MAX BUPA HEALTH INSURANCE CO LTD Bupa Health Insurance Company Ltd. ... Target Limit (% of Investment Assets) Regulatory requirement i. ... CBLO (Collateralized

Version 6.11

Max Bupa Health Insurance Company Ltd.

(“Max Bupa” or “Company”)

Investment Policy

Effective From: July, 2017

Reviewed on: July 24, 2017

Version: 6.11

Version 6.11 INVESTMENT POLICY

Document Revision History

Version Release Date Change Description

1.1 November, 2009

1.2 May, 2010 Review by Investment Committee and Board

2.1 October, 2010 Review and drawn up for the year by the Investment Committee and Board

2.2 January, 2011 Change in maturity profile of investment assets

2.3 May, 2011 Amendment to the list of approved mutual fund AMC (Annexure D)

3.1 October, 2011 Review and drawn up for the year by the Investment Committee and Board

3.2 April, 2012 Amendment to the list of approved mutual fund AMC (Annexure D)

4.1 November, 2012 Amendment in maturity profile of investment assets and list of approved mutual fund AMC (Annexure D)

4.2 April, 2013 Amendment to the list of approved mutual fund AMC (Annexure D), regulatory guidelines (Section 4.4.1) in line with IRDA Investment Regulations (Fifth Amendment),2013 and addition of Annexure E – Code of Conduct to prevent Insider /Personal trading

5.1 October, 2013 Amendment in maturity profile of investment assets. Amendment to the list of approved mutual fund AMC (Annexure D). Amendment with regard to industry exposure limit on the investment in „Housing Finance Companies‟

5.2 March, 2014 Amendment in maturity profile of investment assets

5.3 April, 2014 Amendment to the list of approved mutual fund AMC (Annexure D). Amendment in maturity profile of investment assets and authority matrix

6.1 October, 2014 Amendment to the list of approved mutual fund AMC (Annexure D). Inclusion of Infrastructure Debt Fund under the category Bonds

6.2 January, 2015 Addition of principal officer into working investment committee (WIC). Authorizing Fund Manager to carry out relevant investment front office operations.


6.3 April, 2015 Amendment to the list of approved mutual fund AMC (Annexure D) Change the terminology from “Director Finance” to “Chief Financial Officer” in line with present structure Explicit mention of Appointed Actuary instead of Consulting Actuary Include details of location of investment operations

6.4 July,2015 Reinstate the Authority Matrix wherein Chief Investment Officer is authorized to carry out relevant investment front office operations

6.5 October,2015 Amendment to the list of approved mutual fund AMC (Annexure D)

6.6 February,2016 Amendment to the Code of Conduct to prevent Insider /Personal trading Change in the maturity profile of Investment assets

6.7 May 2016 Amendment to the clause on private placements

6.8 October 2016 Alignment with updated Corporate Governance Guidelines and review of mutual funds

6.9 February,2017 Amendment to Investment pattern of UPR and Investment Structure

6.10 May 2017 Semi Annual Review

6.11 July 2017 Amendment to Mutual fund

Document Control

Reference No. MBHI/INV/IP

Document Name Investments Policy

Version No. 1

Document Status Final

Issue Date July 24, 2017

Compliance Status Mandatory

Review Period Semi-annual

Security Classification

Internal

Distribution All persons of investment function of Max Bupa

Role Signature

Authored by Chief Investment Officer

Reviewed by Chief Financial Officer

Approved by Investment Committee of Max Bupa

Approved by Board of Max Bupa


1. Purpose ................................................................................................................... 5

2. Objective ................................................................................................................ 5

3. Scope ...................................................................................................................... 5

4. Investment Guidelines ........................................................................................... 5

4.1 Guidelines governing investment decisions......................................................... 5 4.2 Time horizon and maturity mix of investments ................................................... 6 4.3 Investment Assets ................................................................................................ 6

4.3.1 Classification................................................................................................. 6

4.3.2 Investment instruments and limits ................................................................ 7 4.3.3 Instrument quality ......................................................................................... 8 4.3.4 Liquidity management .................................................................................. 8

4.4 Investment diversification – adherence to prudential exposure norms ................ 9 4.5 Investment Asset valuation ................................................................................ 11 4.6 Stop loss ............................................................................................................. 12 4.7 Non-Performing investments (including loans) ................................................. 12

5. General guidelines for investment function ......................................................... 12

5.1 Investment Assets .............................................................................................. 12 5.1.1 Bonds .......................................................................................................... 12 5.1.2 Mutual fund investments............................................................................. 13

