Reliance Life launches Classic Plan II

Reliance Life Insurance Company (RLIC), part of ADAG’s Reliance Capital Ltd, on Thursday launched a new unit-linked plan, called Classic Plan II, that offers customers dual benefits of insurance protection and market-linked return.

Announcing the launch here, Mr Malay Ghosh, President and Executive Director, Reliance Life, told reporters that this was the first time that the company is introducing a new life cover option in its unit-linked investment plan portfolio that offers the customer life cover benefit equal to the sum assured or the fund value, whichever is higher.

The existing ULIP plans in RLIC’s portfolio offer life cover benefit equal to the sum assured plus fund value.

The plan offers regular as well as single premium options. The premium for the regular option starts at Rs 15,000 and for the single premium at Rs 50,000. The policy terms under the plan will be 15 to 30 years.

Reliance Life has Rs 17,855 crore worth of assets under management. Seventy per cent of its premium comes from the traditional policies and 30 per cent from ULIPs.

Reliance Life launches new money-back plan

Anil Ambani Group controlled Reliance Life Insurance Ltd is planning to engage young graduates and housewives to break into the rural and semi-urban markets.

Unlike the traditional model of paying commission to insurance agents on the basis of business generated by them, Reliance Life plans to engage fresh graduates on a trainee basis on a fixed stipend to distribute its products.

This apart, the company also plans to employ young women freshly out of college or housewives at a fixed monthly salary in select locations, said Mr Malay Ghosh, Executive Director and President, Reliance Life.

Reliance Life, Mr Ghosh said, will report accounting profits this year.

Financial outlook

However, the company, which had expected to break even in the next three years, will be able to do so only after five years.

“For the last 18 months we have been making profits on a month-on-month basis. We are hopeful of making accounting profits this year. However, we will take five more years to break even because of the recent regulatory changes in the industry,” he pointed out.

The company today unveiled protection riders for its existing policies and also launched a new product — Reliance Life Insurance Guaranteed Money Back Plan. This apart, the company will also launch a unit-linked product — Classic II — by the end of this month.

shobha@thehindu.co.in

Insurance venture: Bharti ends talk with Reliance

Bharti Enterprises and Reliance Industries on Friday terminated talks for the stake sale in Bharti AXA insurance companies due to differences over issues related to long term vision and joint governance.

“AXA, Bharti, Reliance Industries (RIL) and its associate Reliance Industrial Infrastructure (RIIL) announced today that they have mutually agreed to terminate their negotiations on the proposed acquisition by RIL and RIIL of Bharti’s shareholding of 74 per cent in Bharti AXA Life Insurance and Bharti AXA General Insurance,” Bharti said in a statement.

In a separate statement, RIL said the talks were terminated as parties had failed to “reach agreement on long—term vision and joint governance of the ventures.”

After nearly five years of its association with France’s AXA, Bharti had in June announced it would exit from the financial services JVs and sell its entire 74 per cent stake in both general and life insurance businesses. Industry experts had valued the deal at around Rs 5,000 crore.

“Bharti AXA Life and Bharti AXA General Insurance will continue to develop their operations in India, as they have successfully done over the past years, and build a sustainable and long—term business by tapping the significant growth potential offered by the Indian market,” it added.

The company had entered into these joint ventures with the AXA group in 2006 and held 74 per cent stake in both these ventures - Bharti AXA Life Insurance and Bharti AXA General Insurance.

Mutual funds hike exposure to Reliance Industries; lower valuations attractive

NEW DELHI: Shares of Mukesh Ambani-led Reliance Industries may have traded weak on the bourses in the recent months, but mutual funds have enhanced their exposure to the stock, attracted by its lower valuation.

More than 200 mutual fund schemes purchased fresh RIL ( Reliance Industries Ltd) shares, worth an estimated Rs 1,500 crore at current value, during the last quarter.

In contrast, about 100 schemes sold RIL shares from their portfolio during the quarter ended September 30. These shares are worth about Rs 350 crore at the current market price.

The MF schemes having purchased fresh RIL shares during the quarter also included those from Anil Ambani-led group's Reliance MF, the country's biggest fund house.

Interestingly, the RIL stock fell sharply by about 11 per cent during the July-September 2011 quarter.

In the past one year, RIL stock has dipped by over 20 per cent and hit a 52-week low of Rs 713.55 on August 26, 2011 and is currently trading near Rs 884 level.

But, RIL figures prominently on the portfolios of various MF schemes, by virtue of being the country's most valued firm and its high weightage on key market indices including Sensex.

MFs collect money from various investors, including the retail participants, for their different schemes and then invests the same in stocks, bonds and other securities.

One fund house generally runs a number of schemes for different market segments.

RIL is the second most-held stock after ICICI Bank by all the fund houses together. It figures on the portfolios of more than 300 MF schemes and all the funds together held RIL shares worth about Rs 6,800 crore at the end of September.

