Analysis of Insurance Sector in India

8/8/2019 Analysis of Insurance Sector in India

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Financial Analysis of IndianInsurance SectorPresented By Abhinav Tripathi (09P062)

Anunay Priyesh (09P69)Mohit Kumar (09P093)Harkaran Singh (09P080)Riddhi Jain (09P109)Siddharth Shah (09P117)


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Bajaj Allianz

JV between Bajaj Finserv Ltd. and Allianz SE

Received IRDA Certificate of Registration in 2001 tocarry on General Insurance business in India

Only private insurer to cross Rs. 100 crore mark inPBT in last three years

iAAA rating from ICRA Limited for Claims PayingAbility

Various insurance services offered are Motor, Asset,Health, Travel and Corporate Insurance


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United India Insurance Incorporated as Company in February, 1938 Later formed as merger of 22 companies after the

nationalization of general insurance business inIndia

Pioneer for implementing complex covers forONGC Ltd, Mumbai International Airports etc

One of the first to provide insurance to ruralmasses through Universal Health InsuranceProgramme and Vijaya Raji Janani KalyanYojana


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New India Insurance

Established by Sir Dorab Tata in 1919 Insured the first domestic airlines in 1946

Pioneered satellite insurance in 1980

Largest Non-Life insurer in Afro-Asia excluding

Japan First Indian non-life company to cross Rs. 5000

crores Gross Premium


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PERFORMANCE

Growth in Profits after Tax

Growth in Net Premium

Cash Flows


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PERFORMANCE- Growth in Profits after Tax

rowth in Profits ( . )s 000-004 05 -005 06 -006 07 -007 08

nited India Insurance , ,30 77 100 , ,42 52 300 , ,52 88 649 , ,63 16 244ew I ndi a A ss ur anc e , ,40 22 319 , ,71 63 773 , , ,1 45 99 494 , , ,1 40 11 281

ajaj Allianz , ,4 70 656 , ,5 16 870 , ,7 53 691 , ,10 56 179


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PERFORMANCE

- Growth in Net Premium

rowth in Sales ( . )s 000-004 05 -005 06 -006 07 -007 08

nited India Insurance , , ,2 17 26 600 , , ,2 22 58 500 , , ,2 52 95 273 , , ,2 88 06 594e w I nd ia As su ran ce , , ,3 89 51 047 , , ,4 34 26 512 , , ,4 75 17 702 , , ,4 91 42 750

ajaj Allianz , ,37 09 431 , ,58 64 230 , ,83 85 343 , , ,1 41 54 427


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PERFORMANCE

- Cash Flows 2006-07


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PERFORMANCE

- Cash Flows 2007-08


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PROFITABILITY RATIOS Earnings per Share

Dividends per Share

Book Value per Share Return on Net Worth

Combined Ratio

Expenses of Management to Gross Premium Operating Profit Ratio

Net Earnings Ratio

Return on Equity


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PROFITIABILITY

- Earnings Per Share (PAT/No. of Shares)

ar ni ngs P er Sh are ( .)s-006 07 -007 08

nited India Insurance .35 258 .42 108ew I ndi a I ns ur anc e .73 997 .70 056

ajaj Allianz .6 843 .9 582


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PROFITIABILITY

- Dividends Per Share (Dividend Declared/No. of Shares)

iv id end P er Sh are ( .)s-006 07 -007 08

nited India Insurance( )II .7 052 .8 422( )ew India Insurance NII .14 6 .14 15


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PROFITIABILITY

- Book Value Per Share (Net Worth/No. of Shares)

ook Value of Shares ( .)s-006 07 -007 08

nited India Insurance .184 124 .216 379ew I ndi a I ns ur anc e .301 008 .348 64ajaj Allianz .36 63 .52 375


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PROFITABILITY

- Return on Net Worth (PAT/Net worth)

eturn on Net worth -006 07 -007 08nited India Insurance . %19 1 . %19 5e w I nd ia In su ran ce . %24 3 . %20 1ajaj Allianz . %18 7 . %18 3


