Transcript Slide 1

Bajaj FinServ Limited
1
Table of Contents
Bajaj FinServ Limited
Overview of Financial Service Industry
Page 3-7
Bajaj FinServ : Objective & Performance
Page 9-11
Overview of Indian Insurance Industry

Bajaj Allianz Life Insurance

Bajaj Allianz General Insurance
Bajaj Auto Finance
Page 13-27
Page 29-30
Performance Summary

Bajaj Auto Ltd

Bajaj Holdings & Investment Ltd
Page 31-33
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Opportunities
Bajaj FinServ Limited
2005
INDIA – One
of the fastest
growing
economies
2006
3.3
United States
2.8
United Kingdom
Thailand
5.0
South Africa
5.0
5.9
Malaysia
2.2
Japan
5.5
Indonesia
9.2
India
2.8
Germany
2.0
France
6.8
Colombia
10.7
China
3.7
Brazil
0
2
4
6
8
10
12
Growth %
Source: United Nations Statistics Division www.data.un.org
 2nd fastest growing economy, after China
 Clocking an average growth rate of ~9%
 Expected to grow at ~8% over the next decade
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Bajaj FinServ Limited
Insurance Density
Thailand
110.1
USA
South Africa
855.8
Malaysia
292.2
India
38.4
0
100
16
10.5
4.8
Germany
160.9
Brazil
16.5
India
53.5
China
UK
Japan
69.1
Colombia
8.8
S Africa
200
6.7
China
300
400
500
600
700
800
900
2.7
0
2
4
6
Per capita premium US$
Size of Asset Management Market
United States
UK
1000
2000
3000
AUM $ Billion
18
1638.2
India (BSE)
4459.48
0
0
16
4535.08
China
3583
Japan
14
1103.34
Japan
5652
Germany
12
17773.05
South Korea
1812
Australia
10
Stock Market Capitalization
1038
India
8
Premium as a % of GDP
127
Immense
market
potential for
financial
investments
Insurance Penetration
4000
5000
6000
2000
4000
6000
8000
10000 12000 14000 16000 18000 20000
(US $ Bn)
 Under-penetrated market
 Low Insurance density with penetration under 5%
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Consumption Boom
Bajaj FinServ Limited
% to GDP
Credit to Private Sector
300
249
250
200
150
150
100
50
156
130
120
107
98
97
41
-
Low Debt to GDP
and
Savings largely
invested as
deposits
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Bajaj FinServ
Vision
Offer
Bajaj FinServ Limited
To grow for, and with, India
An entire range of financial
products and services covering
individual’s entire life cycle
 Lending
Cover
 Investments
 Protection
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Conceptual structure of BFS
Bajaj FinServ Limited
Bajaj Financial Services Group Structure
One Face
to customer
Distribution Company - Advice and Distribution of all financial products
customers
Focused
Product companies
Cons. Finance
Insurance
AMC
3rd Party
Products and risk
Consolidated
Backend activities
Group Shared Services opportunity
Process
Existing businesses
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Bajaj FinServ Limited
Bajaj FinServ Ltd
Financial Results
8
Bajaj FinServ Limited
Ownership
Consolidated entities
 Subsidiaries & associates
% holding
 Bajaj Allianz Life Insurance
74.0%
 Bajaj Allianz General
74.0%
 Bajaj Auto Finance
40.5%
 Bajaj Allianz Financial
50.0%
Distributors
 Bajaj Financial Solutions
Cost
 Other investments
7,891
100.0%
Market Value
7,588
Rs in million
Q1 /
FY09
Q1 /
FY08
FY 08
Key Business Statistics
Gross Written
Premium
Bajaj Allianz Life
Insurance
18,471
10,599
97,253
Gross Written
Premium
Bajaj Allianz
General Insurance
7,335
5,737
25,780
Funds Deployed
Bajaj Auto Finance
6,322
7,432
30,363
Wind energy
generated
Bajaj FinServ Ltd
118
71
348
164
142
731
Other revenues
All values in INR million unless specified otherwise
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Consolidated segment financials
Rs in million
Bajaj FinServ Limited
Q1 / FY09
Q1 / FY08
FY 08
22,495
13,414
111,275
(13,252)
6,641
9,949
9,243
20,055
121,224
Windmill
118
70
348
Investments & others
157
142
682
9,518
20,267
122,254
115
(698)
354
(404)
1679
(2139)
Windmill
20
( 25)
( 27)
Retail financing
12
16
83
Investments & others
122
135
628
Profit before tax
(429)
76
224
Profit after tax & minority interest
(362)
( 48)
(327)
Segment revenue
Insurance - Net premium earned
Investment & O.Income
subtotal
Total
Segment Profit / (Loss)
Insurance - General
- Life
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Financials - Standalone
