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SUMMER TRAININGREPORT
ON
FINANCIAL ANALYSIS OF MAX NEW YORK LIFE INSURANCE
DONE AT
SUBMITTED IN PARTIAL FULFILLMENT FOR THEDEGREE REQUIREMENTS OF MASTERS IN BUSINESS
ADMINISTRATION
SUBMITTED TO:-
SUBMITTED BY
UNIVERSITYSANTOSH
CLASSROLL NO.:- 81
EXAMROLL NO.:-
MBA(Gen)3rdSEM(F).
SUBMITTED TO
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UNIVERSITY SCHOOL OFMANAGEMENT
KURUSHETRA UNIVERSITY KURUSHETRA
SESSION 2008-2010
ACKNOWLEDGEMENT
An acknowledgement is something one owes to people he is indebted to.
Therefore, it is of great honors to me to acknowledge these people who
have given me support in every sphere of my training period.
First of all I am really thankful to Mr. Rajesh Sud, CEO and Managing
Director and Mr. Rajit mehta of MNYL insurance for their meticulous
attention towards my proceedings and their whole hearted support to me,
which made me finished my training.
I really indebted to, Mr. Vikas kashap and Mr. Chahal sehgal for their
support and caring attitude towrods me. It was there sincere effort and
concerned guidance that made me finishes my training successfully.
I owe thanks to Mr. Mayank bajaj for giving me valuable information
about my course.
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SIGNATURE
DECLARATION
I SANTOSH , Roll no. 81 ,Class- MBA (General ,FINAL YEAR) 3rd
semester , declares that the research project report on Financial
analysis of max newYork life insurance is an original piece of work
done by me and as per my knowledge has not been submitted to any
college, Institute/University in any mean possible.
SIGNATURE
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MBA is a stepping-stone to management carrier. In order to achieve
positive and concrete result, the theoretical knowledge must be
supplemented with the practical knowledge. Theoretical knowledge without
practical knowledge is of little value. Theoretical studies in the classroom
are not sufficient to understand the functioning of financial concept.
Therefore, it becomes necessary to undergo any project work. Practical
project supplements the theoretical studies .
Choice of present topic of research is an effort to contribute to something
to the sphere ofFinancial analysis of max new York life insurance.
Although, a few studies on the topic relating to this have also been
conducted by the different research scholars, but I think that, new study
will also be beneficial.
This research aims to identify the key attributes of general insurance
through the survey and on the basis of secondary data from various
resources. It considers the various issue and concerns on financial of MNYL
Insurance.
I am grateful to all those who have helped me directly or indirectly in
preparing in this project. And I also believe that there is always scope for
improvement and accordingly I shall look forward to receive suggestion.
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ABSTRACT
This analytical report is about the financial situation of the MAX NEW YORK
LIFE INSURANCE COMPANY, the. This is one of the top companies of the
country with a massive share in the market of urea. This analysis would
certainly help us in knowing the current financial status of the company as
i have done .
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CONTENTS
ChapterNumber
Topic PageNumber
Chapter -1 Introduction 8
Chapter -2 History 14
Chapter -3 Company profile 19
Chapter -4 Scope of the study 34
Chapter -5 Research methodology 38
Chapter -6 Financial analysis 43
Chapter -7 Findings & suggestion 64
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Bibliography 72
LIST OF GRAPH
GRAPH NO. GRAPH NAME GRAPH page no.1 Current ratio 502 Liquid ratio 523 Debt-equity ratio 534 Proprietors ratio 545 Debtor turnover
ratio
55
6 Average collection
period
56
7 Net profit 578 Inventory turnover
ratio
58
9 Debt to total funds
ratio
59
10 Fixed assets to
proprietors fund ratio
60
11 Gross profit 6112 Operating ratio 62
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CHAPTER 1INTRODUCTION
OFINSURANCE
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Insurance or assurance, device for indemnifying or guaranteeing an
individual against loss. Reimbursement is made from a fund to which many
individuals exposed to the same risk have contributed certain specified
amounts, called premiums. Payment for an individual loss, divided among
many, does not fall heavily upon the actual loser. The essence of the
contract of insurance, called a policy, is mutuality. The major operations of
an insurance company are underwriting, the determination of which risks
the insurer can take on; and rate making, the decisions regarding
necessary prices for such risks. The underwriter is responsible for guarding
against adverse selection, wherein there is excessive coverage of high risk
candidates in proportion to the coverage of low risk candidates. In
preventing adverse selection, the underwriter must consider physical,
psychological, and moral hazards in relation to applicants. Physical hazards
include those dangers which surround the individual or property,
jeopardizing the well-being of the insured. The amount of the premium is
determined by the operation of the law of averages as calculated by
actuaries. By investing premium payments in a wide range of revenue-
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producing projects, insurance companies have become major
suppliers of capital, and they rank among the nation's largest institutional
investors.
In simple terms, insurance allows someone who suffers a loss or accident
to be compensated for the effects of their misfortune. It lets you protect
yourself against everyday risks to your health, home and financial situation.
