Director
He is Director - Human Resources at Bharti AXA Life Insurance Company. He brings
to the business over 15 years of HR experience in diverse fields spanning financial
services, information technology and manufacturing. He specialises in building large
scale businesses right from their project days. He also has an entrepreneurial venture to
his credit with Bangalore-based Team Excel, which specialised in recruitment and HR
consulting. His first assignment was with Tata Steel as Sr. Personnel Officer from 1991
to 1994, followed by Microland Ltd. as Manager - HR for two years.
He became a part of the Bharti AXA Life family in mid-2006 and is currently Sr. VicePresident and Chief & Appointed Actuary of Bharti AXA Life Insurance Company. He
also plays the role of Chief Risk Officer at Bharti AXA Life. He carries with him 18
years of experience in Insurance, Reinsurance, Pensions and General Administration.
GLN started his career with LIC in 1991, handling policy servicing, underwriting,
claims and sales compensation. Additionally, he was also a part of the Pension and
Group Scheme Team handling LIC's superannuation funds at the corporate office. In
2001, he joined the start-up team of Birla Sun Life as a qualified Actuary and was
responsible for business planning, pricing, valuation and group business initiatives. This
was followed by a stint at Swiss Reinsurance, where he functioned as the Marketing
Actuary and managed clients across the Indian sub-continent.
2.1.4 SWOT ANALYSIS
Strengths
• It has very well established promoters, namely, Bharti Enterprises and the AXA
Group
• It has a range of innovative products
• It has a huge database of clients from promoter companies
This includes newspaper, office clients, and city directory/office directory / commercedirectory/yellow pages, statistical bureaus government and public bodies.
2] Through nominators
This means to obtain help from people who have influence over others not known to
you. Nominators serve as extra “eyes and ears” for the branch office. There can be
numbers of nominators within an Agency Manager circle of friends, acquaintance,
community members, and sales staff is almost limitless.
For getting cooperation from the nominators:
• build prestige: personal, of the branch office and of the company
• give nominators adequate concept of opportunity for the right person
• invest time and effort necessary to earn prestige and to strengthen relationship
3] Impersonal Recruiting Methods
The best candidates from impersonal recruitment survive and produce as well as the
After completion of market survey, each and every survey data is again reentered in ISF(Initial Screening Form) to get a clearer picture of the best among the prospective
candidates. This ISF form serves as a data base for company.
E) BASIC SHORTLISTING ON THE OF ‘Q’ SCORE
The Qs are 5 different criteria where the candidates are to be analyzed. These Qs are
five basic screening questions through which the company knows about the candidate
interest of work in an insurance company.
Q1- The candidate should have been a resident of Bangalore for at least five years.
Q2- He/ She should be married.
Q3- His/ Her annual income should be at least 1.2 to 1.5 lakhs.
Q4- He/ She should be a graduate.
Q5- Minimum age to be eligible for being a life advisor is 25.
The significance of Qs
A high Q score implies possibility of better performance by the candidate as a life
advisor (meaning better revenue generation ability). On an average only a candidate
with a score of Q4 or Q5 was interviewed.
A low Q score implies lesser possibility of such performance.
In this session of recruitment process the probable adviser is given the idea of the jobprofile and taken his response. He is also given a general idea of the product and the
commission on the product holds. In this whole selection process, the prospective
candidate is shown the career path.
G) BOP PRESENTATION
Once the prospective candidate is ready for doing the advisory job he is called to the
office for a BOP (Business Opportunity Presentation) process. In this process, the
prospective advisor is sent to Branch Sales Manager, where the manager tries to know
his interest in the insurance sector and in this process he also verifies his certificate and
him personally.
H) FILLING OF NAAF FORM
The NAAF form consists of terms and conditions under the following headings.
Product training is the final dressing of an advisor. Once the advisor qualifies the IRDAexam he is sent to next stage of enrichment where he is given product training. An
advisor’s main job is to sell products and for this reason he needs to have a sound
knowledge of each and every product the company provides. And once he gets through
these two days training he becomes a full-fledged advisor ready to work for the
company.
4. SALES DEPARTMENT
• Managers Utilities - In this section there are important announcements for
managers, tools like pre-recruitment profiling, manager related initiatives, etc.
• Advisor Utilities - This section holds advisor related tools like, Electronic
Benefit illustrations, Advisor initiatives, important announcements, statutory
The fund managers of insurance companies are investing the maximum fund in
stock market, which is very volatile. Thus the funds are exposed to huge risk; no matter there is a high chance of return. They have to be very careful in allocating the fund in
different sectors to get a maximum return. The stock markets are volatile and hence
there is always a risk on the funds which we invest in the stock market.
However, how safe game they play the returns depends upon their asset
allocation pattern. They have to cover all the risk by managing asset allocation pattern
efficiently. So there comes a need for the study of value at risk of the funds.
This study helps us to analyse how volatile a fund is and also the risk associated
with each fund. This research is going to help the investors to know the maximum
amount of loss they might incur in future depending upon the value at risk of each fund.
3.2 TITLE OF THE STUDY
Risk Analysis of Bharti AXA Life Insurance ULIP funds
The scope of the study is to find the value at risk of six investment funds under ULIP
plan of Bharti AXA Life. The study will help the customers to know the maximum loss
that they might incur in the next six months depending upon the fund.
3.5 OPERATIONAL DEFINITIONS
Standard Deviation: In finance, standard deviation is applied to the annual rate of
return of an investment to measure the investment's volatility (risk). A volatile stock
would have a high standard deviation. In mutual funds, the standard deviation tells ushow much the return on the fund is deviating from the expected normal returns.
Normal Distribution: The normal distribution, a continuous probability distribution, is
the most commonly used probability distribution in finance. The normal distribution
resembles a bell shaped curve. It is completely characterized by just two parameters,viz. Expected return and standard deviation of return. And it is a bell-shaped
distribution that is perfectly symmetric around the expected return.
Systematic Risk: The risk inherent to the entire market or entire market segment.
Also known as "un-diversifiable risk" or "market risk." Interest rates, recession and
wars all represent sources of systematic risk because they will affect the entire market
and cannot be avoided through diversification. Whereas this type of risk affects a broad
range of securities, unsystematic risk affects a very specific group of securities or an
individual security. Systematic risk can be mitigated only by being hedged.
Unsystematic Risk: Risk that affects a very small number of assets. It is sometimes
referred as specific risk. For example, news that is specific to a small number of stocks,
such as a sudden strike by the employees of a company you have shares in.
Value at Risk (VaR): It calculates the maximum loss expected (or worst case scenario)
on an investment, over a given time period and given a specified degree of confidence.
There are three methods of calculating VAR: the historical method, the variance-
The historical method simply re-organizes actual historical returns, putting them inorder from worst to best. It then assumes that history will repeat itself, from a risk
perspective.
2. Variance-Covariance Method
This method assumes that stock returns are normally distributed. In other words, it
requires that we estimate only two factors - an expected (or average) return and a
standard deviation - which allow us to plot a normal distribution curve.
3.6 RESEARCH METHODOLOGY
TYPE OF STUDY
It is an analytical study done to analyze the risk associated with the different funds of
the company.
TYPE OF DATA
To understand the performance and functioning of various funds, we have collected fact
sheets, performance measure statistics, and sector-wise allocation of selected funds as
From the table above the number of days when we get a return less than or equal to zerois 4. So we can say that approximately (4/124*100) = 3.23% of the times the daily
returns will be less than 0. Thus we can say with a 96.77% confidence level that the
daily return on this fund will not exceed -0.8%
Graph 4.2 Graph showing distribution of daily returns