The Government is preparing a new National Agriculture Insurance Scheme to make it more inclusive for farmers of the country.

Union Food and Agriculture Minister Sharad Pawar  on Tuesday said in the Lok Sabha,  that the scheme takes into consideration, factors like larger unit area of insurance among low indemnity level and inadequate coverage of risk.

According to the minister the scheme has been prepared after studying improvements in the existing crop insurance schemes.

Sharad Pawar informed the House, that over 4.6 million farmers have been paid claim amount under the present crop insurance scheme and 19 million (one crore ninety lakh) farmers have been brought under its cover.

Pawar stated that there is no fixed target for the scheme but the number of farmers being covered under it is continuously increasing over the years. (ANI).

(source:- blog.taragana.com)

Orient Global invested Rs 500 Cr in India Infoline in  2008  and has exited apparently at a loss of more than 50%.

 Richard Chandler led investment firm Orient Global has exited its one and half year old investment in financial services group India Infoline,  at a loss of more than 50% .  Orient Global had invested in India Infoline at the time when share market was at it’s peak  and at the end of March’08 held over 11% stake through two funds—Orient Global Tamarind Fund Pte and Orient Global Cinnamon Capital Ltd.

 Orient Global had picked stake through a preferential allotment in early 2008 after striking the deal in November 2007. It had picked 3.7 million shares at a price of Rs 1,500/share costing about Rs 550 crore (after stock split the shares cost works out to Rs 300/share) and valued the firm at Rs 8,564 crore (~$2.1 billion at that time).

 It is still not clear that what happened to the other two deals—insurance broking and consumer finance business of India Infoline. Consumer finance in particular has been hit hard by the economic slowdown and many firms in the business have either rolled back their exposure or exited the space completely.

According to government raising foreign direct investment (FDI) cap in the insurance sector to 49 per cent will not result in automatic change of management in a company.

“Increase in foreign equity holding limit to 49 per cent in the insurance sector would not result in change in management control automatically”, Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply in the Lok Sabha.

The government is planning to propose the raise in FDI cap in private sector insurance companies from 26 per cent to 49 per cent and a bill to give effect to the proposal is pending in the Rajya Sabha.

The Insurance Laws (Amendment) Bill, 2008, which was introduced by the government in the Rajya Sabha in December 2008, provides for enhancement of share holdings by a foreign company, either by itself or through its subsidiary firms or its nominee in India insurance companies from 26 per cent to 49 per cent, except in case of insurance co-operative societies where the limit continues to be 26 per cent.

Scindia  said that there is no proposal to extend the limit of FDI in banking and media. At present, FDI up to 26 per cent in media sector and 74 per cent in banking is allowed. ”

(source:- business-standard)

There are total 35 asset management comapies in india in india managing Rs 6,70,012 crore. The industry’s penetration is estimated at 4-5 % as against 10-15 % for insurance. There are around 3 million agents for insurance products but just 80,000 distributors for mutual funds.

Insurance is no doubt a life covering investment plan, but sold more as a tax saving investment scheme.In terms of selling, both mutual funds and insurance are ‘push’ products. However, a distributor has a higher incentive to sell the latter because of the opportunity to earn a higher commission. An agent selling insurance earns a commission of 25-40 % of the initial premium and a trail commission of around 5%. However, the commission in case of mutual funds is never more than 2-2 .5%.

 State Bank of India  introduced group micro insurance product in association with SBI Life Insurance named ‘Grameen Shakti’ for the weaker sections of the society.

It will be limited  only for the members of Self Help Groups (SHG) and will provide life insurance cover at a very low cost of Re 1 per day, SBI said in a statement.

The close ended scheme, will remain open for 45 days between August 1 and September 14, 2009.

A dual-benefit life insurance plan provides cover for 5 years and the premium payable is Rs 361 per annum per member (inclusive of service tax) for a sum assured of Rs 30,000.

On death of the Group member, the nominee receives the sum assured, it said, adding, on the other hand, on maturity of the plan the group member, if alive, receives 50 per cent of the premium paid for a 5 year term.

The age limitof a person must be between 18 to 50 years and linked to SBI. No medical check up is required for joining the Scheme, it said

 After facing  a Rs 26-crore marked-to-market loss in FY09 (April-March), SBI life has bounced back with 38 - crore profit in Q1FY10. It has helped the company wipe out earlier losses and carry forward Rs 17 crore to the balance sheet.

The turnaround has been facilitated by a resurgence of equity markets. This has reversed the insurer’s marked-to-market losses on its equity investmentsWhile the policy holders bears the entire investnment risk for equities purchased by unit linked insurance plans (ULIPs) life companies have to make provisions on their traditional portfolios. Although private life insurers have been around for 10 years, most continue to make losses, because of accounting losses which do not let them amortise acquisition costs over the term of the policy. SBI Life is one of the very few companies to report a netprofit

Despite a 6% decrement in new business premium income at Rs 1,073 crore at the end of the first quarter, SBI Life has succeeded in becoming the No.1 life company in new business as its nearest rivals have seen a greater decline in their premia.