Rs in million
Total Income
Q1/FY09 Q1/FY08
272
212
FY08
1,064
Employee cost
Depreciation
Other expenses
8
74
45
6
75
20
21
297
96
Total Expenses
127
101
414
Profit before tax
Provision for tax
Profit after tax
145
48
97
111
38
73
650
210
440
EPS (weighted average)
Dividend
0.7
0.6
3.1
20%
Bajaj FinServ Limited
Rs in million
as on
as on
as on
June 08 June 07 March 08
Sources of funds
Share capital
Reserves and surplus
Total shareholders funds
723
11,185
11,908
723
10,891
11,614
723
11,088
11,811
3,108
15,016
2,900
14,514
3,108
14,919
924
13,532
509
51
1,125
13,286
136
(33)
999
13,469
425
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15,016
14,514
14,919
82.3
80.2
81.6
SICOM ( on windmill )
Application of funds
Fixed assets ( net )
Investments at cost
Net current assets
Defered tax adjustment
Book value per share
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Insurance Industry
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The life insurance opportunity
Financial Year
Premium / GDP as %
FY 11 E
FY 10 E
FY 09 E
FY 08 E
FY 07
FY 06
Malaysia
• Only a third of the target population is
estimated to be insured
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
FY 04
Thailand
• Premium per capita is INR 1,500
against an average INR 6,750 for Asia
80000
70000
60000
50000
40000
30000
20000
FY 03
PR China
• Premium/GDP is at 4% compared to 6%-9%
developed countries
GDP INR Bn
India
Penetration levels still lower than
developed countries
UK
8,127
France
2,580
Low density, strong
GDP growth and
growing penetration =
favorable climate for
Life Insurance growth.
76,970
US
1,462
S.Korea
1,419
125,689
Japan
63,640
121,647
221,020
FY 05
Life insurance density (INR per Capita)
GDP
Premium / GDP
1 -Life insurance density – Swiss Re Sigma report 2006
2- Estimates by JP Morgan Associates
1USD = INR 43
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The Indian Insurance industry –
past, present and future
GWP INR Bn
5,000
Non life
4,500
4,000
16% CAGR 07-12
Life
3,500
3,000
20% CAGR 07-12
2,500
2,000
1,500
1,000
500
2003
2004
2005
2006
2007
2012
1 – Swiss Re estimates extended by 1 year – ASSOCHAM estimates 2010 extended by 2 years
2 – Mckinsey estimate 2011 $ 80 Bn - $ 100 Bn – we have considered $80 Bn plus 12.5% growth in 2012
Fiscal year ending 31 March
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The great Indian middle class
Source Mckinsey Global institute
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Building Bajaj Allianz
Insurance environment
until 2001
Start of Bajaj-Allianz JV
What we did differently
compared to our peers
Non-Life market
 Agency the only distribution
channel
 90% of business done
directly through 4,000 offices
of government companies
 No product innovation
 No incentive for good
service
 Cashless claim settlement
was unheard of
Non-Life
 Focus on retail
 Pioneered several
innovative services
 Tie-up with non-traditional
channels for distribution
of products like motor
dealers and
manufacturers, travel
agents, banks
Non-Life
 Tie-up with motor dealers
and manufacturers to increase
volumes
 Leverage IT and focus on
IT-enabled systems
 Create image for transparency
and innovation
 OPEX (Operational Excellence)
methodology (claims handling,
customer service)
Life market
 Only one Life company1 was
operating till 2001
 Products like unit linked
policies did not exist
Life
 Minimize set-up costs for
distribution
 e.g. Banyan tree
 Fast roll out for pan-Indian
presence
Life
 Fast and nationwide roll-out of
branches to leverage crosssell/ up-sell
 Focus not only on tier 1, but
also on tier 2 + 3 cities
How it all started
1)
Life insurance corporation (state owned company)
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Bajaj Allianz
Life Insurance Co.
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Bajaj Allianz Life - Market
Share on APE** basis
2007/08
Q1 2008/09
21.1%
14.2%
13.7%
15.4%
10.3%
8.1%
7.8%
6.2%
4.9%
ICICI
PRU
Bajaj
Allianz
SBI Life
Max NY
life
4.1%
4.6%
Birla SL
3.4%
Others
Pvt (12 cos)
ICICI
PRU
Bajaj
Allianz
SBI Life HDFC Reliance Others
Std Life Life
Pvt (12 cos)
LIC’s market share is 38% for YTD May 08 as compared to 48% as on 31st March ,2008
Source: IRDA website.