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Definition of Insurance
Insurance is a contract whereby, in return for the payment of premium by
the insured, the insurers pay the financial losses suffered by the insured as
a result of the occurrence of unforeseen events. With the help of insurance,
large number 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.
General definition:
In the words of John Magee, Insurance is a plan by which large number of
people associate themselves and transfer to the shoulders of all, risks that
attach to individuals.
Fundamental definition:
In the words of D.S. Hansel, Insurance may be defined as a social device
providing financial compensation for the effects of misfortune, the payment
being made from the accumulated contributions of all parties participating
in the scheme.
The Insurance Act, 1938
The Insurance Act, 1938 was the first legislation governing all forms of
insurance to provide strict state control over insurance business.
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Life Insurance Corporation Act, 1956
Even though the first legislation was enacted in 1938, it was only in 19
January 1956, that life insurance in India was completely nationalized,
through a Government ordinance; the Life Insurance Corporation Act, 1956
effective from 1.9.1956 was enacted in the same year to, inter-alias, form
LIFE INSURANCE CORPORATION after nationalization of the 245 companies
into one entity. There were 245 insurance companies of both Indian and
foreign origin in 1956. Nationalization was accomplished by the govt.
acquisition of the management of the companies. The Life Insurance
Corporation of India was created on 1st September, 1956, as a result and
has grown to be the largest insurance company in India as of 2006.
General Insurance Business (Nationalization) Act, 1972
The General Insurance Business (Nationalization) Act, 1972 was enacted to
nationalize the 100 odd general insurance companies and subsequently
merging them into four companies. All the companies were amalgamated
into National Insurance, New India Assurance, Oriental Insurance, United
India Insurance which were headquartered in each of the four metropolitan
cities.
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Insurance Regulatory and Development Authority (IRDA)Act, 1999
Till 1999, there were not any private insurance companies in Indian
insurance sector. The Govt. of India then introduced the Insurance
Regulatory and Development Authority Act in 1999, thereby de-regulating
the insurance sector and allowing private companies into the insurance.
Further, foreign investment was also allowed and capped at 26% holding in
the Indian insurance companies. In recent years many private players
entered in the Insurance sector of India. Companies with equal strength
competing in the Indian insurance market. Currently, in India only 2 million
people (0.2 % of total population of 1 billion), are covered under
Mediclaim, whereas in developed nations like USA about 75 % of the total
population are covered under some insurance scheme. With more and
more private players in the sector this scenario may change at a rapid
pace.
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CHAPTER 2
HISTORY
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OF INDIAN INSURANCE INDUSTRY
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market
again.
Tracing the developments in the Indian insurance sector reveals the 360-
degree turn witnessed over a period of almost 190 years.
The business of life insurance in India in its existing form started in India in
the year 1818 with the establishment of the Oriental Life Insurance
Company in Calcutta.
Some of the important milestones in the life insurance business in India are:
1912 - The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.
1928 - The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
1938 - Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956 - 245 Indian and foreign insurers and provident societies taken over
by the central government and nationalized. LIC formed by an Act of
Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from
the Government of India.
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The General insurance business in India, on the other hand, can trace its
roots to the Triton Insurance Company Ltd., the first general insurance
company established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in India
are:
1907 - The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
1957 - General Insurance Council, a wing of the Insurance Association ofIndia, frames a code of conduct for ensuring fair conduct and sound
business practices.
1968 - The Insurance Act amended to regulate investments and set
minimum solvency margins and the Tariff Advisory Committee set up.
1972 - The General Insurance Business (Nationalization) Act, 1972
nationalized the general insurance business in India with effect from 1stJanuary 1973.
107 insurers amalgamated and grouped into four companies viz. the
National Insurance Company Ltd., the New India Assurance Company Ltd.,
the Oriental Insurance Company Ltd. and the United India Insurance
Company Ltd. GIC incorporated as a company.
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Major Players in The life Insurance Industry In India
Life Insurance Corporation of India (LIC)
HDFC Standard Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company Ltd.
Max New York life insurance company
Om Kotak Mahindra Life Insurance Co. Ltd.
Birla Sun Life Insurance Company Ltd.
Reliance Insurance Company
Aviva Life Insurance India
Bajaj Allianz Life Insurance Co Ltd.
MetLife India Insurance company private limited
ING Vysya Life Insurance Company limited
Bharti AXA Life Insurance co. Ltd.
Star Union Dai-ichi Life Insurance Co. Ltd.
Tata AIG Life Insurance Company Limited
Sahara India Life Insurance Company Ltd
SBI Life Insurance
Shriram Life Insurance
Future General India Life Insurance Co. Ltd.
IDBI Fortis Life Insurance Co. Ltd,
Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.
DLF Pramerica Life Insurance Co Ltd (DPLI),
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AEGON Religare Life Insurance Company Limited.