An analysis of quarterly portfolio disclosures of various funds shows that as many as 210 schemes together bought more than 1.7 crore fresh shares of RIL during the last quarter.

On the other hand, about 41 lakh RIL shares were sold by a total of 97 MF schemes during the quarter.

Only two schemes, belonging to Franklin Templton MF, had no change in their RIL holding during the quarter.

Those having sold RIL shares included only one Reliance MF scheme, while about a dozen schemes of the fund house purchased fresh RIL shares during the quarter.

Besides, the shares were also bought by various schemes of ICICI Pru, UTI, HDFC, Birla Sunlife and Franklin Templeton.

Interestingly, Reliance MF had lowered its exposure to RIL in the last fiscal.

On its part, RIL continued to avoid Reliance MF for its investment needs during the fiscal ended March 31, 2011, even as it parked money in a host of schemes from other funds.

A host of other funds had cut their RIL exposure during the last fiscal and the stock lost its position as the top- held stock for overall mutual fund space to ICICI Bank.

Source: EconomicTimes

Dhanlaxmi shares tank on window-dressing charges

Kerala-based Dhanlaxmi Bank’s stocks tanked on Tuesday on allegations that the bank had resorted to window dressing and that its profitability was under pressure. The allegations were made by an employees association. The Thrissur-headquartered bank’s management, however, refuted all charges.

The All-India Bank Officers Confederation (AIBOC) has written to the Reserve Bank of India (RBI), expressing concerns over the financial health of the bank. The employees association also opposed the extension granted to chief executive Amitabh Chaturvedi for a period of three years. “If the present management continues to be at the helm, the situation may deteriorate further,” said G D Nadaf, general secretary, AIBOC.

The 1927-founded bank's stock slumped 24.22 per cent in intra-day trade to touch a two-year low. However, it gained later, following the management’s denial of the mismanagement charges. The stock closed at Rs 64.45, down 10 per cent compared to its previous close.

The officers association has highlighted several concerns like the dependence on over-night borrowed funds, the capital adequacy ratio, and accused the bank of no real growth in the last six months. The association also alleged the bank was turning away from social banking by not catering to small agricultural borrowers, and levying high service charges.

However, in a detailed statement, the management said, “Dhanlaxmi Bank would like to unequivocally reiterate that all such allegations are baseless, and represent a motivated attempt by one of the employee associations de-recognised by the bank.”

“Moreover, the central bank had, last week, granted the bank's managing director and chief executive, Amitabh Chaturvedi, a second term of three years. The re-appointment is an affirmation of the fact that the audits and inspection of the bank's books have found nothing amiss,” the bank added.

In late 2008, the bank had put in place a new management team, headed by Chaturvedi, who earlier worked with aggressive organisations like Reliance Capital and ICICI Bank. Chaturvedi, with his new team, shrugged off the image of a regional lender and had chalked out plans to become a pan-India bank. After Chaturvedi's induction, the bank registered a whopping 229 per cent growth in advances between December 2008 and June 2011, and diversified its loan book, with emphasising on retail banking. The new management also unveiled a new logo for the bank and shifted treasury operations to Mumbai, though the bank continued to be headquartered at Trissur.

Dhanlaxmi's aggression on lending, branch expansion and venturing into newer businesses had also promoted the central bank to ask it to modify its speed. The bank, however, said it would consolidate its business this financial year, as business remained subdued due to the tight monetary policy.

Source: Business Standard

Reliance mutual fund pips HDFC MF to become most profitable fund house

NEW DELHI: Reliance mutual fund has overtaken HDFC mutual fund to become the country's most profitable fund house, as per their profit figures for the latest financial year.

For the financial year 2011, profit after tax of Reliance MF stood at Rs 261 crore, while that of HDFC MF was Rs 242 crore.

On year-on-year basis, Reliance Asset Management company's PAT rose by as much as 34 per cent in the Fiscal 2011, whereas HDFC MF's profit increased by 16.34 per cent, according to the Association of Mutual Funds in India's data.

While UTI MF's figures were not available for the latest fiscal, Franklin Templeton is currently ranked the third most profitable with a PAT of Rs 97 crore (for fiscal year ended September 2010).

Most of fund houses follow April-March financial year. Others in the top ten include Birla Sun Life AMC with a PAT of Rs 85 crore, followed by SBI AMC (Rs 79 crore), ICICI Prudential AMC (RS 72 crore), DSP AMC (47 crore), Tata AMC (17 crore) and Kotak AMC (Rs 11 crore).

Meanwhile, on September 27, speaking at the Annual General Meeting of Reliance Capital, Anil Ambani had said that the talks for a stake sale in its asset management business to Nippon were also in advanced stages.

The company also plans to take its asset management businesses to other emerging markets and would look at further expansion of its wealth management and private equity businesses, Ambani had said.

Source: Economic Times

HDFC MF overtakes Reliance MF to become largest fund house

NEW DELHI: HDFC Mutual Fund with an average asset base of Rs 91,827.11 crore has overtaken Reliance MF to become the country's largest asset management company.

