FINANCE MAIN PROJECT.docx

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Executive Summary

The oriental General Insurance is a well established private general insurance company in

India.as part of new india assurance compay

Oriental life insurance company offers a range of products for the corporate and individual

customers. Oriental currently offers insurance products including Health, Home, Motor, Travel,

Fire, Engineering, Marine, Liability and Aviation. Reliance General Insurance Company has also

introduced Indias first Over-The-Counter health & home insurance policies, thus encouraging

innovation and enabling convenience to the customers.

Oriental is amongst the leading general insurance companies in India, with a private sector

market share of 7%.oriental had a distribution network composed of 126 branches and over

9,900 intermediaries at the end of December 2012.

The company has been awarded the ISO 9001:2008 certification by Det Norske Veritas (DNV),

a reputed global quality standards auditing organization, for its streamlines processes and speedy

transparent claim procedures.

Oriental General Product Portfolio:

For Individuals

Oriental Health Insurance Plans: Oriental Car Insurance Plans: oriental Travel Insurance Plans: Student Travel Insurance Accident Cover Insurance Oriental Home Insurance Plans.

For Corporates Fire Insurance. Engineering Insurance. Marine Insurance.


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Liability Insurance. Package Plans. Distribution Network: Oriental General Insurance has good reach with over 200 offices across 173 cities in 22

states. Most of oriental General products are available online.

Financial Information: The total premium earned for the half year ended September 30, 2010 was Rs 5,641

million. The profit before tax for the same period is Rs 668 million. A total of 169,710

claims were made during the period out of which 83,043 claims were settled and 5,379

were rejected.


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INTRODUCTION

The Oriental Insurance Company Ltd was incorporated at Bombay

on 12th September 1947. The Company was a wholly owned subsidiary of the Oriental

Government Security Life Assurance Company Ltd and was formed to carry out General

Insurance business. The Company was a subsidiary of Life Insurance Corporation of India from

1956 to 1973 ( till the General Insurance Business was nationalized in the country). In 2003 all

shares of our company held by the General Insurance Corporation of India has been transferred

to Central Government.

The Company is a pioneer in laying down systems for smooth and orderly conduct of the

business. The strength of the company lies in its highly trained and motivated work force that

covers various disciplines and has vast expertise. Oriental specializes in devising special covers

for large projects like power plants, petrochemical, steel and chemical plants. The company has

developed various types of insurance covers to cater to the needs of both the urban and rural

population of India. The Company has a highly technically qualified and competent team of

professionals to render the best customer service.


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Oriental Insurance made a modest beginning with a first year premium of Rs.99,946 in 1950.

The goal of the Company was Service to clients and achievement thereof was helped by the

strong traditions built up overtime.

ORIENTAL with its head Office at New Delhi has 26 Regional Offices and nearly 900+

operating Offices in various cities of the country. The Company has overseas operations in

Nepal, Kuwait and Dubai. The Company has a total strength of around 15,000+ employees.

From less than a lakh at inception, the Gross Premium went up to Rs.58 crores in 1973 and

during 2011-2012 the figure stood at a mammoth Rs. 4077.90 crores


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HISTORY

In India, insurance has a deep-rooted history. Insurance in various

forms has been mentioned in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra)

and Kautilya (Arthashastra). The fundamental basis of the historical reference to insurance in

these ancient Indian texts is the same i.e. pooling of resources that could be re-distributed in

times of calamities such as fire, floods, epidemics and famine. The early references to Insurance

in these texts have reference to marine trade loans and carriers' contracts.

Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance

Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community.

The pre-independence era in India saw discrimination between the lives of foreigners (English)

and Indians with higher premiums being charged for the latter. In 1870, Bombay Mutual Life

Assurance Society became the first Indian insurer.

At the dawn of the twentieth century, many insurance companies were founded. In the year 1912,

the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the

insurance business. The Life Insurance Companies Act, 1912 made it necessary that.

premium-rate tables and periodical valuations of companies should be certified by

an actuary However, the disparity still existed as discrimination between Indian and foreign

companies. The oldest existing insurance company in India is the National Insurance Company

Ltd., which was founded in 1906. It is in business.

