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Standard Life in India | November 2012 2
This presentation may contain certain “forward-looking statements” with respect to certain of Standard Life's
plans and its current goals and expectations relating to its future financial condition, performance, results,
strategy and objectives. Statements containing the words “believes”, “intends”, “expects”, “plans”, “seeks”
and “anticipates”, and words of similar meaning, are forward-looking. By their nature, all forward-looking
statements involve risk and uncertainty because they relate to future events and circumstances which are
beyond Standard Life's control including among other things, UK domestic and global economic and
business conditions, market related risks such as fluctuations in interest rates and exchange rates, and the
performance of financial markets generally; the policies and actions of regulatory authorities, the impact of
competition, inflation, and deflation; experience in particular with regard to mortality and morbidity trends,
lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or
combinations within relevant industries; and the impact of changes in capital, solvency or accounting
standards, and tax and other legislation and regulations in the jurisdictions in which Standard Life and its
affiliates operate. This may for example result in changes to assumptions used for determining results of
operations or re-estimations of reserves for future policy benefits. As a result, Standard Life’s actual future
financial condition, performance and results may differ materially from the plans, goals, and expectations set
forth in the forward-looking statements. Standard Life undertakes no obligation to update the forward-
looking statements contained in this presentation or any other forward-looking statements it may make.
Standard Life in India | November 2012 4
Welcome and agenda
• Welcome
Jackie Hunt (CFO, Standard Life)
• Asia and Emerging Markets overview
Nathan Parnaby (CEO, Asia and Emerging Markets, Standard Life)
• HDFC Life
Amitabh Chaudhry (MD and CEO, HDFC Life)
• HDFC Asset Management Company
James Aird (Director, HDFC AMC and Head of Strategic Development, Standard Life Investments)
• Questions and Answers
Standard Life in India | November 2012 6
Asia and Emerging Markets
• International operations
• Hong Kong - Standard Life Asia Limited
• Standard Life International Limited
• Based in Dublin, primarily servicing UK offshore market
• Singapore branch now open for business
• Joint ventures
• HDFC Life
• Joint venture with Housing Development Finance Corporation (HDFC)
• 26% stake, maximum allowed by FDI rules
• Heng An Standard Life
• Joint venture with Tianjin Economic Technological Development Area (TEDA)
• 50% stake, maximum allowed by FDI rules
•Asset management
• HDFC AMC
• Joint venture with HDFC
• 40% stake, held and managed by Standard Life Investments
Standard Life in India | November 2012 7
Maximising the value of our JV relationships
•Number 2 position in Indian individual private market with 17% share and more than 2m customers
• India now profitable and capital self-sufficient
•Growing distribution capability in China
Growing our business
Taking advantage of our offshore savings
capability
•Operations base in Dublin primarily servicing UK offshore
•16% market share and growing
• Increasing efficiency and building an internationally scalable business with c.£3bn assets
Leveraging the value of Standard Life and HDFC
brands in Asia
•Strong brands with both European ex-pats and non-resident Indian market
•Attractive affluent target customer base
•Existing experience in Hong Kong
•Opening of Singapore branch with further potential for growth in similar markets
Leveraging the asset management expertise
of Standard Life Investments and HDFC AMC
• Increased scope for distribution of Standard Life Investments and HDFC AMC investment products
• Expanding share of the value chain
•Number one mutual fund company in India by assets and 5m customers
Standard Life in India | November 2012 9
� Background & Parentage
� Growth Opportunities for HDFC Life
� Overview of Indian life insurance industry
� HDFC Life performance
About HDFC Life
Standard Life in India | November 2012 10
HDFC Life : Strong parentage
Leading financial services corporation
known for its industry leading business performance and high governance standards
Leading long term savings and investments company operating internationally
1st private life insurer to start
operations in India
HDFC: Housing Development Finance CorporationShareholding Pattern as at 30th Sept 2012 : HDFC 72.4%; Standard Life 26.0%; Individuals / ESOP Trust 1.6%
72.4% 26.0%
Standard Life in India | November 2012 11
� HDFC Limited was incorporated in 1977 as the first specialized mortgage company in India
� HDFC has financed 4.2 million housing units, has Rs 1551.3 Bn loans outstanding
� Mortgage loan growth at 22% CAGR, PAT at 21% CAGR
� Stable, experienced management – average tenure of senior management is 25+ years
� Today it is a financial conglomerate with interests beyond mortgages
HDFC Group : India’s leading financial services conglomerate
^ on a fully diluted basis
Standard Life in India | November 2012 12
� Background & Parentage
� Growth Opportunities for HDFC Life
� Overview of Indian life insurance industry
� HDFC Life performance
About HDFC Life
Standard Life in India | November 2012 13
Indian consumers are positively disposed towards insurance purchase
Average Household Size
1981 1991 2001 2011
5.5 5.1 4.6 4.2
• Indian consumers are risk-averse and consider insurance to be a low risk, high return product
• Insurance penetration (premiums as a % of GDP) is higher than most emerging markets. With expected increase in per capita income, life insurance premiums should increase given the positive disposition of customers.