CHAPTER 3
COMPANY
PROFILE
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Max New York Life Insurance
Type Private
Industry Financial Services
Founded 2000
Founder(s) Analjit Singh
Headquarters New Delhi, India
Number of locations
674 offices (2010), 139 offices dedicated torural business (2010)
Area served India
Key peopleAnaljit Singh Executive Chairman, RajeshSud Chief executive officer and Managingdirector
Products
Individual Insurance (25 products and 8riders/options) and Group Insurance (6products and 7 riders/option
s)
Employees11,666 (2010), 69,778 Agent Advisors(2010)
Website http://www.maxnewyorklife.com
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http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Privately_held_companyhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Financial_Serviceshttp://en.wikipedia.org/wiki/Entrepreneurhttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Executive_Chairmanhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.maxnewyorklife.com/http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Privately_held_companyhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Financial_Serviceshttp://en.wikipedia.org/wiki/Entrepreneurhttp://en.wikipedia.org/wiki/New_Delhihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Executive_Chairmanhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/MDhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.maxnewyorklife.com/8/8/2019 56,Max New York Life Insurance,DOUBLE,New.santosh - Copy
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HEADQUATER OF MNYL INSURANCE COMPANY
l
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Max New York Life Insurance Company Ltd. is a joint venture between Max
India Limited, one of India's leading multi-business corporations and New
York Life International, the international arm of New York Life, a Fortune
100 company. The company has positioned itself on the quality platform. In
line with its vision to be the most admired life insurance company in India,
it has developed a strong corporate governance model based on the core
values of excellence, honesty, knowledge, caring, integrity and teamwork.
Incorporated in 2000, Max New York Life (MNYL) started commercial
operation in 2001. In line with its values of financial responsibility, Max New
York Life has adopted prudent financial practices to ensure safety of
policyholder's funds. The Company's paid up capital as on 30th April, 2009
is Rs 1782 crore. MYNL shares a market share of 5.9% in the life insurance
sector.
MNYL has multi-channel distribution spread across the country. Agency
distribution is the primary channel complemented by partnership
distribution, banc assurance, alliance marketing and dedicated distribution
for emerging markets. The Company places a lot of emphasis on its
selection process for agent advisors, which comprises four stages -screening, psychometric test, career seminar and final interview. The agent
advisors are trained in-house to ensure optimal control on quality of
training. The company currently has around 92,760 agent advisors at 710
offices across 385 cities. The company also has 36 referral tie-ups with
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banks, 24 partnership distribution and alliance marketing
relationships each.
Max New York Life has put in place a unique hub and spoke model of
distribution to deepen our rural penetration. The company has 133 offices
dedicated to rural areas. MNYL offers a suite of flexible products. It now has
43 life insurance products and 8 riders that can be customized to over 800
combinations enabling customers to choose the policy that best fits their
need. The company currently has more than 13,923 employees.
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Max New York Life Insurance
is a joint venture between..
25
Max India Ltd. (74%)
A multi-business
corporation
Focused on service
oriented businesses:
- Life Insurance
- Healthcare
Other Businesses :
- Clinical Research
- Specialty Plastics
New York Life, USA (26%)
Specialist in the Life Insurancebusiness since 1845
Asset under management US
$13 billion
Has surplus & reserves over US $265
billion
Insured million of lives
(including 10 US Presidents) globally
Has always delivered on its promises
in-spite of world wars, famine and
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HOW NEW YORK LIFE ENTERED THE INDIAN MARKET:-
New York Life International, INC., a Fortune 100 company, decided to select
JOINT VENTURE as a medium to enter into the market of India. It has
chosen MAX INDIA LTD., one of the Indias leading multi-business
corporations. Through its wide network of highly competent wide network
of highly competent agent advisors and flexible product solutions, MYNL is
creating a partnership for life with its customers in INDIA to meet their life
stage needs..
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VISION
To become one of the most admired life insurance company of India.
Strong Corporate Governance Model
MISSION
Become one of the top quartile life insurance companies in India
Be a national player
Be the brand of first choice
Be the employer of choice
Become principal of choice for agents
VALUES
Knowledge:
Knowledge leads to expertise; and our expertise is in helping people protect
themselves. Perfectly combining global expertise with local knowledge, we
are India's life insurance specialist. MNYL believes that for knowledge to be
of value it must be focused, current, tested and shared.
Caring:
MNYL is redefining the life insurance paradigm by focusing on customers
first. The service process is responsive, personalized, humane and
empathetic. Every individual who represents the company is for us our
brand champion.
Honesty:
Honesty is the heart of the life insurance business. It is all about trust.
Transparency, integrity and dependability form the cornerstones of the
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MNYL experience. The company ensures that everyone who
represents the brand carries a promise: we care in word as well as deed.
Excellence:Excellence at MNYL implies the ability to perform at a consistently high
level. Focused on the value of continuous improvement in people,
processes and the organization, the company strives for the highest
standards of quality in every aspect of its business.
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ACHEIVEMENTS
MNYL Insurance felicitated with the Golden PeacockInnovation Award for the year 2008 for Excellence in
innovation in conceptualizing and marketing Max Vijay.
MNYL is the first life insurance company in India to be awarded theIS0 9001:2000 certification.