Fiscal year ending 31 March
** APE = 10% of Single Premium + 100% of Regular Premium
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Bajaj Allianz Life
• Amongst private insurers … during FY08
Second largest in new business premium
First position on number of policies issues
• Gross Written Premium – 82% Rs. 97 billion v/s Rs. 53 billion in P. Yr
• Market share – 10.3% v/s 7.4% in P. Yr on APE* basis
• Number of policies – 3.7 million v/s 2.1 million in P. Yr
• Unit linked funds increased by 111%
• 12 new products launched during the current year
• Currently 32 individual products & 9 product groups on offer
*APE = 10% of Single Premium + 100% of Regular Premium
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Performance Summary
Q1/FY09
Q1/FY08
FY 08
INR Bn
INR Bn
INR Bn
Gross written premium
18.4
10.5
97.2
New business premium
8.2
7.2
67.0
Net earned premium
18.4
10.5
97.1
Total income
Annualized premium
equivalent *
5.49
11.91
107.1
7.6
6.6
60.0
Policyholder surplus/(deficit)
0.66
0.70
1.98
Shareholder Profit/(Loss)
(0.69)
(0.40)
(2.13)
Profit / ( Loss )
Net contribution to policy
holders account
(0.03)
0.30
(0.15)
0.9
0.5
2.9
Rs. In billion
*APE = 10% of Single Premium + 100% of Regular Premium
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Shareholders funds & Investments overview
Rs. in million
Share Capital
Share premium
Sub-total
Balance in P & L
account
Total
as on
June 08
as on
Mar 08
INR Mn
INR Mn
1,507
10,600
12,107
(5,596)
1,507
10,600
12,107
(4,899)
Shareholders
Traditional
Policyholders
Unit Linked
Policyholders
6,511
7,208
Total
Rs. in million
as on
June 08
as on
Mar 08
INR Mn
INR Mn
10,043
11,459
17,043
14,687
103,922
109,542
131,008
135,688
Total capital infused during the year – Rs. 5,101 million
Efficient capital management
Gross Written Premium to Share Capital 2007/08
Bajaj Allianz Life
8.04
SBI Life
HDFC SL
ICICI Pru
5.62
3.66
3.60
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New Business Achieved Profit
(NBAP) trend
APE**
NBAP
INR Mn
INR Mn
2008/09 Q1
7,640
1,487
2007/08 Q1
6,581
1,468
FY 2007/08
59,953
12,029
FY 2006/07
32,330
7,036
Period
NBAP Comparison with other Life Companies might not be very relevant as actuarial
Assumptions & methodology used are likely to vary from Company to Company,
in the absence of any common agreed process
** APE = 10% of Single Premium + 100% of Regular Premium
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Bajaj Allianz
General Insurance Co.
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Bajaj Allianz General (Q1/FY09)
 Amongst private insurers, during FY08, maintained second position
in terms of GWP
 GWP –
28%, Rs.7.3 billion v/s Rs.5.7 billion in Q1/FY08
Market share –
8.5% v/s 7.4% in Q1/FY08
 Net premium earned– 43% Rs.4.1 billion v/s Rs.2.8 billion in Q1/FY08
 Number of policies sold – 1.8 million v/s 1.4 million in Q1/FY08
 Investible surplus – Rs. 22.6 billion
 Strong retention ration – increased to 72% from 66%
 Losses from Motor Pool estimated at Rs 120 million v/s Rs 90 million
proportionately in Q1/FY08
 Bancassurance, direct retail channels growing above 60%
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Performance Summary
Q1/FY09
Q1/FY08
FY08
Gross written premium
7.34
5.74
25.8
Net earned premium
4.06
2.84
14.1
Net Insurance Income
0.60
0.63
2.9
Rs. in billion
Underwriting profit
excluding pool losses
(0.24)
0.03
0.2
Underwriting profit
including pool losses
(0.36)
(0.06)
(0.2)
Profit before tax
0.12
0.26
1.7
Profit after tax
0.07
0.13
1.1
Loss ratio
72.2%
69.9%
66.7%
Combined ratio
excluding pool losses
105.8%
98.9%
98.5%
Combined ratio
including pool losses
108.7%
102.1%
101.5%
Retention ratio
71.9%
65.9%
69.1%
As on
June 08
As on
March 08
Cash and
investments
22.62
20.48
Other assets
4.44
4.20
Insurance reserves
18.53
16.36
Other liabilities
2.73
2.58
Net worth
5.80
5.75
Free cash flow
2.16
5.04
Rs. in billion
Focus on cash flows,
growth in invested surplus.