• Increase in average life expectancy would fuel need for pension and health products. Emergence of nuclear families has resulted in reduction in average household size and would increase need for protection products.
4444
3333
2222
2222 55553333 4444
Risk
Return
Mutual Funds
Bonds
Life Insurance
Bank Savings Account
Source: McKinsey PFS Survey, 2011
Indian consumer perceives life insurance as a low risk, high return
product
4444
3333
2222
2222 55553333 4444
Risk
Return
Mutual Funds
Bonds
Life Insurance
Bank Savings Account
Source: McKinsey PFS Survey, 2011
Indian consumer perceives life insurance as a low risk, high return
product
Standard Life in India | November 2012 14
Product suite has significant headroom to expand and increase penetration and profitability
� Current product mix is largely oriented around investment & savings products. HDFC Life has developed multiple ‘vehicles of protection’.
� Click2Protect - term insurance plan on individual platform
� Credit Protect - loan cover plan on group platform
� The increased emphasis on risk protection would help to diversify the product mix
� Increasing opportunities for bundling insurance with banking products as financial inclusion increases across the country
Risk Protection
LIFEEARNING ABILITY
LIFESTYLE ADJUSTMENT
FUTURE NEEDS
Premium Protection
Future CoverIllnessFunctional Impairment
Combination Retrenchment
Physical Impairment
Occupational Disability
Death
Accidental Death Benefit
Final Expense Benefit
Health
and
Wellbeing
Death
and
Bereavement
Emergencies
Work
Counselling
Legal
Savings
Standard Life in India | November 2012 15
� Share of agency channel (2.4 million agents) continues to shrink
� Bancassurance contributes nearly 1/3rd of NB premiums for private life insurers
� Top 3 private life insurers have banking partners within the financial group
� LIC continues to be agency driven
Source : Public Disclosures of 20 Private Insurers in India, IRDA Annual Report & HDFC Life Analysis
Banks continue to gain share of distribution as they expand and penetrate new markets
Distribution Mix of Private Life Insurers
64%
45%
18%
37%
10% 8%
1% 5%8% 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
FY06 FY12
Individual agents Corporate Agents‐‐‐‐Banks Corporate Agents ‐‐‐‐Others
Brokers Direct Business
Standard Life in India | November 2012 16
We are well positioned to leverage this trend due to our strong partnership with HDFC Bank
� “HDFC Bank – HDFC Life” operate the single largest bancassurance partnership in terms of new business premiums garnered
� The bank’s share of saving deposits across Indian banks is estimated at nearly 5%
� Fees and remuneration earned through bancassurancewas 11% of the bank’s net profits in FY’12
� In FY’12 the bank contributed � 68% of new business premiums to HDFC Life in
FY’12� 20-22% of all new business premiums collected
by banks
� The Best Bancassurance Award at the 11th International Excellence in Retail Financial Services Awards Program
� As of March 31, 2012 HDFC Bank had� 2,544 branches across 1,399 cities with 75%
branches outside the top 9 cities� Customer base of 26 million
� The branch network has grown at a CAGR of 22% from March 2009 to March 2012
Source : HDFC Life estimates, Public Disclosures, HDFC Bank Annual Report, RBI Data
Standard Life in India | November 2012 17
� Background & Parentage
� Growth Opportunities for HDFC Life
� Overview of Indian life insurance industry
� HDFC Life performance
About HDFC Life
Standard Life in India | November 2012 18
Entry of Private Life Insurers
Start of Equity Bull Market
Post-Lehman World
Riding the wave (ULIPs1)1st wave of private
insurers 2nd wave of entrants
Increase in Regulatory
change, 3rd wave
BSE SENSEX
Source : BSE Sensex Performance Jan 1, 2000 – Nov.5,2012, Google Finance, HDFC Life Analysis.
Graph not as per scale
� Life Insurance in India has seen 3 distinct phases post the year 2000 – the market has 24 life insurers present today
The development of life insurance industry in India
1 Unit Linked Insurance Plans are products where the investor bears the investment risk
13
Number of private life insurance entrants
7 3
Standard Life in India | November 2012 19
Industry new business premium movement in last decade since entry of private players
The Life Insurance journey (2001–2012): New Business Premia
Source: IRDA data, HDFC Life Analysis
1 GBP = 87.0706 INR (as per Reuters 13 Nov 2012)
� Private sector grew at a CAGR of 192% between 00-01 and 08-09 (8 times the pace of LIC)
� LIC grew at a 15% CAGR between 08-09 and 11-12 while the private sector remained flat in this period resulting in a slide in the private sector’s market share in the last 3 years
� Private sector growth slowdown post increase in regulatory change(3rd phase of industry development). Primary reason for the flat growth was the charge cap regulations introduced by the regulator on ULIP products.
