Life Insurance in India - The road ahead

by Akhila Srinivasan, Managing Director, Shriram Life Insurance Co Ltd, April 25, 2007

Agenda

1 2

Overview of the Indian economy Life insurance market in India

Shriram Lifes key strategies

Performance expectation during 2007-2008

The Indian Economy .

India today has a strong and vibrant economy The reform process is irreversible

The economy is in a resilient

mode in terms of GDP growth

Industrial policy End of

licensing, Automatic FDI, Privatization initiatives

Currently positioned as the fourth

largest economy in terms of purchasing power parity...

Financial sector -

and has the benefit of low

inflation

Rationalization of tax rates, Current account convertibility and partial capital account convertibility TRAI etc

along with rising

reserves

forex rate and

Regulatory reforms SEBI, IRDA, Other enablers Judiciary

reforms, trade arrangements

Indias economy has looked up since the early 1990s, due to implementation of several reforms and liberalization measures
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The economy is riding on several key drivers for growth

Entrepreneurship Technology and innovation Investment returns

Infrastructure boom

Drivers

Consumer boom

Social enterprise Manufacturing competitivenes

Financial markets

Advantage India The insurance linkages

Over 1 Billion Indians Strong economic growth Majority of the population does not have adequate financial protection Opportunity of a Lifetime Insurance penetration of 3,1% following entry of foreign players

The country is looking at an annual GDP growth of 9.2%

There exists a strong urban and rural There exists a strong urban and rural divide with regard to saving and and divide with regard to saving investment pattern investment pattern

Huge opportunity to tap semi-urban and rural markets

High expected growth in personal income and aspirations

Need for strong financial planning

Markets in most developed countries have saturated

This makes the Indian market more attractive for global insurance majors

Comparative demographics

Population 1 billion Projected annual GDP growth

9.2%

Population 45 million Projected annual GDP growth

4.4%

Life insurance penetration

2.53%

Life insurance penetration 10.8%

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Insurance premium in emerging markets

Country Premium volume (in USD million) Share of emerging markets

South Korea China Taiwan South Africa India Hong Kong Brazil Singapore Russia Mexico Top 10
Source: Swiss Re Economic Research & Consulting

41,998 32,442 23,739 20,728 13,590 10,117 6,306 5,561 4,887 4,230 163,598

22.40% 17.30% 12.60% 11.00% 7.20% 5.40% 3.40% 3.00% 2.60% 2.30% 87.10%

Agenda

1 2 3 4

Overview of the Indian economy Life insurance market in India

Shriram Lifes key strategies Performance expectation during 2007-2008

Life insurance market in India

There are 16 life insurance players in India with
aggregate foreign investment of $322m

Insurance penetration was less than 1% till 1990-91.

It is now 2.53% following the entry of foreign players

Prior to competition, growth in life premium income

collection did not exceed 20%. During 2005-06 this growth was 28%

The life-insurance business, in terms of premium

collection, has already doubled in the past 5 years.

The life insurance sector in India is poised to grow

by about 30% touching US $ 60 billion in five years

An evolving insurance sector is vital for economic

growth as it encourages saving and provides a safety net to enterprise and individuals
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Agenda

1 2 3 4

Overview of the Indian economy Life insurance market in India

Shriram Lifes key strategies Performance expectation during 2007-2008

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Why Shriram is the right vehicle for entry into the business
Trusted name in financial services since 1974, with a turnover of more
than $3000m

Business includes consumer finance, personal finance, truck finance

and now life insurance

3 million customers, 65,000 agents, 600 offices employing 15,000 people Truck finance business poised to cover 15% of the trucker population
(400 000)

Association with banks include ABN Amro,Standard Chartered Bank,

HSBC, Deutsche Bank, Citibank, Bank of India, ICICI Bank, IDBI Bank, Indian Overseas Bank,UTI Bank,Canara Bank, Bank of India, State Bank of India

Listed on the National Stock Exchange

with a good dividend track record

and the Bombay Stock Exchange

Equity partners include Newbridge Capital, Chrysalis Capital, DSP Merrill

Lynch, Cambridge Investments,UK and FMO, Netherlands
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Shrirams unique advantage

Presence in chit fund business has established close

relationships with 1.5 million savers and investors

Chit funds operate on the mechanism of SHGs (self help

groups) which establish a long term relationship between the company and the customer creating strong loyalties

The chit members have been supporting various financial

products introduced by the group companies

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Key Strategies Segment-specific strategies in place Leveraging on the existing network of Shriram agents for the
insurance business

Resident representatives in rural areas and SHGs (self help groups)

of rural women of Shrirams micro finance division

1.2 million depositor base of Shriram Making use of the broker/corporate agency channel Bancassurance channel Tap high networth individuals by developing a relationship with
mutual fund distributors and brokers

Low cost strategy converting existing 3 million customers into life

insurance buyers requiring minimal brand building and promotional exercise

Product strategy focus on medium to long term saving policies

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Private vs state-owned insurance companies

Following competition the market share of the state-owned

Life Insurance Corporation has dropped to 78% - it enjoyed monopoly status earlier

Innovative products, smart marketing and aggressive

distribution have enabled fledgling life insurance companies to establish themselves

Recognizing the capital intensive nature of the life insurance

sector a resolution to increase the share of foreign equity from 26% to 49% is on the anvil

With the entry of private players, the introduction of ULIPs has

considerably widened the range of products

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Shriram vs competition in the first year of operations

Amount in USD million

Insurer

1st year premium

Single premium

APE

ICICI Prulife Max Newyork HDFC Standard Life Birla Sunlife Tata AIG Shriram Life (1.1.2006 to 31.12.2006)

12.39 7.92 4.94 4.02 4.68 12.99

12.79 0.70 2.34 2.23 0.02 12.45

13.67 7.99 5.18 4.24 4.68 14.23

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Agenda

1 2 3 4

Overview of the Indian economy Life insurance market in India

Shriram Lifes key strategies Performance expectation during 2007-2008

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Performance projections

Amount in USD million

Budget 2006

Actuals 2006

Budget 2007

Single Premium (new business) Non- single Premium (new business) Renewal Premium Total Premium

Business operations commenced in February 2006

15.29 9.42 Nil 24.71

12.45 12.53 0.46 25.44

27.16 22.96 8.00 58.12

Approval for single premium policies obtained in June 2006

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The road ahead.

Sanlam is the right partner for Shriram in India. Following the joint venture in life insurance, Shriram and Sanlam are exploring the possibility of setting up operations in general insurance

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Thank You / Questions?

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