MNYL was among the top 25 companies to work with in India,according to 2003 Business World magazine, "Great Workplaces In
India", MNYL was ranked at the 20th position. This survey is the local
version of the "Great Places To Work" survey carried out every year in
22 countries.
Been among top five most respected private life insurance companiesin India according to a 2004 and 2006 Business World survey.
MNYL Insurance has emerged as one of the best employer in therecently announced Business Today-Mercer-TNS Survey of 'The Best
Companies to Work For in India'. The company was ranked 7th in the
survey and the best life insurance company to work for in India.
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Awards
BT Mercer Ranked No7 in the Best companies to Work For
Awarded the Gallup Great Work Place Award 2009
CII Exim Bank Commendation Certificate for Business Excellence
2008
Recognized as a Superbrand
Recipient of 2008 CIO 100 Award for technology implementation
Golden Peacock Award for Innovation 2008
Among the top 25 companies to work for in India, according to Business
world 2003 Great Workplaces of India
Among the top five most respected insurance companies in India as per
Business world 2004 & 2006 survey
Won Indo-American Corporate Excellence Award for Best Indo-US
company in Financial Services Category in 2006 Received Best Six Sigma Project award at Sakal Six Sigma Excellence
Awards 2006
Among top 3 in Asia Life Insurance Company of the Year Award 2007
instituted by Asia Insurance Review
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MANAGEMENT TEAM
Mr. Rajesh Sud
CEO & Managing Director
Mr. Rajit Mehta
Executive Director & Chief Operating Officer
Mr. Sunil Kakar
Sr. Director and Chief Financial Officer
Mr. John Poole
Appointed Actuary
Mr. Prashant Tripathy
Director - Strategic Planning, Business Development and Health & Retirement
Mr. V.Viswanand
Director & Head - Products and Persistency Management
Ms. Anisha Motwani
Director and Chief Marketing Officer
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VARIOUS PRODUCTS OF MNYL INSURANCE
Life is full of surprises. Unexpected events that strike without warning can disrupt the smooth
rhythm of life. You must be prepared at all times. As the primary earning member, you need to
make sure that your family is never lacking in anything even if you are taken away from them
forever. Do your best today to ensure that your family can always enjoy a comfortable lifestyle.
In double income families, both spouses should get adequate life covers especially if there are
dependent children involved. We have plans that guarantee maximum protection at a low cost.
Your parenting is perfect but is your planning adequate? Are you thinking beyond the
immediate to the future, about higher education and professional courses, in India and
abroad? Many children are keen to pursue unconventional careers. Are you in tune
with their aspirations and passions? As parents you would never let money come in
the way of your children and the fulfillment of their true potential. Our plans will help
build the corpus that allows your children to dream big and soar high.
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Building a nest egg is about aggregating surplus amounts regularly to allow them to
grow into a sizeable sum. Investments should be aligned to specific, long-term goals.
Luxury car, foreign holiday or dream house, create your own wish list and make it
come true. Your dreams are in your hands. Every move that you make today will bring
you a step closer to your goals. Our Investment Plans offer the dual benefit of
protection and market-linked returns with the flexibility to choose the premium and
determine the market exposure.
Let your golden years be the most precious of your life, full of freedom and choice. A
time to pursue your hobbies, travel and enjoy the good life. You will never miss your
salary cheque or be constrained by rising inflation. Even as you work hard to make a
better today, it is up to you to create a superior tomorrow. If you want to sustain your
current lifestyle even after you stop working, make that money work for you. OurRetirement Plans will keep you comfortable and content, and let you live the life you
deserve.
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Do you know the cost of healthcare has climbed faster than inflation? Medical costs
can be a big drain on finances. A medical crisis can strike anyone, anytime and may
even force an individual to dip into savings to meet these sudden and steep costs.
Such an eventuality could delay or destroy a cherished financial goal. No wonder,
health is wealth. The health of every member of the family is precious and you need tosafeguard it as a priority. Use our Health Plans to make sure your family stays fit and
fine.
Strategic Products Plans
Most people desire a carefree life. They want to be happy and comfortable at all times.
But needs keep evolving and you must always be one step ahead. Our Strategic
Products Plans will meet your special needs and are available through additional
distribution channels. You can choose a plan to meet the planned events and
unforeseen incidents in your life.
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CHAPTER 4
SCOPE
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SCOPE OF THIS STUDY
A big boom has been witnessed in Insurance Industry in recent times. A
large number of new players have entered the market and want to gain
market share in this rapidly improving market. The study deals with MNYL
in focus and the various segments that it caters to. The study then goes on
to evaluate and analyze the findings so as to present a clear picture of
trends in the Insurance sector.
SIGNIFICANCE OF THE STUDY
1.SIGNIFICANCE TO THE INDUSTRY:
The significance for the industry lies in studying these trends that emerge
from the study. It is a rapidly changing and evolving sector. People are only
beginning to wake up to its vast possibilities. A study like this can attempt
to guide the future of the industry based on current trends.