Note: New Business Premium numbers are based on first year premium including single premium
97
196160 173
207
285
562600
532
715
864815
353
0 3 10 2456
103
194
337 342384 394
327
1161%6%
12%
21%
26%
26%
36%
39%
35%
31%29%
25%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
100
200
300
400
500
600
700
800
900
1000
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 H1 2012-13
Pri
va
te M
ark
et
Sh
are
%
Ne
w B
usi
ne
ss P
rem
ium
in R
s. B
n
LIC Private Players Private Market Share
State Owned Life Insurance Corporation (LIC) of India vs. Private Players
Standard Life in India | November 2012 20
The industry had to reinvent to stay relevant to customers and distributors due to the pace & magnitude of change
Unprecedented shift in regulation post Sept. 2010
Households allocated less to financial assets
Source : Nomura
Source : Mckinsey
� Lower margins for insurers and distributors post the shift in regulation on ULIP products
� High inflation resulted in a reduction in household savings rates – impact on financial savings (insurance, mutual funds, deposits,etc.) higher than that on physical savings (gold, real estate, etc.)
� Central bank policy sustained high interest rates on bank deposits making life insurance and equity linked investments unattractive in the short term.
Standard Life in India | November 2012 21
The transition is near completion and we expect the industry to revert to growth in the next 3-4 quarters
� Government looking at reforms to stimulate the life insurance industry
� Short term pain but customer friendly in the long term – transition in its last leg
� Distributors aligned to the new normal; large distributors commanding a premium
� Improvement in operating efficiencies and expense management
� Increased focus on customer service and brand building
� Industry leaders selling a balanced product mix
� Norms for traditional products near finalization
� Increasing demand for protection products
Standard Life in India | November 2012 22
� Background & Parentage
� Growth Opportunities for HDFC Life
� Overview of Indian life insurance industry
� HDFC Life performance
About HDFC Life
Standard Life in India | November 2012 23
Revenue
Total Premium FY 09-10 FY 11-12 CAGR
HDFC Life 70 102 21%
Top 7 620 626 0.5%
Costs
FY 09-10 FY 11-12 CAGR
HDFC Life 208 323 25%
Top 7 1,801 2,462 17%
AUM
Capital Efficiency
FY 09-10 FY 11-12 CAGR
HDFC Life 3.6 4.7 15%
Top 7 3.8 3.7 -2%
Others
13th month persistency FY 09-10 FY 11-12
HDFC Life 57% 82%
Top 7* 63% 71%
Conservation ratio FY 09-10 FY 11-12
HDFC Life 72% 77%
Top 7* 67% 69%
Surrenders & Withdrawals
/ Renewal Premia
FY 09-10 FY 11-12
HDFC Life 34% 43%
Top 7 39% 63%
Note: Top 7 comprise of I-Pru, HDFC Life, SBI Life, Bajaj Allianz Life insurance, Birla Life Insurance, Max Life and Reliance Life
* Numbers are simple average of the respective company’s ratio
Source: IRDA, Public disclosure of respective companies
Individual WRP FY 09-10 FY 11-12 CAGR
HDFC Life 25 27 4%
Top 7 218 127 -23%
Total Private 288 175 -22%
Mkt share -
Individual WRP
FY 09-10 FY 11-12 Change
HDFC Life 8.7% 15.5% 680 bps
Top 7 75.6% 72.7% -290 bps
Ranking - HDFC Life 5 2
Opex / Total
premium Ratio
FY 09-10 FY 11-12 (Inc)/
Dec
HDFC Life 19.6% 11.5% 8.2%
Top 7 17.1% 14.0% 3.2%
Opex / Individual
WRP
FY 09-10 FY 11-12 (Inc)/
Dec
HDFC Life 55% 43% 11.6%
Top 7 49% 69% -19.8%
Capital Efficiency = Total Premium / Capital
Conservation ratio = Ratio of current year renewal premiums to previous year’s renewal
premium and first year premium.
In the last two years HDFC Life has outperformed its competitorsacross many metrics
Bn Rupees
Standard Life in India | November 2012 24
8.7%
12.9%
15.5%
17.0%
4.6%
5.9% 5.7% 5.5%
FY10 FY11 FY12 H1 FY13
Private Sector Market Share Total Industry Market Share
Consistent growth in market share
• Ranked #2 in H1 FY13 amongst private insurance companies (Individual & Overall business)
• During the last 2 years, private industry has ceded 19% market share to LIC
(LIC market share increased from 49% in H1 FY11 to 68% in H1 FY13)
Source: IRDA
Steady in
crease in
private se
ctor marke
t share
Standard Life in India | November 2012 25
31%19% 17%
1%
4% 7%
65%73% 71%
3% 4% 5%
FY11 FY12 H1 FY13
Tied Agency Broker Bancassurance Direct
86%
56% 56%
14%
44% 44%
FY11 FY12 H1 FY13
ULIP Conventional
• Efforts to diversifying distribution mix have started to yield results with new channels i.e. Broker & Direct increasing their share of APE
• Tied Agency continues to struggle in line with industry
• Operates out of 461 offices across the country serving over 945 cities in India & a liaison office in Dubai
• Share of Conventional business has increased after regulatory changes of Sep 2010
Distribution Mix Product Mix
• The percentages are with reference to APE for individual business. ULIP stands for Unit Linked Insurance Plan.
