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Posts Tagged ‘Fortis’

Disclaimer: The Indian regulatory framework ensures that Indian insurance companies are well protected. India has to a large extent has been insulated from the fallouts of the global financial meltdown. Policyholders and depositors are safe from problems that may arise outside the country. This article is not a comment on any Indian financial insitution’s financial position.

When the ICICI Bank foreign exposure of 8 per cent on Leehman Brothers became news, I was wondering about the IDBI Fortis Life Insurance Company. With more news coming forth on Fortis and BNP Paribas, I wanted to know if it will have any impact on the Indian JV.

And true to expectations, the next insurance company in line to reassure policyholders is IDBI Fortis’s MD & CEO Nageswara Rao saying, “It (global crisis) not going to have any impact on IDBI Fortis.”

So in a statement identical to those issued by Tata AIG Life and General Insurance Companies and ICICI Prudential Life Insurance Company, IDBI Fortis Life says its solvency margin is above the regulatory requirement of 150 per cent and has a capital base of 2 billion rupees.

Ironically, a high solvency margin while meaning a good safety net, also means less profitability; company not realising its full potential through investments.

Cute Ad campaign on www.bosskaboss.com.:

IDBI Fortis Life has come up with ad campaign, starring a comic hero Rajinikanth for one of its insurance products. Its all about how Rajinikanth doesn’t need cigarettes or his muscles to defeat his enemies anymore. He just needs insurance from IDBI Fortis.

The person, who forwarded the mail to me on the ad,  very rightly pointed out that while it was a nice initiative it might not work. Rajinikanth being a mass hero, such an ad campaign aired on TV channels might work, but on the net it becomes very Tamil Nadu specific and would be appreciated only by the small minority who are Rajinikanth fans and are net savvy people eligible for insurance.

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I oppose P. Chidambaram’s latest attempts at economic reform because

a) Its a misnomer. They should call it economic malforms. These reforms are pro-MNCs not pro-people or pro-Indian companies.

b) Its going to increase the FDI cap in insurance from 26% to 49%. All the private insurance companies in India are joint ventures between an Indian company and a foreign one. If the foreign companies’ stake increases, it translates to more power for them or neo-imperialism of the captialist kind. Of the 50 odd insurance companies in India, the majority are private insurance companies.

To give you a list of how much foreign influence is there in insurance at present, the list of joint ventures:

  • Bajaj Auto Ltd (Indian) + Allianz (Foreign)= Bajaj Allianz Life Insurance Co, Bajaj Allianz General Insurance Co
  • Aditya Birla Group (Indian) + Sun Life Financial (Foreign) = Birla Sun Life Insurance Co
  • HDFC Bank (Indian) + Standard Life (Foreign) = HDFC Standard Life Insurance Co
  • HDFC Bank (Indian) + Ergo (Foreign) = HDFC Ergo General Insurance Co
  • ICICI (Indian) + Prudential (Foreign) = ICICI Prudential Life Insurance Co
  • ICICI (Indian) + Lombard (Foreign) = ICICI Lombard General Insurance Co
  • Max India + New York Life (Foreign) = Max New York Life Insurance Co
  • Max India + BUPA (Foreign) = Max BUPA Health Insurance Co
  • Tata Group (Indian) + AIG (Foreign) = Tata AIG Life Insurance Co, Tata AIG General Insurance Co
  • Bharati (Indian) + AXA (Foreign) = Bharati AXA Life Insurance Co
  • Future (Indian) + Generali (Foreign) = Future Generali Life Insurance Co
  • IDBI (Indian) + Fortis (Foreign) = IDBI Fortis Life Insurance Co
  • Aegon (Indian) + Religare (Foreign) = Aegon Religare Life Insurance Co
  • IFFCO (Indian) + Tokio (Foreign) = IFFCO Tokio General Insurance Co
  • Apollo Group (Indian) + DKV (Foreign) = Apollo DKV Health Insurance Co

I have noticed that the recommendations of the last FICCI or SICC meeting always get enacted as laws in the next Parliament or Assembly session. All these joint ventures have signed agreements with a clause that should the market open up, the foreign companies’ stake can increase to as much as 50 %. And going from 50 % to 75 % would be short journey for the next government in power.

In the latest, Max BUPA Board meeting on July 13, the company issued a statement that BUPA could increase its stake to 50% if the FDI cap was increased.

July 24, Union Finance Minister P.Chidambaram announces that the government would carry out economic reforms without the interference of the Left. He proposes to increase the FDI ceiling limit to 49%.

I also oppose it because

c) of the Pension reforms. The government is planning to enact the PRFDA Bill. In lay man’s terms, it means the pension amount for government servants will go down.

d) I have a gut feeling its going to mean higher petrol and diesel prices. I wish the government would answer the question as to why petrol costs Rs 17 in Pakistan and Rs 56 in India? Apart from the arguments that Pakistan is a Muslim country and that India has more consumers, more cars, more people, I’d like to know why the difference is so high?

e) The last time P.C.’s boss, Mr Manmohan Singh opened up the market in 1993 with his economic reforms,

  1. we had the Controller of Capital Issues, which decided the prices and number of shares that firms could issue, abolished.
  2. We had tarrifs for companies reduced from 85 % to 25 %. (Why not reduce the tax for common people like that? No! They won’t! Instead they’ll introduce VAT, usher in MNCs in retail to wipe-out the livelihood of all small traders)
  3. We had FDI.

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