2.SIGNIFICANE FOR THE RESEARCHER:To facilitate and provide all the
useful information of the study, the company, the insurance industry and
also provide marketing ways, methods of Max New York Life insurance.
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NEED FOR THE STUDY:-
1. The study has great significance & provides benefits to various parties
whom directly or indirectly interact with the company.
2. It is beneficial to management of the company by providing crystal clear
picture regarding important aspects like liquidity, leverage, activity &
profitability.
3. The study is also beneficial to employees & officers motivation by
showing how actively they are contributing for companys growth.
4. The investors who are interest in involving in the companys shares will
also get benefit by going through the study &can easily take a decision
whether to invest or not to invest in the companys shares.
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OBJECTIVES
The major objectives of the resent study are to know about financial
strengths and weakness of MNYL INSURANCE through Financial analysis.
The main objectives of resent study aimed as:
To evaluate the performance of the company by using ratios as a yardstick
to measure the efficiency of the company. To understand the liquidity,profitability and efficiency positions of the company during the study
period. To evaluate and analyze various facts of the financial performance
of the company. To make comparisons between the ratios during different
periods.
OBJECTIVES1. To study the present financial system .
2. To determine the Profitability, Liquidity Ratios.
3. To analyze the capital structure of the company with the help of
Leverage ratio.
4. To offer appropriate suggestions for the better performance of the
organization.
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CHAPTER 5
RESEARCH
METHODOLOGY
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RESEARCH DESIGN
Research design tells us about which tools & techniques are used to find
the results in a better way. It is used to describe the market phenomena
while trying to determine the association among variables.
Types of research
On the basis of theoretical study a research has many types. All of these
are distributed on the nature of research. Some of these are:
Descriptive and Analytical
Qualitative and Quantitative
Conceptual and Empirical
Applied and Fundamental
One time research
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My research is based on analytical research
Analytical research:-
In Analytical research, the researcher has to use facts or information
already available and analyze these to make a critical evaluation of the
material.
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SOURCES OF DATA COLLECTION
The information is collected through secondary sources during the project.
That information was utilized for calculating performance evaluation and
based on that, interpretations were made.
Sources of Secondary data
1. Most of the calculations are made on the financial statements of thecompany provided statements.
2. Referring standard texts and referred books collected some of theinformation regarding theoretical aspects.
3. Method- to assess the performance of he company method ofobservation of the work in finance department in followed.
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LIMITATION
1. The study provides an insight into the financial, personnel, marketing
and other aspects of MNYL INSURANCE. Every study will be bound with
certain limitations.
2. The below mentioned are the constraints under which the study is
carried out.
3. One of the factors of the study was lack of availability of ample
information. Most of the information has been kept confidential and as such
as not assed as art of policy of company. Time is an important limitation.
The whole study was conducted in a period of 60 days, which is not
sufficient to carry out proper interpretation and analysis.
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CHAPTER 6
DATA ANALYSIS
&
INTERPRETATION
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Financial analysis is an attempt to understand a business operating resultsand
Financial position of the true face, from the obscure accounting data
accounting procedures will be excavated behind the economic implications
for investors and creditors to provide a basis for decisions. As the
accounting system reflects only the selective economic activity, and its
recognition of an economic activity there will be a time lag, coupled with
the imperfections of their own accounting standards, as well as managers
the freedom to choose accounting methods to make financial Inevitably,
there will be many reports are not the right place. While the audit can
improve the situation to some extent, but the auditors can not absolutely
guarantee the authenticity of the financial statements and the
appropriateness of their work only to users of the report to make the right
decisions to provide a reasonable basis, so even if audited and received
unqualified audit report of the financial statements, we can not completely
avoid that inappropriate sexual. This makes the financial analysis has
become particularly important.
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In general, the financial analysis methods include the followingfour:
1. Comparative analysis: financial information to illustrate the
relationship between the amount and number of different direction for
further analysis. This comparison can be compared to the actual and
planned, can the current period compared to the previous period, and the
same can also be compared with others in the industry;
2. Trend Analysis: in order to reveal the financial condition and operating
results changes and their causes, nature and help predict the future. The
data used for trend analysis can be either absolute, it can be ratio or
percentage of data;
3. Factors: Several factors to analyze the financial indicators of a degree
of influence, generally by means of different analysis methods;
4. Ratio Analysis: It is through the analysis of financial ratios to
understand the financial position and operating results, often by means of
comparative analysis and trend analysis.
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Advantages of financial analysis
1. Helpful in analysis of financial statements
Financial analysis is an extremely useful device for analyzing the financial
statements. Its helps the bankers, creditors, investors, shareholders etc.
2. Simplification of accounting data
Accounting ratio summarizes a long array of accounting data and makes
them understandable.
3. Helpful in comparative study
With the help of financial analysis comparison of profitability and financial
soundness can be made between one firm and another in the same
industry.
4. Fixation of ideal standards
Financial analysis help us in establishing ideal standards of the different
items of the business.
5. Study of financial soundness
Financial analysis discloses the position of business with different view-
points. It discloses the position of business with the liquidity point of view ,
solvency point of view, profitability point of view etc.