Developing broker distribution while maintaining highly profitable bancassurance focus
Standard Life in India | November 2012 26
Organization agenda continues to be driven through five strategic themes
Leader in providing long term insurance solutions
Fortify & Diversify distribution channel mix
Own select customer segments and product categories
Deliver unique customer experience
Cost leadership across the delivery chain
Set the industry standards by driving changes that encourage long term behaviour by all stakeholders & yield sustainable benefits
Set the industry standards by driving changes that encourage long term behaviour by all stakeholders & yield sustainable benefits
Retain and grow existing distribution partners and win new relationships to de-risk business in the face of increasing competitive intensity
Retain and grow existing distribution partners and win new relationships to de-risk business in the face of increasing competitive intensity
Select attractive customer segments, develop products based on needs of the segments and drive efforts & investments to these segments
Select attractive customer segments, develop products based on needs of the segments and drive efforts & investments to these segments
Improve customer experience & loyalty through offering best-in-class service standards across touch points
Improve customer experience & loyalty through offering best-in-class service standards across touch points
Run a profitable business through driving cost & productivity efficiencies across the value chain
Run a profitable business through driving cost & productivity efficiencies across the value chain
Standard Life in India | November 2012 27
Leader in providing long term insurance solutions
Acquire new customers
Enhance policy termBalanced product
mixRetain customers for the long term
Number of policies grew by 26% in H1’13 vs. H1’12
Number of policies grew by 26% in H1’13 vs. H1’12
Policy term enhanced to 13.2 years in H1’13 vs. 11.5 years in H1’12
Policy term enhanced to 13.2 years in H1’13 vs. 11.5 years in H1’12
Conventional products contributed 44% in H1’13 vs. 35% in H1’12 to individual premium
Conventional products contributed 44% in H1’13 vs. 35% in H1’12 to individual premium
Maintained high quality business amidst tough regulatory conditions, Conservation ratio at 77% in H1’13
Maintained high quality business amidst tough regulatory conditions, Conservation ratio at 77% in H1’13
Improvement in key indicators on the journey to becoming a leader in providing long term insurance solutions
Standard Life in India | November 2012 28
Fortify & Diversify Channel Mix
Fortify existing channels
Diversify Channel Mix
Segregated management structures
Win new relationships
Growth in bancassurance channel in H1’13
Agency stays flat in difficult business conditions
Better than industry performance
Growth in bancassurance channel in H1’13
Agency stays flat in difficult business conditions
Better than industry performance
Direct sales & broker contribution in individual business increased to 11.5% in H1’13 vs. 6.5% in H1’12
Direct sales & broker contribution in individual business increased to 11.5% in H1’13 vs. 6.5% in H1’12
Dedicated sales team structures for channels & verticals under channels
Interventions to improve knowledge, skills and relationships
Dedicated sales team structures for channels & verticals under channels
Interventions to improve knowledge, skills and relationships
Plug-and-Play toolkit for new partner acquisitions
Ongoing program to attract new financial consultants
Plug-and-Play toolkit for new partner acquisitions
Ongoing program to attract new financial consultants
Efforts to fortify and diversify channel mix that started in FY’11 beginning to yield results
Standard Life in India | November 2012 29
Own select customer segments and product categories
Product development aligned to customer segments
Sales of online term product Click2Protect continue to grow
Smart woman campaign launched to attract more women customers
Invest wise plan launched for the wisdom investor
Sales of online term product Click2Protect continue to grow
Smart woman campaign launched to attract more women customers
Invest wise plan launched for the wisdom investor
Integrated & faster NPD process
New Product Development driven through an integrated Research, Product & Marketing structure to improve speed-to-market from concept to launch has been deployed
Positioned to manage any product changes that may be rolled out in H2’13 by regulator
New Product Development driven through an integrated Research, Product & Marketing structure to improve speed-to-market from concept to launch has been deployed
Positioned to manage any product changes that may be rolled out in H2’13 by regulator
Products launched in identified customer segments and steps taken to improve speed to market
Standard Life in India | November 2012 30
Deliver unique customer experience
Faster Policy Issuance
Right Advice & Need based selling
Improve Customer Loyalty
Continuous Improvement
Point-of-Sale underwriting engine -Click2Buy extended across channels
Emphasis on straight-through-processing based on LEAN principles
Point-of-Sale underwriting engine -Click2Buy extended across channels
Emphasis on straight-through-processing based on LEAN principles
Mobility devices tested
Aim to ensure standardization of communication
Need based analysis –financial planning tool
Mobility devices tested