US Roy, MD, SBI Life, told ET “SBI’s brand and its distribution network have enabled us to become a leading player with a paid-up capital of Rs 1,000 crore. Last year, we expanded our business without any capital requirement”.

Big Indian banks and financial institutions such as State Bank of India (SBI), Life Insurance Corporation (LIC), General Insurance Corporation (GIC), Bank of Baroda (BoB) and IDBI Bank are helping Reliance Equity Advisors, which is of the Anil Dhirubhai Ambani Group, mop up around Rs 1,500 crore.

While this has been tied up in less than three months, the company is expecting to raise another Rs 500 crore over the next two weeks, Reliance Equity Advisors Chief Executive Officer Ramesh Venkat told Business Standard in an interview. He, however, did not disclose the investors.

“We plan to make two investments every quarter. The average deal size will remain around Rs 150 crore. We will soon start with the second round of fund raising after investments from this fund picks up,” Venkat said.

the large banks and insurers such as SBI, BoB, IDBI Bank, LIC and GIC have invested around Rs 100 crore each, some of the old-generation private banks, which are among the dozen investors, have chipped in with Rs 30-50 crore each.

“We are seeing active participation by domestic players in PEs. As the overseas sources have not yet revived, raising capital from abroad can be difficult. PEs will soon shift their focus to India since the market is untapped and opportunity is huge,” Venkat said.

However, he mentioned that Reliance Equity Advisors was not averse to raising funds from abroad. It planned to invest in education, logistics and infrastructure services among others. It will make its first investment in August. The company has a pipeline of around 12 companies. In the first two companies, it will make an investment of Rs 150 crore each.

Source: Business Standard

Insurer American International Group Inc. said on Tuesday that it closed the sale of its life insurance premium finance business for $679.5 million in cash.

AIG sold a majority of the U.S. life insurance premium finance portfolio of AIG Credit Corp. and A.I. Credit Consumer Discount Co. to First Insurance Funding Corp., a subsidiary of Wintrust Financial Corp. of Lake Forest, Ill.

Upon meeting certain conditions, First Insurance Funding will also purchase an additional amount of certain specified life insurance premium finance assets for $61.2 million, AIG said.

The property-casualty premium finance business of A.I. Credit was not included in the deal.

During the credit crisis last fall, the U.S. government rescued AIG from the brink of collapse with a loan bailout package worth up to $182.5 billion. The government now owns roughly 80 percent of the huge insurer. AIG is now shedding assets and cutting costs as it restructures.

Shares of AIG rose 35 cents, or 2.7 percent, to close at $13.35, while shares of Wintrust Financial jumped $2.14, or 12.3 percent, to $19.52.

UTI Asset Management Company has partnered with HSH Nordbank and Kuwait’s Noor Financial Investment Company to launch a $500 million infrastructure fund.

The fund, India Infrastructure Development Fund (IIDF), will make private equity investments in infrastructure projects in India, including the projects which are being offered to private developers under the public-private partnership (PPP) model. India has been promoting the PPP model, a collaborative model between private developers and the government, to address its infrastructure gap, specifically in the areas of roads, ports, airports and power generation.

UTI AMC is the investment management arm of UTI mutual fund. As of June 30, 2009, UTI MF had average assets under management of Rs680 billion ($14 billion) raised from 78 domestic schemes and more than 9 million investor accounts. The sponsors of UTI MF are all government-controlled entities, namely State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India.

At ASSOCHAM organised National Summit on ‘Indian Insurance Industry’ Mr. J. Hari Narayayan Chairman IRDA said “Insurance regulator and Securities & Exchange Board of India (SEBI) have commenced dialogues to finalise mergers and acquisition guidelines in insurance sector”.

In a couple of months IRDA will finalise directives and detailed guidelines for Mergers & Acquisitions in the Insurance sector as also examine possibilities to hike existing insurance agent’s commission rates to increase their productivity.

“Since the process is just begun between IRDA and SEBI, it would take couple of months before the IRDA unveils such guidelines to give a new dimension to insurance sector”, said Narayan.

Minister of State for Finance, Namo Narain Meena emphasised that one of the important challenges before Insurance industry today is to generate required level of awareness for insurance particularly in people living in semi-urban and rural areas.

One of the criticism against the liberalisation in the insurance sector was that the private insurance companies might not cater to the requirement of rural and social sector on commercial consideration. It is, therefore, in the self interest of the insurance companies to find ways and means to explore rural sector because growth of insurance sector will crucially depend on the extent to which the vast potential in rural sector is tapped by companies”, said the Minister

The lower penetration of general insurance is also one of the concern for insurance companies. The reason for the problem is the lower penetration in rural and semi rural ares.