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limitation
1.False accounting data gives false ratios.
Accounting ratios are calculated on the basis of data given in profit &loss
a/c and balance sheet. Therefore, they will be only as correct as the
accounting data on which they are based .
2.Window - dressing
Some companies in order to cover up their bad financial position resort to
window dressing.
3.lack of proper standards
Circumstances differ from firm to firm hence no single standards ratio can
be fixed for all the firms against which the actual ratio may be compared.
4. Limited use of a single ratio
The analyst should not merely rely on a single ratio. He should study
several connected ratios before reaching a conclusion.
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FORMULAS FOR FINANCIAL ANALYSIS
(A) Liquidity Ratios -
Current Ratio = Current Assets
Current Liabilities
Quick Ratio = Liquid Assets
Current Liabilities
(B) Leverage Ratios -
Debt Equity Ratio = Debt
Equity
Debt to Total Funds Ratio = Debt
Equity + Debt
Proprietary Ratio = Equity
Total Assets
Fixed Assets to Proprietors Fund Ratio = Fixed Assets
Proprietors Fund
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(C) Activity Ratio -
Inventory Turnover Ratio = Cost of Goods Sold
Average Stock
Debtors Turnover Ratio = Credit Sale
Average Debtors + Average B/R
Average Collection Period = Debtors + B/R
Credit Sales Per Day
(D) Profitability Ratios -
Gross Profit Ratio = Gross Profit
Net Sales
Net Profit Ratio = Net Profit
Net Sales
Operating Ratio = Cost of sales + Operating Expenses
Net Sales
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1.CALCULATION OF CURRENT RATIO
CURRENT RATIOYEAR CURRENT
ASSETS
CURRENT
LIABITILIES
CURRENT RATIO
2005 240000 89000 2.72006 280000 100000 2.82007 320000 100000 3.22008 380000 130000 2.92009 430000 170000 2.5
CURRENT RATIO
0
0.5
1
1.5
2
2.5
3
3.5
2005 2006 2007 2008 2009
51
CURRENT
RATIO
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INTERPRETATION
As a rule, the current ratio with 2:1 (or) more is considered as
satisfactory position of the firm.
When compared with 2009, there is an increase in the provision for
tax, because the debtors are raised and for that the provision is
created. The current liabilities majorly included MNYL Insurance of
company for consultancy additional services.
The huge increase in sundry debtors resulted an increase in the ratio,
which is above the benchmark level of 2:1 which shows the
comfortable position of the firm.
2.CALCULATION OF LIQUID RATIO
LIQUID RATIO
YEAR CUURENTASSETS
INVENTORY CURRENTLIABILITIES
LIQUIDRATIOS
2005 280000 23000 89000 2.882006 320000 37000 100000 2.832007 370000 37000 100000 3.332008 440000 30000 130000 3.152009 430000 34000 170000 2.32
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LIQUID RATIO
0
0.5
1
1.5
2
2.5
3
3.5
2005 2006 2007 2008 2009
INTERPRETATION
An ideal Quick ratio is said to be 1:1.
If it is more, it is considered to be better. The idea is that for every
rupee of current liabilities, there should at least be one rupee of liquid
assets.
This ratio is a better test of short term financial position of the
company than the current ratio.
Quick ratio thus is a more rigorous test of liquidity than the current
ratio. And when used together with current ratio, it gives a better
picture of the short term financial position of the firm.
53
LIQUID
RATIO
GRAPH NO. 2
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3.CALCULATION OF DEBT-EQUITY RATIO
DEBT- EQUITY RATIO
YEAR DEBT NET WORTH DEBT-EQUITYRATIO
2005 2118 400024 0.0053=0.0052006 1490 463142 0.0032=0.0032007 1069 535934 0.0019=0.0012008 696 614099 0.0011=0.001
2009 369 699435 0.0005=0.001
DEBT-EQUITY RATIO
0
0.001
0.002
0.003
0.004
0.005
2005 2006 2007 2008 2009
INTERPRETATION
Debt-equity ratio of 2:1 is considered safe.
54
GRAPH NO. 3
DEBT-
EQUITY
RATIO
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If the debt-equity ratio is more than that, it
shows a rather risky financial position from the long term
points of view.
4.CALCULATION OF Proprietary Ratio
PROPRIETARY RATIO
0
1
2
3
4
5
6
7
8
2005 2006 2007 2008 2009
INTERPRETATION-
Proprietary Ratio
Year Proprietorsfund
Total assets Proprietaryratio(in%)
2005 10000 250000 42006 18000 500000 3.6
2007 15000 200000 7.5
2008 16000 230000 6.9
2009 17000 250000 6.8
55
GRAPH NO. 4
PROPRIE-
TARY
RATIO
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A Higher proprietary ratio is generally treated an indicator
of sound financial position from long term point of view.
Because it means that a large proportion of total assets is provided
by equity.