Aim to ensure standardization of communication
Need based analysis –financial planning tool
Dedicated loyalty channel �Tele-sales�Feet-on-street�Branch Sales
Growth surpassing traditional sales channels
Dedicated loyalty channel �Tele-sales�Feet-on-street�Branch Sales
Growth surpassing traditional sales channels
‘Servesresht’ program based on Lean Six Sigma methodology
Governance driven through Service Excellence Council
‘Servesresht’ program based on Lean Six Sigma methodology
Governance driven through Service Excellence Council
Processes & teams aligned to offer a unique customer experience
Standard Life in India | November 2012 31
Cost leadership across the delivery chain
Higher profitability Optimize CapitalTechnology enabled
business transformation
NBM – 17.5% (H1’13) vs 15.6% (H1’12)
Opex/Total Premium –13.3% (H1’13) vs. 12.1% (H1’12)
NBM – 17.5% (H1’13) vs 15.6% (H1’12)
Opex/Total Premium –13.3% (H1’13) vs. 12.1% (H1’12)
No capital draw-down needed in the last 6 quarters
Company can now declare dividend
No capital draw-down needed in the last 6 quarters
Company can now declare dividend
System Integrator selected for end-to-end technology transformation
Customer impacting projects prioritized
System Integrator selected for end-to-end technology transformation
Customer impacting projects prioritized
Improvement in cost ratios in a difficult business environment
Standard Life in India | November 2012 32
HDFC Life is well positioned to align and take advantage of the potential changes expected in the near future
Market
Customer
Channel
Product
Process & Technology
People
Polarization of market share in favour of large players with access to existing distribution
Polarization of market share in favour of large players with access to existing distribution
Higher alignment to brands that evoke trustHigher alignment to brands that evoke trust
Bancassurance guidelines expected in Q3’13Bancassurance guidelines expected in Q3’13
Revised product guidelines are expected in Q3’13 and speed to market would be critical in the short term
Revised product guidelines are expected in Q3’13 and speed to market would be critical in the short term
Key differentiator to improve productivity & reduce cost across the value chain given anticipated business environment challenges
Key differentiator to improve productivity & reduce cost across the value chain given anticipated business environment challenges
Ability to attract talent likely to be restricted to select few insurers who deliver profitable, sustainable growth
Ability to attract talent likely to be restricted to select few insurers who deliver profitable, sustainable growth
Standard Life in India | November 2012 33
Summary
� HDFC Life has a strong parentage and enjoys the trust of all stakeholders
� Established market outperformance consistently over the past 2 years
� The Indian life insurance industry in poised for long term growth
� HDFC Life is best positioned to take advantage of the market opportunity
HDFC Asset Management Company
James Aird
Director, HDFC AMC
Head of Strategic Development, Standard Life Investments
Standard Life in India | November 2012 36
The largest mutual fund company in India
• Context
• Joint venture established in 2000 between SLI (40%) and Housing Development Finance Corporation (HDFC) 60%
• Major driver in reaching current position has been organic growth
• Bolt-on acquisition of Zurich AM in India in 2003 added equity team and increased retail presence
• Has licenses for Mutual Funds and Portfolio Management Services
• Number one in mutual funds market by assets both overall and in equities with over 5m customer accounts
• Strategic priorities
• Further strengthen position in retail segment
� Focus on investment performance
� Widening distribution
� Maintaining market leadership
• Build business from overseas markets
� Standard Life Investments distribution
HDFC brand strengthConsistent and quality
investment performance
Broad based distribution
franchise
Standard Life in India | November 2012 37
Market leading position and growing market share
September 2008 September 2012
Equity 10.4% 19.8%
Debt 10.7% 13.0%
Liquidity 7.0% 8.6%
Other 0% 4.8%
Total 9.9% 13.9%
• Over 5m customer accounts - market leader in Indian mutual funds, growth through global financial crisis
• Overall market share has grown from under 10% to nearly 14% by AUM over the past four years
• Significant growth in higher margin equity class with assets more than doubling to 406bn rupees vs. industry
growth of around 25%
HDFC AMC market share by AUM
0
200
400
600
800
1000
1200
2004 2008 2012
0
1
2
3
4
5
6
Assets Accounts
HDFC AMC assets and accounts
Accounts (million)
Assets (billion Rupees)
Number one in equity market and overall mutual funds market by assets1
1. As at 30 September 2012
Standard Life in India | November 2012 38
Retail equity propositions driving growth
• Strong growth in higher margin equity segment outpacing market shift
• Retail (£7.2bn1)
� Main investors in equity funds
� Growing use of ‘pound cost averaging’ with Systematic Investment Plan (SIP) / Systematic Transfer Plan (STP) products
� Average holding period has extended to almost 3 years
� Product focus still very much on domestic funds
� Market leader in SIP, with over 1.5m customers investing on a monthly basis
• Institutional (£4.2bn1)
� Primarily institutions parking surplus liquidity in short term debt funds (yield pick up c/w overnight rates)
� Flows can be volatile around quarter ends