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BREAK UP OF CLAIMS AND EXPENSES


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PROFITABILITY

- Combined Ratio [(Claims + Expenses)/Gross Premium]


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PROFITABILITY

- Expenses of Management to Gross Premium Ratio


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PROFITABILITY

- Operating Profit Ratio (Operating Profit/Net Premium)

perating Profit Ratio-006 07 -007 08

nited India Insurance . %4 5 . %4 5ew In di a I ns ura nc e %31 %34ajaj Allianz %8 %9


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PROFITABILITY

- Net Earnings Ratio (PAT/Net Premium)

/et Earnings Ratio Net Profit Ratio-006 07 -007 08

nited India Insurance . %20 9 . %21 9ew I ndi a I ns ur anc e . %30 7 . %28 5

ajaj Allianz . %81 1 . %85 5


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PROFITABILITY

- Return on Equity (PAT/Net Worth)

eturn on Equity-006 07 -007 08

nited India Insurance .3 526 .4 211e w I nd ia In su ran ce .7 3 .7 006



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LIQUIDITY RATIOS

Current Ratio

Liquid Ratio Super Quick Ratio


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LIQUIDITY- Current Ratio (Current Assets/Current Liabilities)

urrent Ratio-006 07 -007 08

nited India Insurance .0 422 .0 448e w I nd ia In su ran ce .0 711 .0 841



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LIQUIDITY- Liquid Ratio (Liquid Assets/Current Liabilities)


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LIQUIDITY- Super Quick Ratio (Cash and Bank/Current Liabilities)

uper Quick Ratio-006 07 -007 08

nited India Insurance .0 18 .0 141ew I ndi a I ns ur anc e .0 416 .0 368



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EFFICIENCY RATIOS

Fixed Assets Turnover Ratio

Total Assets Turnover Ratio

Working Capital Turnover Ratio


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EFFICIENCY- Fixed Assets Turnover Ratio (Net Premium/Fixed Assets)

i xed A sse ts Tu rn ove r R at io-006 07 -007 08

nited India Insurance .25 707 .34 978e w I nd ia In sur an ce .35 823 .42 643



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EFFICIENCY- Total Assets Turnover Ratio (Net Premium/Total Assets)

ot al As se ts T urno ve r R at io-006 07 -007 08

nited India Insurance .0 19 .0 189ew I ndi a Ins ur anc e .0 173 .0 154



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EFFICIENCY

- Working Capital Turnover Ratio (Net Premium/Working Capital)


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OTHER RATIOS

Reinsurance Ratio

Net Commission Ratio Financial Leverage


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OTHER RATIOS

- Reinsurance Ratio


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OTHER RATIOS

- Net Commission Ratio (Net Commission/Net Premium)


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OTHER RATIOS

- Financial Leverage (Total Assets/Net worth)

inancial Leverage-006 07 -007 08

nited India Insurance .88 541 .101 819ew I ndia In su ran ce .136 985 .159 721



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DU PONT ANALYSIS

Helps us understand the performance of a

company in a better way Divides ROE into 3 parts

Operating Efficiency Net Earnings Ratio

Asset Usage Efficiency Assets Turnover Ratio

Financial Leverage

ROE = Net Earnings Ratio * Assets TurnoverRatio * Financial Leverage


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Du Pont Analysis-006 07 -007 08

ROE NER TATR FLR ROE NER TATR FLR

UII .3 526 .0 209 .0 19 .88 541 .4 211 .0 219 .0 189 .101 819NIA .7 3 .0 307 .0 173 .136 985 .7 006 .0 285 .0 154 .159 721Bajaj .0 187 .0 811 .0 055 .15 4 .0 183 .0 855 .0 048 .23 158

The ratio tells us the source of superior or inferior returnwhen compared with other companies in the same industryas well as enables cross industry comparison.

It may be said that all three companies are High LeverageIndustries.


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Significant Accounting Policies


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Documents

Analysis of Insurance Sector in India