Tag: iciciprulife

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Insurance FDI hike to bring in Rs.50,000 Crore Capital

(Disclosure:I am market making in the shares of ICICI Pru Life)

The passage of the Insurance Bill in the Lok Sabha is most welcome as it would spur the sector’s growth and penetration of insurance, and bring in Rs.50,000 crore capital, said a top official of Life Insurance Council.

“We have been wanting this for a very long time for industry’s betterment. Life insurance is capital intensive and needs large doses of the same for the industry to grow,” V. Manickam, secretary general, Life Insurance Council told IANS.

The proposed law increases the foreign direct investment (FDI) cap to 49 percent from the current 26 percent, a major demand of the industry players.

Manickam said that if the FDI limit is increased more foreign players would come to India as the uninsured population in the country is around 30 crore.

He said the upward revision in the FDI limit is expected to result in additional capital infusion of around Rs.50,000 crore in five years’ time.

Manickam hoped that Rajya Sabha too passes the bill so that it becomes a law.”The total capital of the life insurance industry is now at around Rs.30,000 crore of which the foreign component is 26 percent. On the face value a minimum of Rs.7,500 crore additional fund is expected to come,” Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services told IANS earlier.

However, dilution of equity stakes does not happen at par values, he remarked.”As per market value, an additional infusion would be around Rs.55,000 crore,” Parekh added.

According to him, life insurers that are 10 years’ and above old would get a valuation of seven to eight times of their original investment whereas for companies that are around seven years’ old it will be six times and for those which are much younger the multiple will be two to four times.-from Deccan Herald

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Pre-IPO Opportunity in the shares of ICICI Prudential Life

ICICI Prudential Life is India’s largest private player in the life insurance space .

A limited quantity of its shares are on offer for sale.Kindly note that you need a NSDL demat account to avail this offer.

For those interested,please email me at Alpha Ideas.

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ICICI Pru Life to sell stake at 6 Billion $ valuation

(Disclosure:I am market making in the shares of ICICI Pru Life)

ICICI Bank and Prudential Plc are looking to sell at least a 5% stake in their insurance joint venture, ICICI Pru Life, to financial investors such as private equity firms and sovereign wealth funds, in anticipation of Parliament clearing the ordinance raising the foreign investment cap in the sector to 49%.
Morgan Stanley and Bank of America Merrill Lynch (BofAML) have been mandated by ICICI Prudential Life — which is running the process — to bring in investors, said multiple sources aware of the possible transaction. Most see this exercise as an attempt to discover a valuation for a planned IPO in the near future or to discover a price at which Prudential Plc could increase its stake in the venture, India’s largest private life insurance company by sum assured and premium income. ICICI Pru ..

ICICI Prudential is present in 489 locations in India through 559 branches as of March 31, 2014 with over 5,000 partner points of presence. Bancassurance or distribution by banks accounted for 61.2% of the total business. Its market share as of December end was 11.4%. “This is part of the journey to establish price as there are no benchmarks in the industry,” said Alpesh Shah, partner, BCG.

The paid-up capital of the company is Rs 1,429 crore and its net worth stood at Rs 5,144 crore as on December 31, 2014. ICICI Pru Life had a profit after tax of Rs 462 crore in the third quarter of 2014-15 compared to Rs 428 crore in the same period last year. For the April-December period, profit after tax was at Rs 1,243 crore while premium income from new business was at Rs 3,585 crore.

The company has seen an increase in its market share to over 11% during the nine months to December 2014. Its product mix is skewed more towards unit-linked insurance plans, which is largely on the back of the rising stock market. Till December-end, the company used to manage assets worth Rs 94,593 crore. The total sum assured by ICICI Pru Life, including the group insurance business, increased by 9.5% from Rs 2.75 lakh crore at March 31, 2013 to Rs 3.02 lakh crore on March 31, 2014. –from ET

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ICICI Pru Life valued at Rs.38,000 Crores at ESOP sale

(Disclosure:I am market making in the shares of ICICI Pru Life)

ICICI Prudential Life Insurance, the biggest private sector insurer, is being valued at $6 billion (Rs 38,000 crore) as per internal calculations based on the price at which employee stock options are sold. Though there’s no plan to list the firm anytime soon, the liberal Esop programme makes it a likely candidate in future.

The paid-up capital of the company increased Rs 31.6 lakh (face value) pursuant to exercise of stock options granted under the Employee Stock Option Scheme taking the paid-up capital to Rs 1,429 crore (face value) at March 31, 2014, according to the latest annual report. In 2007-08, the company had given an option to its employees to encash their Esops. At that time, employees who had exercised their stock options, sold their share at Rs 400 apiece, valuing the company at $11 billion.

According to the current valuation, ICICI Prudential is placed higher than other life insurance companies such as HDFC Life, which is valued at around Rs 18,000-20,000 crore. Prudential has the option to raise its stake in the joint venture to 49% as and when the regulations are liberalised. The foreign partner will have the option to increase its stake at a fair value.

If Prudential Plc wants to increase its stake by another 23%, it would have to bring in around Rs 7,250 crore. Around 0.2% of the company’s capital was given as part of Esop. They are allowed to grant share options up to 3% of the issued capital of the company. Many private life insurance companies had introduced the stock option programme. –from ET

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ICICI Pru Life increases its market share by 410 basis points

Disclaimer:I am market making in the shares of ICICI Pru Life

The stock market boom has breathed new life into a few large life insurance companies, thanks mainly to unit-linked insurance plans (Ulips).

Top private life insurers like ICICI Prudential Life, HDFC Life Insurance, Max Life Insurance and a couple of smaller players with a significant number of Ulips in their product baskets have been able to register double-digit growth in individual new business premium during April-August.

On the other hand, PSU behemoth Life Insurance Corporation of India (LIC) has witnessed negative growth in individual business for the same period. According to data available with Financial Chronicle, individual adjusted first-year premium calculated (as per international norms) by taking into account 10 per cent of single premium and 100 per cent of regular premium during April-August was Rs 1,347 crore for ICICI Prudential Life Insurance, up 34 per cent.

During this period, ICICI Prudential Life’s market share increased by 410 basis points. One basis point is one-100th of a per cent. More than 70 per cent of ICICI Prudential Life’s premium comes from Ulips and the rest from traditional products.

Similarly, HDFC Life Insurance had individual new business premium of Rs 855 crore during April-August, a growth of 31 per cent, which improved its market share by 228 basis points to 15.1 per cent. Max Life Insurance clocked a 15 per cent growth in individual first-year premium at Rs 614 crore during this period.

A top official with a large life insurance company said, “A bull run is supporting higher Ulip sales, which could be one reason. The other reason is that people are moving away from gold to financial products. Financial savings ratio as a percentage to GDP has now started to increase. But we need to wait, as these are early days as 60-70 per cent of actual sales of the life insurance industry happen in the second half of FY15.”-from MyDigital