• Portfolio Management Services (£0.6bn1)
� Main segment is Indian HNWI
� Growing international sales efforts, but small at present
� SLI promote India strategy through their distribution channels
� SLI provides product wrappers e.g. SICAV, Mauritian OEIC
1. R87/£1 used
HDFC AMC channel mix
Retail 60%Institutional
35%
Portfolio
Management
Services 5%
HDFC AMC product mix
Equity 40%
Debt 46%
Liquidity 12%
Other 2%
Standard Life in India | November 2012 39
Diversified distribution network
• India is an ‘open architecture’ distribution environment
• HDFC AMC has 115 branches / investor service centres and has 37,000 certified distributors
• HDFC AMC has well diversified distribution through banks, nationals (non-bank financial services providers), IFA’s and Direct
� Largest Distributor is HDFC Bank with 9% of total sales
� Five largest distributors just 24.2% and no other distributor accounts for more than 5% of sales
� Direct at 11% of AUM, continues to grow steadily (Walk ins and online)
• Top 15 cities account for 82% of AUM - ongoing initiatives to grow distribution in second and third tier cities
HDFC AMC distribution
Banks 23%
Nationals 33%
IFA’s 33%
Direct 11%
Standard Life in India | November 2012 40
Demand driven by brand and fund performance
Past performance is not indicative of future results. Past performance may not necessarily provide a basis for comparison with other investments. Source: Bloomberg as of Jun 29, 2012 (1) Fund performance is for the Growth Option in USD. Performance is reported net of management fees and other standard operating fees (excluding any sales and commissions) . Reporting currency is in INR. Returns are absolute annualized returns unless otherwise stated. Inception date is January 1, 1995. Since inception returns are based on CompoundedAnnualized Returns. (2) S&P CNX 500 index is the Fund’s benchmark index. Benchmarks are used solely for the purposes of comparison and the comparison does not mean that there will necessarily be a correlation between the returns described herein and the benchmarks. There are limitations in using financial indices for comparison purposes because, among other reasons, such indices may have different volatility, diversification, credit and other material characteristics (such as number or type of instrument or security).
Delivering outperformance
• Team members have an average of 14 years experience in the Indian markets
• HDFC Equity Fund – Growth Option has outperformed its benchmark in 15 out of 17 years since 1995, delivering significant alpha
• HDFC CMF Treasury Advantage Plan and HDFC Liquid Fund – our two largest Fixed Income funds, representing over £4bn assets outperformed benchmark net of fees over 1, 3 and 5 years
12.2%
10.1%8.6%
29.9%
13.0%
3.7%
1.5%
20.4%
1 year 3 year 5 year 10 year
HDFC Equity Fund - Growth Option S&P CNX 500(2)(1)
HDFC Equity Fund – Historical Performance (in USD %)
HDFC brand recognition continuing to drive retail flows
Standard Life in India | November 2012 41
Delivering growth in profitability
• Growth in profitability – CAGR from 2008 to 2011 of 32%
• Growing strength in higher margin equities driving increasing profitability
• EBIT margin of over 50%
6.2
13.0
9.3
14.1
7.0
2008 2009 2010 2011 H1 2012
HDFC AMC normalised underlying profit contribution to Standard Life Investments1 (£m)
1. Underlying profit contribution defined as profit to Standard Life Investments less any material movement in provisions and accounting policy changes
Continuing contribution to the profitability of Standard Life Investments
Standard Life in India | November 2012 42
Attractive opportunities for future growth
Market
• Strong economic growth, leading to increased financial prosperity
• Demographic profile supports asset accumulation
• Cash savings growing strongly
• Mutual funds penetration remains low (8% of GDP)
• Increased investor education, should underpin greater take up of mutual funds, and the introduction of more sophisticated products over time
Opportunity to leverage Standard Life Investments
• Sale of HDFC AMC funds via SL wrappers (IOSI)
• Ability to use SLI and its global reach to secure mandates for the JV
• Opportunity to sell SLI global products into India as the market becomes more sophisticated.
HDFC brand strengthConsistent and quality
investment performance
Broad based distribution
franchise
Standard Life in India | November 2012 44
10.3 11.4
3.4 3.8
26.9 28.1
1.1
0.5
H1 FY12 H1 FY13
41.743.8
16%
88%
38%
70%
-26%
5%
-53%
4%
12%
11%
Premium Income
• Growth of 13% in total premium at 102.0 billion rupees led by renewal premium & group premium in FY12
• Positive growth in first year regular (11%), group (12%) & renewal (8%) premium leading to overall growth of 7% in H1 FY13
• Continue to grow in new business since Q3 of FY12 beating the private market
(Q3 FY12: 3%, Q4 FY12: 15%, Q1 FY13: 17%, Q2 FY13: 7%)
First Year Regular Premium (Individual)
Total Premium Single Premium (Individual) Reported Renewal Premium (Individual)
Group Premium
H1 Performance
{7%}
{8%}
Note: 1) Since Q1 FY13, we stopped making an accrual for premium due but not received on unit-linked policies, based on directive from the regulator. Figures in bracket represent growth numbers had this change been done for previous years. 2) After adjusting for change in accounting policy for unit-linked business, total reported premium growth would be 13% (PY FY12), 29% (PY FY 11), 7% (H1 FY13) and 17% (H1 FY12).