Free cash flow = increase in invested surplus net of financing cash
flows
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Changing business mix
Business Mix-Market
Business Mix- Bajaj Allianz
Corporate
Corporate
Motor
Motor
Health
Health
Others
Others
0%
10%
20%
2007/08
30%
40%
2006/07
50%
60%
0%
10%
20%
30%
Q1 2008/09
40%
2007/08
50%
60%
70%
2006/07
By 2012, it is expected
that Motor and Health
will constitute more than
two thirds of the market
To capitalize on the growing health and motor segments and with corporate pricing
under pressure, Bajaj Allianz has increased its presence in retail business
26
Capital Efficiency – FY08
Share
capital
Share
premium
Total
capital
brought in
ICICI
3774
5933
9707
33447
3.45
10.2%
Bajaj Allianz
1102
1666
2768
24043
8.68
21.5%
Reliance
1072
4998
6070
19464
3.21
Negative
ITGI
2200
300
2500
12358
4.94
2.4%
TATA
2250
0
2250
8134
3.62
6.4%
Rs. in million
GWP
FY08
GWP/
Equity
Return
on Equity
Bajaj Allianz is the benchmark for efficient use of capital
Highest return on equity in the private sector
Return on equity is on simple average equity. GWP as per IRDA website
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Bajaj FinServ Limited
Bajaj Auto Finance
– Retail Financing
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Vision
Bajaj Auto Finance
Develop a Unique Business Model
focused on delivering range of
consumer lending products to Indian
Middle Class serviced by best in
breed specialists
Leading financer of …
~ Two wheelers
~ Consumer durables & personal computers
~ Personal loans
New business lines
~ Securitization
~IPO financing
~ Loans against shares ~Loans against
property (to launch)
~ Personal loans
>Cross-sell >Small business loans
Strategy
Bajaj FinServ Limited
Plug & Play Model for accelerated growth
 Innovate to grow – Product and services
• Build and launch innovative products
• Offer full product suite
• Leverage existing gaps of “service
differentiation” in the market
 Forging Business Partnerships
• Build partnerships with consumer databases
• Leverage distribution & customers to build
faster growth engines
 Scalable Operating Platform
• Outsource Technology & Operations for
variable cost structure
• Own / Automate risk & underwriting process
 Leverage CRM Capabilities
• Sell more & more to each customer
• Acquisition and operating cost advantage
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Bajaj FinServ Limited
Business Performance
Financial Performance
Q1/FY09
Q1/FY08
2007 –
08
Automobiles
2,072
3,584
14,844
Total Income
Consumer Durables
1,327
2,344
6,307
Personal Computers
612
1,398
4,628
Personal Loans
915
106
1,627
Rs. in million
Securitized retail
asset pool
Total Disbursals




4,926
7,342
2,597
30,363
Q1/FY09
Q1/FY08
2007 –
08
1,282
1,052
5,027
Interest &
Finance charges
435
378
1,704
Other Expenses
792
609
2,975
Depreciation
10
5
48
Provision for tax
15
18
99
Profit for the
year
30
41
201
Rs. in million
Asset base of Rs. 27 billion
Book value per share – Rs. 291
Capital adequacy ratio – 40% ( RBI norm – 12% )
Earning per share ( diluted ) – Rs. 0.82 in Q1/FY09 v/s
Rs. 1.12 in Q1/FY08 & Rs. 5.68 in P. Yr
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Bajaj FinServ Limited
Thank you
No part of this presentation is to be circulated, quoted, or reproduced for any distribution without prior written
approval from Bajaj FinServ Limited, Mumbai-Pune Road, Akurdi, Pune-411 035, India.
Certain part of this presentation describing estimates, objectives and projections may be a “forward looking
statement” within the meaning of applicable laws and regulations. Actual results might differ materially from those
either expressed or implied. Undue reliance should not be placed on such statements & values because by their
nature, they are subject to known and unknown risks and uncertainties and can be affected by numerous factors that
could cause actual results to differ materially. This material was used by Bajaj FinServ Limited during an oral
presentation; it is not a complete record of the discussion.
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