Mumbai: One of the India’s most leading private life insurer company Bajaj Allianz Life Insurance has been rated AAA by rating agency CARE for the company’s outstanding claims settlement ability and strong financial stability.
CARE has retained AAA rating for Bajaj Allianz Life Insurance for financial year 2014-15 as well. Last year, Bajaj Allianz Life Insurance had received the rating for its ability to settle claims and financial strength in FY13.
This year, the rating agency has evaluated the Company’s financial strength based on factors such as strong capital support, high degree of synergy with strong promoters, strong solvency position, healthy profitability, good asset quality of the investment portfolio and moderate persistency ratio.
According to CARE, the Company has a better capital support and, considering the high solvency margin, the company is not likely to require additional capital infusion in the near future. The promoters infused total capital of Rs 1,211 crore and the net worth of the company stood at Rs 5,871 crore as on March 31, 2014 (Rs 4,846 crore as on March 31, 2013).
Bajaj Allianz Life Insurance reported very strong solvency ratio at 7.34 times as per IRDAI norms as on March 31, 2014 as compared to 6.43 times as on March 31, 2013. The solvency ratio was well above the minimum requirement of 1.5 times prescribed by IRDAI.
In its Rationale, CARE said: “Most of the life insurance companies generally take longer period of time (typically 9 to 10 years) to break-even. Bajaj Allianz Life Insurance has been reporting profit since FY10, after it started operations in 2001. The profits have, however, seen a declining trend over the last three years on account of lower renewal premium, higher amount of claims paid on account of maturity and surrender as well as high operating costs. The net earnings ratio remained healthy at 17.74% for FY14 as compared to 18.81% for FY13. Over the medium term, the profitability would be marginally impacted on account of shift from high margin linked products to low margin traditional products.”
The rating agency has stated the Company has maintained a “good asset quality” with an investment portfolio of Rs 38,780 crore as on March 31, 2014 as compared to Rs 38,000 crore as on March 31, 2013. Of the total portfolio, around 73% of the investments attributable to the linked policies are invested in equities and the remaining largely invested in Government securities, corporate bonds and infrastructure bonds.
Commenting on the rating Anuj Agarwal, MD & CEO, Bajaj Allianz Life Insurance said: “A strong solvency position and profitability have helped us retain one of the most credible ratings – CARE AAA – in terms of financial strength. Ability to maintain a moderate persistency ratio has also been a key factor behind this rating.”
Bajaj Allianz Life Insurance’s 13th Months persistency ratio for last three years:
| Persistency Ratio (%) | FY13 | FY14 | H1FY15 |
| For 13 Months | 60.22 | 61.57 | 59.10 |
Source: Press Release
Bureau Report
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