29.0 26.9
5.9 9.5
49.2
63.4
5.9
2.1
FY11 FY12
90.0
102.0
29%
120%
36%
-5%
17%
13%
-65%
29%
61%
-7%
PY (12 M) Performance
Standard Life in India | November 2012 45
14.4
11.7
16.0%
11.5%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
(3.0)
2.0
7.0
12.0
17.0
22.0
FY11 FY12
4.9 5.8
11.9% 13.3%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
H1 FY12 H1 FY13
Operating Expenses
- After adjusting for change in accounting policy for unit-linked business, operating expenses/total reported premium ratio for previous years would be 11.7% (PY FY12), 16.3% (PY FY 11) and
12.1% (H1 FY12)- Operating expenses exclude service tax
• In H1 FY13, Operating expenses ratio has increased vs. last year due to higher incentive support for
new channels & conscious decision to invest in new channels, technology, branch refurbishments and
international business
H1 PerformancePY (12 M) Performance
{12.1%}
Bn Rupees
Standard Life in India | November 2012 46
(0.0)
0.6
1.1
1.9
0.2
0.2
(1.0)
(0.5)
-
0.5
1.0
1.5
2.0
2.5
3.0
H1 FY12 H1 FY13
1.2
2.8
(1.7)
1.1
0.4
2.5
(1.4)
0.2
(4.0)
(3.0)
(2.0)
(1.0)
-
1.0
2.0
3.0
4.0
FY11 FY12
(2.7)
3.8
Indian GAAP Results
• Policyholder A/C Surplus amounting to 1.9 bn rupees transferred to Shareholder Account in H1 FY13
• Deficit as of 31st March 2012 of 0.6 bn rupees has been completely off-set by the surplus generated in the
Policyholder A/C in the current year
H1 PerformancePY (12 M) Performance
Shareholder A/C surplus Policyholder A/C surplus Deficit (created)/reversed in Rev A/c
Bn Rupees
Standard Life in India | November 2012 47
24 26
-16
19
H1 FY 12 H1 FY 13
Fund flow Market Movements
265 273
323
367
31st March 2011
30th Sept 2011
31st March 2012
30th Sept 2012
Robust growth in Assets Under Management
45Inflows vs. Market
8
AUM Movements
248
273
367 20,069
16,454
18,763
14,000
16,000
18,000
20,000
22,000
24,000
26,000
150
200
250
300
350
400
30th Sept 2010 30th Sept 2011 30th Sept 2012
AUM in Rs bn Sensex
34.5%50.6%
10.1%
Growth in AUM vs LY
42% 46% 50%
58% 54% 50%
30th Sept 2010 30th Sept 2011 30th Sept 2012
Debt Equity
Bn Rupees
Standard Life in India | November 2012 48
* FY11 had first 5 months of margins under product portfolio that existed in the pre charge cap regime
H1 FY12 H1 FY13 FY11 FY12
New business profits1,2 1.7 2.1 5.4 4.8
New business APE2 10.6 11.8 28.6 27.9
New business margin1,2 15.6% 17.5% 18.8%* 17.2%
1 Based on loaded acquisition expenses2 Margins and APE are shown for individual business only
New business margin (after impact of
acquisition expenses overrun) 210.5%14.2%
New Business Profits
Bn Rupees
Standard Life in India | November 2012 49
CIO 100 Award for Enterprise Excellence
Underwriting initiative of the year award by Asian Leadership Awards
For more details about our Awards & Accolades, kindly refer our website at www.hdfclife.com
FAME – Fabulous Achievement in Marketing Excellence
BestPrax Benchmark Award for Leadership Governance
Brand Slam Leadership Awardby CMO Asia
‘Best Private Life Insurer’ at CNBC TV18 Best Bank and Financial
Institution Awards 2012
Awards and Accolades
Standard Life in India | November 2012 50
Best Product Innovation Award 2012 for second consecutive year
Best Companies to Work for 3rd consecutive year.