5.CALCULATION OF DETOR TURNOVER RATIO
DETOR TURNOVER RATIO
0
1
2
3
4
5
6
7
8
9
10
2005 2006 2007 2008 2009
DEBTOR TURNOVRE RATIOYEAR SALES DEBTORS DEBTORS
TUNROVRERATIO
2005 10000 5000 22006 9000 6000 32007 12000 3000 42008 125000 25000 52009 100000 10000 10
56
GRAPH NO. 5
DEBTOR
TURNOV
ER
RATIO
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INTERPRETATION-
This ratio indicates the speed with which the amount is collected from
debtors.
The higher the ratio ,better it is.
6.CALCULATION OF AVERAGE COLLECTION PERIOD
AVERAGE COLLECTION PERIOD
0
1
2
3
4
5
6
2005 2006 2007 2008 2009
INTERPRETATION-
AVERAGE COLLECTION PERIOD
YEAR SALES DEBTORS 12 months/debtors/sales
2005 10000 5000 62006 9000 6000 4
2007 12000 3000 32008 125000 25000 2.52009 100000 10000 1.2
57
GRAPH NO. 6
AVERAGECOLLECTION
RATIO
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This ratio indicates the time within which the amount is
collection from debtors and bills receivable.
A higher debt collection period is thus, an indication of the
inefficiency and negligence on the part of management.
7.CALCULATION OF NET PROFIT RATIO
NET PROFIT RATIO
25
26
27
28
29
30
2005 2006 2007 2008 2009
INTERPRETATION-
Net profit ratioYear Sales Profit after tax Net profit ratio
(in %)2005 32509 86644 26.652006 46709 129830 27.802007 48200 144308 29.932008 56903 156429 27.492009 60137 167016 27.77
58
GRAPH NO. 7
NET
PROFIT
RATIO
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This ratio measures of profit available on sales.
The higher the net profit ratio, the better it is.
8.CALCULATION OF INVENTORY TURNOVER RATIO
INVENTORY TURNOVER RATIO
0
2
4
6
8
10
2005 2006 2007 2008 2009
Inventory turnover ratioYear Cost of goods
SoldAverage stock Net profit ratio
(in times)2005 20009 10000 22006 56009 30000 2
2007 28200 10008 32008 36903 29000 12009 80000 8000 10
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GRAPH NO. 8
INVENTORY
TURN ONER
RATIO
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INTERPRETATION-
The higher the ratio, the better it is, since it indicates that stock is
selling quickly.
In a business where stock turnover ratio is high, goods can be sold at
a low margin of profit and even then the profitability may be quite
high.
A low stock turnover ration indicates that stock does not sell quickly
and it creates many other costs like carrying cost, storage cost etc.
9.CALCULATION OF DEBT TO TOTAL FUNDS RATIO
Debt to total funds ratio Year Debt Equity + debt Debt to total
funds ratio (in%)
2005 10000 100000 102006 10669 300000 36.92007 22007 100080 21.92008 369030 390000 94.622009 89999 254750 36.62
DEBT TO TOTAL FUNDS RATIO
0
20
40
60
80
100
2005 2006 2007 2008 2009
60
GRAPH NO. 9
DEBT TO
TOTAL
FUNDS
RATIO
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INTERPRETATION-
Generally, debt to total funds ratio of 67 % is considered satisfactory.
Because it means that the firms depends too much upon outside
loans for its existence.
10.CALCULATION OF Fixed Assets to Proprietors
Fund Ratio
FIXED ASSETS TO PROPRIETORS FUNDRATIO
Fixed assets to proprietors fund ratioYear Fixed assets Proprietors
fundFixed assets toproprietorsfund ratio(in %)
2005 480000 600000 802006 220000 300000 73.332007 350000 400000 87.5
2008 120000 200000 602009 880000 900000 97.8
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0
20
40
60
80
100
2005 2006 2007 2008 2009
INTERPRETATION-
If the ratio is less than 100% , it would mean that proprietors funds
are more than fixed assts.
If more than 100%, it would means that owners funds are not
sufficient to finance the fixed assets.
11.CACULATION OF Gross profit ratio
GROSS PROFIT RATIO
Gross profitYear Gross profit Net sales Gross profit
ratio(in %)2005 200000 500000 402006 64000 800000 82007 420000 600000 702008 30000 200000 152009 88000 900000 9.8
62
GRAPH NO. 10
FIXED
ASSETS TO
PROPRIETORS RATIO
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0
10
20
30
40
50
60
70
2005 2006 2007 2008 2009
INTERPRETATION-
This ratio measures the margin of profit available on sales
The higher the gross profit ratio, the better it is.
12.CALCULATION OF OPERATING RATIO
OPERATING RATIO
Operating ratioYear Cost of sales +
operatingexpenses
Net sales Operating ratio(%)
2005 420000 500000 84
2006 25000 95000 26.322007 35000 65500 53.442008 40000 87000 462009 100000 250000 40
63
GRAPH NO. 11
GROSS
PAOFIT
RATIO
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0
10
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009
INTERPRETATION-
Operating ratio is a measurement of the efficiency and profitability of
the business enterprise.