The Government of India issued an Ordinance on 19 January 1956 nationalising the Life

Insurance sector and Life Insurance Corporation came into existence in the same year. The Life

Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident

societies245 Indian and foreign insurers in all. In 1972 with the General Insurance Business

(Nationalisation) Act was passed by the Indian Parliament, and consequently, General Insurancebusiness was nationalized with effect from 1 January 1973. 107 insurers were amalgamated and

grouped into four companies, namely National Insurance Company Ltd., the New India

Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance

Company Ltd. The General Insurance Corporation of India was incorporated as a company in

1971 and it commence business on January 1, 1973.


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The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private

sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance

Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC).GIC had four subsidiary companies.With effect from December 2000, these subsidiaries have been de-linked from the parent

company and were set up as independent insurance companies: Oriental Insurance Company

Limited, New India Assurance Company Limited, National Insurance Company Limited and

United India Insurance Company Limited.


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Corporate Mission

To contribute to the socio economic objectives of the nation by being a vibrant and viable

organization catering to the growing insurance needs of the community. Towards this end we

will strive for effective management of business operations.

Corporate Objectives

1. To serve better the insurance needs of the entire community, keeping CUSTOMER as the

focus.

2. To strengthen our tradition of being CUSTOMER - FRIENDLY, in order to provide

quality service.

3. To manage Business profitably, manage funds judiciously and deploy investible funds for

optimum yield.

4. To optimise the retention of Indian business and conduct reinsurance and international

operations in the best interest of the country.

5. To work towards minimisation of losses and develop Risk Management Technologies


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RESEARCH METHODOLOGY

Research Methodology is defined as a highly intellectual human activity used in the investigation

of nature and matter and deals specifically with the manner in which data is collected, analyzedand interpreted.

Types of Research Design

Exploratory ResearchAn exploratory study is undertaken when not much is known about the situation at hand or

no information is available on how similar problem or research issues have been solved in

the past.

Descriptive ResearchStatistical study to identify patterns or trends in a situation, but not the cause-and-effect

(causal) linkages among its different elements. Descriptive studies (such as a cross-sectional

study) help in generating hypothesis on which further research may be based.

Types of Data Collection

Primary DataPrimary Data is first hand information for a particular statistical enquiry and it is collected

originally.

The most popular and common tool is questionnaire/interview schedule to collect the primary

data.

Secondary DataIt refers to the statistical material which is not originated by the investigator himself but

obtained from someone else's records.
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This type of data is generally taken from newspapers, magazines, bulletins, reports, journals

etc.

I AM USING A SECONDARY DATA

REVENUE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2012

S N Particulars Schedule CY PY

31.03.12 31.03.11

( 000) ( 000)

1 Premium Earned (Net) 1 13202136 12759164

2

Profit/Loss on

Sale/Redemption of

Investments

36 15186

3 Others 0 0

4Interest, Dividend & Rent

-Gross1501627 1284843

TOTAL (A) 14703799 14059193

1 Claims Incurred (Net) 2 10257502 9501464

2 Commission 3 -2461462 -1310760

3

Operating Expenses

related to Insurance

Business

4 411821 448041

4Expenses related to

Investments :

a) Amortization of

Premium on Investments10406 16662


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b) Stock Holding

Charges854 866

c) Bank Interest &

Charges

1680 113

d) Cenvat Credit Input

Claimed0 200000

TOTAL (B) 8220801 8856386

Operating Profit from

Crop Insurance Business

C=(A-B)

6482998 5202806

APPROPRIATIONS

Transfer to Shareholders

Account6482998 5202807

Transfer to Catastrophe

Reserve0 0

Transfer to Other

Reserves0 0

TOTAL 6482998 5202807


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PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH,

2012

S N PARTICULARS Schedule CY PY

31.03.12 31.03.1

( 000) ( 000

1 OPERATING PROFIT/(LOSS)

Crop Insurance Business 6482998 520280

2INCOME FROM

INVESTMENTS

a) Interest,Dividend & Rent-Gross 937701 51990

b) Profit on Sale of Investments 22 6145

3 OTHER INCOME

a) Miscellaneous Receipts 45964 6288

b) Profit on Sale of Assets 0 163

c) Prior Period Income 0 0

TOTAL(A) 7466685 573531

4PROVISIONS (other than

Taxation)

a) Dimunition in the value of

Investments0 0

b) Provision for Doubtful Debts 0 -1355

c) Provision on Standard Assets 12430 8391

5 OTHER EXPENSES

a) Expenses other than those

related to insurance business0 0


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b) Amortisation of Premium on