CISO –Best Information Security practices
World HRD Congress – Thought Leader Award 2012
Porter Prize for Strategy & Product Innovation
Award for CEO with HR orientation & Talent Management
For more details about our Awards & Accolades, kindly refer our website at www.hdfclife.com
Awards and Accolades
Standard Life in India | November 2012 51
Mutual fund industry AUM and growth rate
0000
1,0001,0001,0001,000
2,0002,0002,0002,000
3,0003,0003,0003,000
4,0004,0004,0004,000
5,0005,0005,0005,000
6,0006,0006,0006,000
7,0007,0007,0007,000
'03'03'03'03 '04'04'04'04 '05'05'05'05 '06'06'06'06 '07'07'07'07 '08'08'08'08 '09'09'09'09 '10'10'10'10 '11'11'11'11 '12'12'12'12
Source: AMFI, AUM amounts in Rupees billions as at end March (end of FY)
• JV grew initially in 00-03 period when falling bond yields attracted strong growth in core fixed income product
• 03, acquired Zurich’s Indian AMC, which strengthened JV equity proposition
• 03-08, major equity bull market, JV becomes leading equity franchise in India
• Since financial crisis, become leader in SIP
Standard Life in India | November 2012 52
2012
AUM Market Share %
HDFC 978 13.1
Reliance 863 11.6
ICICI Prudential 764 10.2
Birla 729 9.8
UTI 708 9.5
SBI 510 6.8
Franklin Templeton 390 5.2
DSP 302 4.0
IDFC 280 3.8
Kotak 303 4.0
Total Market 6,928 78.0
Source: AMFI, Based on Average AUM for July – Sept Periods in Rupee Bn’s
New Entrants
Invesco (Bought 49% of Religare)
Schroders (Bought 25% of Axis)
Nippon Life (Bought 26% of Reliance)
Exit
Fidelity (Sold to L&T AMC (Indian AMC))
Other Foreign Participants (Market Share)
AIG (0.1%)
BP Paribas (0.7%),
Daiwa (0.1%),
Goldman Sachs (0.6%),
Mirae (0.1%),
Pramerica (0.3%)
Top ten mutual fund houses in India
Standard Life in India | November 2012 53
Simplified structure chart
Standard Life plc
Standard Life
Employee Services
Limited
Heng-An Standard
Life Insurance
Company Limited
Standard Life
(Mauritius Holdings)
2006 Limited
Standard Life
Overseas Holdings
Limited
Standard Life
Investments
(Holdings) Limited
Standard Life
Assurance Limited
Standard Life
Savings Limited
Standard Life
Investment Funds
Limited
The Standard Life
Assurance Company
of Canada
Standard Life
Financial Inc
HDFC Standard Life
Insurance Company
Limited
Standard Life
Investments Limited
HDFC Asset
Management
Company Limited
The Standard Life
Assurance Company
2006
Standard Life
Savings Nominees
Limited
Standard Life
Trustee Company
Limited
Standard Life
International Limited
Standard Life
Pension Funds
Limited
Standard Life Client
Management
Limited
Standard Life Asia
Limited
Standard Life in India | November 2012 54
Heng An Standard Life
GUANDONG
HENAN
JIANGSU
SHANDONG
BEIJINGTIANJIN
LIAONING
SICHUAN
• Joint venture with TEDA (TianjinEconomic – Technological Development Area )
• Standard Life holding: 50%
• Based in Tianjin: one of 4 Chinese direct-controlled municipalities
• Ranked 8 (2011: 9) of 25 foreign JVs
• Presence in 36 (2011: 32) cities across 8 provinces
• New general manager and management team driving business growth
• Working closely with TEDA on developing the business
• Opportunities for growth particularly in individual and bancassurance
Standard Life in India | November 2012 55
Standard Life Asia (Hong Kong)
• Relationship with 315 brokers firms and No. 2 position in IFA channel
• Broad range of propositions:
• Aspire, Wealth Amplifier, Harvest 101, Harvest Supreme, LifeMaster, Pro-Investor (exclusive product), Peaceful Life and Perpetual Protector
• New propositions recently launched including Harvest Wealth to cater to the needs of internationally mobile clients and Smart Wealth, our first Renminbi denominated product
• leveraging existing Standard Life technology
• Use of mobile technology to attract and engage target customers
• Wholly owned operation based in Hong Kong
• Fast growing business with significant future potential
• No. 6 position in market (H1 2008: 18)
• Market position stable despite overall market being down year-on-year
• Scalable operation and contributing to Group IFRS profit
SL Asia assets under administration, HK$ m
528
1,053
1,604
2,407
0
500
1,000
1,500
2,000
2,500
FY 2009 FY 2010 FY 2011 Q3 2012
Standard Life in India | November 2012 56
Standard Life International Limited
• Open to business in 2006 – grown quickly vs. very established competitors
• Around £3bn in UK assets of which over £1bn on Wrap
• Branch of SLIL recently launched in Singapore targeting high net worth clients
• Singapore offers exposure to high growth, high value Asian markets and presents a growth opportunity reusing existing infrastructure
• Wholly owned offshore business based in Ireland
• In the UK Offshore Bond market:
• Top 3 player over last 18 months
• Around 15% market share
• Leader in core IFA segment and developing newer bank and wealth manager channels
• Fully RDR compliant ahead of deadlines
• See strong growth in this market as product becomes mainstream
SLIL assets under administration, GBP m
1,159
1,769
2,360
2,876
0
500
1,000
1,500
2,000
2,500
3,000
FY 2009 FY 2010 FY 2011 Q3 2012
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