This is the first time since 2009 that the average assets under management (AUM) of Reliance MF fell below the Rs 1 lakh crore.

At the end of September, the AUM of Reliance MF declined by Rs 10,598.72 crore or 10 per cent to Rs 90,660.60 crore.

HDFC MFs asset base too witnessed a decline of Rs 205.79 crore or 0.2 per cent to Rs 91,827.11 crore at the end of September.

Reliance Capital Asset Management CEO Sundeep Sikka had earlier said that the company was focusing on increasing its retail customers base, rather than on bringing AUM through institutional investors.

As at the end of September the average assets managed by the mutual fund industry, consisting of 41 active players, stood at Rs 7.12 lakh crore.

The MF industry witnessed decline in their average AUM by Rs 31,255.34 crore or 4.2 per cent, as per the data available with industry body Association of Mutual Fund Industry (AMFI).

The combined average AUM was Rs 7,43,083.91 crore in end-June.

Besides, ICICI Prudential MF and UTI MFs assets declined 5.7 per cent and 9.4 per cent. At the end of September quarter, ICICI Prudential's AUM stood at Rs 75,217.10 crore and UTI MF's at Rs 62,579.86 crore.

The industry has seen an AUM decline of 5 per cent in December quarter and 2 per cent in March quarter. This was followed by a 6 per cent increase in the June quarter.

As many as 22 players witnessed a decline in their AUM in the September quarter.

Among the other players Birla Sun Life MF saw their average assets declining 4.8 per cent to Rs 64,217.03 crore. Also SBI MF average AUM fell 0.3 per cent to Rs 47,731.39 crore.

Source: Economic Times

RBI OK's Reliance Cap's RL stake sale

Mumbai: The Anil Dhirubhai Ambani Group's (ADAG) financial services arm Reliance Capital today said it has received approval from the Reserve Bank of India (RBI) for its proposed 26 per cent stake sale in Reliance Life Insurance to Japan's Nippon Life.

The company had signed a definitive agreement to sell a 26 per cent stake in Reliance Life Insurance to Nippon Life Insurance for Rs 3,062 crore earlier this year. The deal was subject to regulatory approvals.

The Insurance Regulatory Development Authority (IRDA) has already granted in-principle approval for the proposed stake sale. Following RBI clearance for the deal, IRDA will now grant final approval for completion of the transaction, Reliance Capital said in a filing to the Bombay Stock Exchange.

Commenting on the development, Reliance Capital CEO Sam Ghosh said, "We are delighted to receive the RBI approval, bringing us closer to concluding this transaction very shortly."

"This is great news as we move closer to completing the transaction," Nippon Life Insurance President Yoshinobu Tsutsui said.

This transaction pegs the total valuation of Reliance Life Insurance at around Rs 11,500 crore.

Nippon Life is a 122-year-old Global Fortune 100 company and the seventh largest life insurer in the world. It is a leading private life insurer in Asia and Japan.

R-Cap figures among the country's top-four private sector financial services and banking groups in terms of net worth.

Source: Financial Express

Corporates welcome RBI's draft norms on banking licences

Mumbai: Welcoming the Reserve Bank's draft guidelines on granting new bank linceces, corporates and analysts on Monday said the norms would pave the way for entry of business houses into the banking space.

"We welcome the draft banking guidelines. Clearly, based on eligibility criteria, Aditya Birla Nuvo, which enjoys a significant presence across several key financial services businesses, would fit into the criteria," Aditya Birla Nuvo Chief Financial Officer Sushil Agarwal said.

Terming the paper as a well-thought out piece, analysts said the draft incorporates a lot from the consultative process held after the the discussion paper floated by the RBI in August, 2010.

"Overall, this is a good set of guidelines. They give a clear set of directions about the entry of corporates which is welcome," consultancy firm Ernst and Young's Director Viren Mehta said.

"The draft guidelines are definitely in line with the discussion paper and views expressed subsequently also have been taken into consideration," G S Sundararajan, Managing Director of finance company Shriram Capital, said.

He said the group will be analysing the details and looking if it can come up with a profitable model. The company's interest in banking continues, Sundararajan added.

"The draft guidelines contain a strong focus on greater financial inclusion, efficient corporate governance, adequate controls on exposure to group companies, and time-bound milestones for listing. We now look forward to the release of the final guidelines over the next few months," Sam Ghosh, CEO, Reliance Capital, said.

"Our group will be keen to explore a banking licence. Our long experience of two decades provides us with the necessary understanding and strength in the financial services domain," diversified conglomerate Mahindra and Mahindra's President (Finance, Legal and Financial Services) Uday Phadke said.

"What is important is that they have chosen to create a level-playing field, there is nothing there which will offend an existing player," consultancy firm PricewaterhouseCoopers' Associate Director Robin Roy said.

Source: Financial Express