Investments6498 10649

c) Stock Holding Charges 534 350

d) Bank Interest & Charges 1049 46

e) Loss on Sale of Assets 728 0

f) Preliminary Expenses Written

off0 0

g) Prior Period Expenses 0 0

TOTAL(B) 21239 5886

PROFIT BEFORE TAX (C=A-B) 7445446 572942PROVISION FOR TAXATION

a) Income Tax (Current Year) 2430000 191494

b) Income Tax (pertaining to

earlier years)5450 2836

c) Wealth Tax 386 358

d) Fringe Benefit Tax 0 0

e) Deferred Tax -11677 8322

TOTAL(D) 2424159 192646

PROFIT AFTER TAX

AVAILABLE FOR

APPROPRIATION (E=C-D)

5021287 380295

APPROPRIATIONS

a) Interim Dividend paid during the

year0 0

b) Proposed Final Dividend 250000 20000

c) Dividend Distribution Tax 40556 32446


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d) Transfer to General Reserve 4730731 357051

TOTAL 5021287 380295

PROFIT AFTER TAX &

APPROPRIATIONS

0 0

Add: Balance of Profit/(Loss) b/f

from last year0 0

BALANCE C/F TO BALANCE

SHEET0 0

Basic Earning per Share 25.11 19.01

Diluted Earning per Share - -Number of Equity Shares 20,00,00,000 20,00,00

Nominal Value per Share 10/- 10/-


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BALANCE SHEET AS AT 31ST MARCH, 2012

PARTICULARS Schedule CY PY

31.03.12 31.03.11

( 000) ( 000)

SOURCES OF FUNDS

Share Capital 5 2000000 2000000

Reserves & Surplus 6 13959014 9228283

Fair Value Change

Account-37935 38217

Borrowings 7 0 0

TOTAL 15921079 11266500

APPLICATION OF

FUNDS

Investments 8 20035484 15648366

Loans 9 11919 12469

Fixed Assets 10 197678 234924

Deferred Tax Asset (Net) 31029 19352

Current Assets:

Cash & Bank Balances 11 12265140 16294625

Advances & Other Assets 12 5444394 4953470

Sub - Total (A) 17709534 21248095

Current Liabilities 13 14372045 19074289

Provisions 14 7692520 6822417

Sub - Total (B) 22064565 25896706


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Net Current Assets (C) = (A) -

(B)-4355031 -4648611

Miscellaneous Expenditure

(to the extent not written

off or adjusted)0 0

Debit Balance in Profit and

Loss Account0 0

TOTAL 15921079 11266500

Contingent LiabilitiesClaims, other than against

Policies, not

acknowledged as debts by

the Company0 0


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CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2012

(As per Direct Method )

S N PARTICULARS CY PY

01.04.11

to31.03.12 01.04.10 to 31.03.11

( 000) ( 000)

A)

CASH FLOW

FROM

OPERATINGACTIVITIES

1Cash receipts from

Premium income25751050 25751050 19533589 19533589

Less:

2Cash paid for Claims

payment14355904 10519268

3Cash paid for

Reinsurance Premium5701508 5398824

(less Commission net

of Reinsurance & Re-

insurance claims)

4

Cash paid for

expenses 269370 20326782 376390 16294482

Cash generated from

Operations5424268 3239107

5 Miscellaneous 45964 6451


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receipts

6Income Tax

paid/refunds-1581229 -1663023

7Cash Flow before

extraordinary items3889003 1582535

8(Increase) / Decrease

in Loans given550 0

Net Cash from

Operating Activities

(A)

3889553 1582535

B)

CASH FLOW

FROM

INVESTING

ACTIVITIES

9Purchase of Fixed

Assets-15470 -26069

10Proceeds from sale of

Fixed Assets202 0

11 Investments made -5723843 -2809539

12 Interest Income 2287506 1836213

13 Expenses incurred -4117 -1376

14

(Increase) / Decrease

in Funds Advanced

(Sch 12)

-771839 -396470

Net Cash used in

Investing Activities-4227561 -1397241


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(B)

C)

