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MANAGEMENT’S DISCUSSION AND ANALYSISMANAGEMENT DISCUSSION AND ANALYSISAditya Birla Nuvo LimitedMANAGEMENT DISCUSSION AND ANALYSISPrivate Life Insurers market Share in terms of new business 1Others28.6%Reliance Life6.2%MaxNew York6.7%Birla Sun Life7.8%ICICI Prudential18.4%Bajaj Allianz8.2%HDFCStandard13.0%SBI Life11.1%the first half year, de-growth was prominent sincenew guidelines came into effect from nearly midof the previous year. During the second half year,private players registered almost flat growth.While rationalisation of distributors’ compensationwas a major factor impacting growth, regulatoryuncertainty around new product launches,ambiguity on the pension products, weak equitymarkets and high interest rates were some ofthe other variables that impacted new businessperformance.Performance ReviewBirla Sun Life Insurance (“BSLI”) completed 12years of its journey towards serving theprotection, health, retirement, children’s futureand wealth management needs of variedcustomer segments. During 2011-12, BSLIreported lowest de-growth among top 7 privatelife insurers and improved its private sectormarket share from 7% to 7.8%. It moved onestep up to rank 5 th among the private life insurers[Source: IRDA, www.irda.gov.in]. BSLI continues tofollow a successful multi-channel distributionstrategy with over 650 branches, about 139,000agents, 5 bank partners and about 200 third partydistributors.In 2011-12, new business premium income ofBSLI at ` 1,926 Crore de-grew year on year by7% due to the ULIP segment. Non-ULIP salesgained traction and contributed to 46% of BSLI’sindividual new business vis-a-vis 25% in theprevious year. BSLI has successfully transitionedits sales force from selling predominantlyULIPs to now having a balanced product mix.BSLI’s performance in the Group segmentwas also strong driven by improvement in theproduct lines. This has helped BSLI to achieve2 nd rank amongst private insurers in the groupsegment.Renewal premium rose by 10% to ` 3,959 Crore.The total premium income grew by 4% to ` 5,885Crore. The conservation ratio at 76% and the13 th month persistency at 82% signifycustomer stickiness and are among the best inthe industry.AUM grew by 7% to ` 21,110 Crore (about USD4.2 billion). BSLI continued to deliver superiorinvestment returns to its policyholders.During the year, operating expenses to premiumratio improved from 21.2% to 20.6% andcommission ratio reduced from 6.7% to 5.5%.Driven by rising profit from in-force business,declining expense ratios and changes in productmix and structures, earnings before tax of BSLIsurged by 51% from ` 304 Crore to ` 461 Crore.No capital infusion has been required since pasttwo years.With the strong emergence of profitability, BSLIdeclared its maiden dividend amounting to ` 98.5Crore @ 5% of its paid-up capital. Aditya BirlaNuvo received ` 73 Crore for its 74%shareholding.During the year under review, the Company filedseveral new products with the regulator to focuson under-penetrated segments and to broad-baseits product mix.Indian Life Insurance Industry : Growth in New business 1(` Crore)April 2011 to October 2011 toSeptember 2011 March 2012 2011-12New Y-o-Y New Y-o-Y New Y-o-YBusiness growth Business growth Business growthPrivate Players 8,742 -36% 14,941 -1% 23,683 -18%LIC 18,204 -12% 25,882 28% 44,086 8%Total 26,946 -22% 40,823 15% 67,770 -3%Note 1 : Weighted new business premium = 100% of regular first year premium + 10% of single premium (Source: IRDA, www.irda.gov.in)20 Annual Report 2011-2012
Aditya Birla Nuvo LimitedMANAGEMENT DISCUSSION AND ANALYSIS(` Crore)Birla Sun Life Insurance 2011-12 2010-11Branches (Nos.) Over 650 Over 600Agents ~139,000 ~150,000Assets under management (“AUM”) 21,110 19,760Individual First Year Premium 1,250 1,644Group First Year Premium 676 436First Year Premium 1,926 2,080Renewal Premium 3,959 3,597Premium Income (Gross) 5,885 5,677Less : Reinsurance ceded & Service tax (261) (166)Premium Income (Net) 5,624 5,511Other Operating Income 67 23Revenue 5,691 5,534Earnings before tax 461 304Net Profit 461 305Capital 2,450 2,450ABNL’s Investment 1,814 1,814MANAGEMENT DISCUSSION AND ANALYSISThe agency channel continues to be the largestdistribution channel for BSLI contributing to 71%of its individual new business sales during theyear. The bancassurance channel contributed 14%and Corporate Agents and Brokers accounted for15%. In 2011-12, BSLI ranked amongst the top 3private life insurers in terms of new businesssales from agency channel and has consistentlybeen in the top quartile in terms of front linesales staff productivity.OutlookThe last two years have been challenging for theIndian life insurance industry in terms of newbusiness growth. However, its long term growthprospects undoubtedly remain strong consideringthat India is still a fairly underpenetrated lifeinsurance market. The insurance density orinsurance premium per capita in India atUSD 55.5 is one of the lowest in the world(Source: Swiss Re Sigma, 2011). Also looking at theCapital Infusion and Profitability Trend of Birla Sun Life Insurance since Inception (` Crore)725Capital InfusionNet Profit/(Loss)603450461120303011060110211305-8-36-60 -78 -61 -61-1400-445-435-7022000-012001-022002-032003-042004-052005-062006-072007-082008-092009-102010-112011-12Annual Report 2011-2012 21
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Aditya Birla Nuvo LimitedSOCIAL REP
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Aditya Birla Nuvo LimitedENVIRONMEN
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FINANCIAL STATEMENTS
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Aditya Birla Nuvo LimitedAUDITORS
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Aditya Birla Nuvo LimitedSTATEMENT
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Aditya Birla Nuvo LimitedCASH FLOW
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Aditya Birla Nuvo LimitedNOTES FORM
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ADITYA BIRLA NUVO, ITS SUBSIDIARIES
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