Lower the Operating ratio, the better it is.
64
GRAPH NO. 12
OPERATING
RATIO
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CHAPTER 7FINDINGS &
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SUGGESTIONS
FACT/FINDINGS
1. The current ratio has shown in a fluctuating trend as 2.7, 2.83, 3.2, 2.9 &
2.5 during 2005 of which indicates a continuous increase in both current
assets and current liabilities.
2. The quick ratio is also in a fluctuating trend through out the period 2005-
2009 2.88, 2.83, 3.33, 3.15, 2.32 resulting as. The companys present
liquidity position is satisfactory.
3. The debt- equity ratio during the 2005-2009 is not good.
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4. The proprietary ratio has shown a fluctuating trend. The proprietary ratio
is increased compared with the last year. So, the long term solvency of the
firm is increased.
5. As Debtors turnover ratio indicates the number of times debtors
turnover each year,
the debtors turnover ratio of last five years of MNYL insurance co. shows
that the credit management department of the MNYL insurance co. is very
efficient in recovering their debts. The debtors turnover ratio of the
company shows that the recovery of credit is very frequent, which is very
good.
6.Average Collection period of ONGC Ltd. itself states the excellent credit
management policy of the company. The company is doing exceptionally
well during last five years to recover their debtors.
7. The net profit is increased greater in the current year.
8.The higher the ratio, the better it is, since it indicates that stock is selling
quickly.
9. Generally, debt to total funds ratio of 67 % is considered satisfactory.
Because it means that the firms depends too much upon outside loans for
its existence.
10. If the ratio is less than 100%, it would mean that proprietors funds are
more than fixed assts. If more than 100%, it would means that owners
funds are not sufficient to finance the fixed assets.
11. This ratio measures the margin of profit available on sales. The higher
the gross profit ratio, the better it is.
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12.The operating profit ratio is in fluctuating manner as
84,26.32,53.44,46,40 (%) from 2005-2009 respectively.
Max New York is one of the most powerful, world class Life Insurance Co.,
gaining appreciation for their strong work ethics, excellent performance,
professionalism and team work which led them to progress in todays
challenging environment. Though with its excellence performance and
every efforts has been made to present the most authentic and truly
representative findings, but some uncontrollable factors do affect the
performance and thus bring about some deviations and hurdles in progress.
So, with its strengths and good quality, the company is having some
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weaknesses, and threats and opportunities. Its SWOT analysis is
as below:
Strengths
Max New York is the largest private player in the insurance industry in
India.
Excellent services.
Customization of Products as per customers needs.
Brand Image.
Business Experience.
Strong Financial Base.
Innovative products, Technology, organization culture and climate.
Weaknesses
Lot of competitors are in the market offer same product by the title
difference in the premium and offerings.
Target only higher income group whereas other companies are trying
to catch middle-lower level people.
Higher premiums as compared to the other companies, Clients face
problems to get insured due to large number of formalities.
High targets for financial advisors and for the sales department.
Opportunities
Huge market is literally untapped. Out of estimated 320 million
insurable markets only 20% of the population is insured.
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In a conservative society of India where people are more
inclined towards risk free investments such as Bank FDs and savings
rather than equity and high risk investments insurance offers the best
of both worlds The security with high returns. So there exists high
potential for insurance company like Max New York.
In the pension field where people want good life after their
retirement.
Indian people are more emotional towards their child thats why
children plans are selling like hot cakes.
Threats
Weak perception of private players in the minds of Indian people due
to frequent financial scams
Large number of insurance players
Existing wrong business practices of companies like LIC First
premium is paid by their agents where as IRDA suggests that even
forms to be filled by the clients themselves
Players like Allianz Bajaj and Birla sun life with low premium for the
similar plans
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Entry of many other private companies with equally
strong experience and financial strength of foreign partners making
the competition difficult and saturating the urban markets.
LIC has woken up from sleep and is following competitive strategies.
Its huge surplus in Life Fund gives a capability to lodge Price war.
Current Government policies do not encourage Gross Domestic
Savings. If the Tax Liability of the service class rises, the customer
will have little money to invest.
For the Insurance sector Government set the authority that is IRDA
(Insurance Regulatory and Development Authority) which is
undertaken to track record of all the companies and change rules day
by day more rigid which is very difficult for the companies.
CONCLUSION
The companys overall position is at a good position. Particularly the current
years position is well due to raise in the profit level from the last year
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position. It is better for the organization to diversify the funds to
different sectors in the present market scenario.
SUGGESTION
Analyses of above conditions direct to form serious planning to recover but
as year 2008- 09 shows progress in companys condition, it is at recovering
stage. In nutshell, it can be said that Company shall review the strategies
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followed in the years 2008 & 2009. This time company is
growing.
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BIBLOGRAPHY
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1.BOOKS/MAGAZINES REFFERED:
Money Outlook
D.K.Goyal
I.M.Pandey
Shashi K Gupta
2. WEBSITES REFFERED:
www.cifainsurance.com
www.moneyoutlook.com
www.maxnewyorklife.com