CASH FLOW

FROM

FINANCING

ACTIVITIES

15Issue of Share

Capital0 0

16Increase in

Borrowings0 0

17

Dividend and

dividend distibution

tax paid

-232445 0

18

Increase / (Decrease)

in Liabilities (Sch 13

& 14)

-4703312 5191192

Net Cash fromFinancing

Activities(C)

-4935757 5191192

Net increase in Cash

& Cash equivalents:-5273765 5376486

19

Cash & Cash

equivalents at the end

of the period

201250 5475015

Cash & Cash


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20 equivalents at the

beginning of the

period

5475015 98529

Net increase in Cash

& Cash equivalents-5273765 5376486


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DATA ANALYSIS


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RATIO ANALYSIS

Analytical Ratios for Life Insurance Companies

Sr.No Particular June 30,2012

June 30,2011

1 New business premium income growth rate - segment wise

Participating Individual 16% NA

Participating Pension -98% NA

Non - Participating Individual 163% -3%

Non - Participating Group -68% -18%

Non - Participating Health -19% 51%

Linked Pension -72% -95%

Linked Life -59% -17%

Linked Group Gratuity 100% NA

2 Net Retention Ratio 96% 97%3 Expense ofManagement to Gross Direct Premium Ratio 90% 127%

4 Commission Ratio (Gross commission paid to Gross Premium) 4% 5%

5 Ratio of policy holder's liabilities to shareholder's funds 508% 251%

6 Growth rate ofshareholders' fund * -22% -12%

7 Ratio of surplus/deficit to policyholders' liability -5% -11%

8 Change in net worth (Rs'000) * (446,657) (268,645)

9 Profit after tax/Total Income -46% -97%

10 (Total real estate + loans)/(Cash & invested assets) 0% 0%

11 Total investments/(Capital + Surplus) 587% 328%

12 Total affiliated investments/(Capital+ Surplus) 5% 0%

13 Investment Yield (Gross and Net)

(i) With realized gains /losses

- Policyholders' Funds :

Participating 8% 8%

Non Participating 9% 9%

Pension Participating 8% 8%

Unit Linked 3% -18%

- Shareholders' Funds : 10% 8%

(ii) Without realized gains /losses

- Policyholders' Funds :

Participating8%

8%

Non Participating 9% 9%

Pension Participating 8% 8%

Unit Linked 8% -19%

- Shareholders' Funds : 9% 8%

14 Conservation Ratio 64% 104%

15 Persistency Ratio **

By annualized Premium


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For 13th month 48% 69%


For 37th month 42% NA

For 49th Month NA NA

for 61st month NA NA

By no. of policiesFor 13th month 49% 67%


For 37th month 28% NA

For 49th Month NA NA

for 61st month NA NA

16 NPA Ratio

Gross NPA Ratio Nil Nil

Net NPA Ratio Nil Nil

Equity Holding Pattern for Life Insurers1 No. ofshares 1,135,000,000 1,000,000,000

2Percentage ofshareholding (Indian/Foreign)

Indian Foreign

74%

26%

74%

26%

3 % ofGovernment holding (in case of public sector insurancecompanies)

NA NA

4 Basic and diluted EPS before extraordinary items (net of

tax expense) for the period (not to be annualized) (Rs.) (0.35) (0.69)

5 Basic and diluted EPS after extraordinary items (net of tax

expense) for the period (not to be annualized) (Rs.) (0.35) (0.69)

6Book value per share (Rs.) 1.36 1.99

* The ratios are in comparison with corresponding previous period i.e June 30, 2011

** Persistency numbers are calculated on annual premium basis, and the method of

calculation can be defined as: Persistency for the respective period i.e. Quarterly &

Year to date (YTD) is the ratio of enforce policies at end of reporting period to the

policies issued for the investigation period. For example, 13 month persistency for the

4th quarter of the Financial Year 2011-12 (January to March 2012) represents the ratio of

enforce policies as of March 31, 2012 to the policies issued during December 2010 to

February 2011


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DATA ANALYSIS AND INTERPRETATION

INTERPRETATION

75 % Employees are aware of the brochure that is provided to them by the organizationwhile they commence their job.

This is a simple way to make the employees learn and know the HR Policies of OrientalInsurance. And as the ratio suggest many of the employees are provided with the

brochure except a few.

YES

75%

NO

25%

YES

NO


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INTERPRETATION

48 % of the total respondents suryed think that Life Insurance policy is important for themand

28.8% respondent think that it is very important and only 16% think that Life insuranceis not

impotant for them.


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The company's operations in Nepal, Dubai and Kuwait yielded a Gross Direct Premium of Rs.

146.71 crores during the year 2011-12 as against Rs 112.55 crores during the previous year. The

net premium on foreign operations stood at Rs. 128.03 crores as against this, the Net Incurred

Claims during this year in respect of foreign operations were Rs.106.24 crores at 82.98%. The

foreign operations have resulted in an overall deficit of Rs. 19.68 crores.

After taking into account the income from Interest, Dividend & Rent of Rs 859 crores and Profit

on sale of Investments of Rs 751 crores, we have posted a pre-tax profit of Rs 366.34 crores &

post-tax profit of Rs. 253.39 crores for the year 2011-12

As against the desirable Solvency Margin mandated by the Indian regulatory body, IRDA, the

available Solvency Margin is 1.33 as at 31st March 2012.

The Company had issued 1,12,19,016 documents in the year 2011-12. The claims disposal ratio

for non-suit claims settlement ratio was 85.53%.


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The Company is not only 'IT friendly' but also 'Technology Savvy'. We have our own website in

place. An integrated Non-Life Insurance Application Software (INLIAS) has been implemented

in all the offices. This will ensure that our Customer Service parameters grow by leaps and

bounds.

No wonder, The Oriental Insurance Company has been enjoying the highest rating from leading

Indian credit rating agencies CRISIL and ICRA. The Company has also been rated as B++(Very

Good) by AM Best, an international rating agency.


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FINDING

Oriental Insurance insurance is not an old company , then too they have successfully framed their

HR POLICIES which generally meet the overall requirements and in most cases follow the best

practices. They have a friendly working environment. With only a few exceptions, arrangements

for the Human Resource Policies, Practices and Procedures are adequately adopted to meet the

companys and employees requirements.

Oriental Insurance has a high disciplinary system , and the framed HR POLICIES give a sense of

security to the current employees. Oriental Insurance employees are aware of the fact that their

performance appraisal is based on their objective assessment and adequate information.

With all the praises , still there is a scope for an improvement , like..:-

some of the policies are not clear to the employees despite the fact that they were given formal

orientation program and the brochures as well.

Some of the policies should be modified like Med claim policy , on the request of the

employees and some of the policies should be formed like sexual harassment policy, and policies

which would help the employees to raise their voice

A large number of employees are not aware of the companys manual which outlines terms

and conditions of employment and its policies.

The policies are reviewed and modified by expert HR professionals as per requirements and

according to the surveys conducted by them.


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RECOMMENDATIONS

Some of the policies like Sexual Harassmentpolicy etc should be framed for the welfare of the

employees.

I believe that in order to form a professional environment , every employee should be asked to

wear proper Formal wear. This would motivate the employees more faster.

Need to develop consultation/awareness program to assist the employees for their better

understanding of the policies.

I would recommend that while dealing with the complaints anonymity need to be maintained.

Except LTIP , more incentives should be offered to the employees who provide services to the

organization for more than two years continuously .

As seen from the survey that at present 70% of the customer are having insurance policy out of

which 87.5% of the customer are planning for new investments. So it can be a good potential for

the company and they should make an attempt to trap thesecustomers.43% of the customer is

even ready to go for insurance if a service provider away fromtheir home is providing it. But

intend they should provide good products and services.The company should try to convince these

customers and get them in its favor


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CONCLUSION

Due to emergence of private insurance companies, the competition has increased

many a fold and it provides much better and flexible schemes & policies than the existing

insurance companies. Customer relationship should is the need of the hour and since private

companies prime motive is the same, so naturally it would do much better with respect to

insurance services. With then private company coming into the field the returns are going to be

better and the services are also likely to get better.Since private insurance companies are known

for their service & promptness they would do much better job in insurance sector than the

existing ones. Oriental a life insurance company need more advertisement as being new in the

field as they are new in the field.


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BIBLIOGRAPHY

Books

Business today,

India Today

Gupta S. P. and Gupta, M. P.

Websites

www.orientalinsurance.org.in

www.sebi.com

www.nse..com

WWW.MONEY CONTROL.COM

Documents

FINANCE MAIN PROJECT.docx