5.1.3 Equities and equity related securities .......................................................... 13 5.1.4 Bank deposits .............................................................................................. 13

5.2 Operational guidelines ....................................................................................... 13 5.3 Adoption and Review of Investment Policy ...................................................... 15 5.4 Standard operating procedures manual .............................................................. 15

5.5 Organizational structure – investment function ................................................. 15

5.6 Investment Committee ....................................................................................... 16 5.7 Working investment committee ......................................................................... 16 5.8 Internal Audit ..................................................................................................... 16

5.9 Banking .............................................................................................................. 17 5.10 Counterparty exposure ..................................................................................... 17 5.11 Research and Analysis ..................................................................................... 17

5.12 Reporting.......................................................................................................... 17 5.13 Temporary Deviations from the policy ............................................................ 17

5.14 Risk Management ............................................................................................ 18 Annexure A – Authority Matrix .............................................................................. 19

Annexure B – Reporting .......................................................................................... 21

Annexure C – Valuation of Investments .................................................................. 22

Annexure D – List of Approved Mutual Fund AMC .............................................. 34

Annexure E – Code for Personal Investment / Trading in Securities ............................. 35

Annexure F – Organization Chart: Investment Function ......................................... 61


1. Purpose The purpose of this policy is to provide guidance for decision making regarding the investment of funds of the company in a manner to ensure safety of investments, while managing liquidity to meet the business requirements and policyholder obligations and provide adequate investment return using authorized securities. 2. Objective The policy seeks to achieve the following primary objectives:

Ensuring adequate returns for the policyholders and shareholder.

Ensure prudent investment of funds to protect the interest of policyholders and shareholders.

Maintenance of adequate liquidity to meet policyholder‟s obligations and business requirements.

Ensuring compliance with all applicable legislations.

Matching of assets and liabilities as per actuarial requirements.

Transparency of the portfolio with strict adherence to the internal guidelines.

3. Scope This policy herein deals with investment responsibilities, portfolio composition, prudential and exposure norms, authorizations, review procedures, investment risk management system, processes and principles related to management of investment funds. In addition to this policy, the company has also adopted standard operating procedure (SOP) documenting the investment process. There are separate SOPs for Front Office, Mid Office and Back Office which enlist the detailed procedure for their respective function. This investment policy will prevail in case of any disagreement between the policy and the SOP. This policy shall effective from the date of registration of Max Bupa with IRDA. 4. Investment Guidelines 4.1 Guidelines governing investment decisions The investments shall be governed by following broad guidelines:

Compliance with IRDA guidelines on investment patterns, valuation, provisioning, exposure norms etc.

Compliance with guidelines issued by the Institute of Chartered Accountants of India (“ICAI”), on accounting for investments of various types and adherence to the requirements prescribed in ICAI‟s technical


guide on “Review and Certification of Investment Risk Management Systems and Processes of Insurance Companies”

Generating adequate returns on Investment Assets while ensuring adequate liquidity and safety of the funds

Responding appropriately to general economic conditions

Having robust Asset Liabilities Management (ALM) principles for Investments in place

Diversifying investment portfolio in terms of industry concentration, issuer/group concentration and tenor concentration

Adequately addressing other investment risks on account of various factors such as liquidity, credit, market and systemic, interest rate, inflation, currency, call and pre-payment risks

Taking into consideration shareholders‟ requirements.

4.2 Time horizon and maturity mix of investments Max Bupa‟s financial assets would pertain to investment of funds linked with solvency requirements, funds generated on account of technical reserves including unearned premium reserves and claims reserves (such as outstanding reported claims, IBNR etc) and funds meant for day-to-day working capital. Funds representing 150% of Required Solvency Margin (RSM) in terms of book value of investment can be invested in long dated securities, subject to residual maturity of each security would not be longer than 10 years

Funds representing 90% of Unearned Premium Reserves (UPR) in terms of book value of investment is to be invested in securities between 1-and 5 years residual maturity. For the balance investment funds (including contingency reserves to be maintained towards catastrophe risk), the residual maturity of any security would not be longer than 18 months. Maturity/ duration gap between various classes of assets and liabilities shall be monitored on a monthly basis, based on ALM policy of the company. It will be the endeavor of Max Bupa‟s investment function to match the duration of invested assets with duration of associated liabilities, subject to adherence to applicable solvency requirements, maintaining sufficient liquidity, depth of Indian debt market and availability of acceptable instruments and the issuer in line with this policy document. 4.3 Investment Assets 4.3.1 Classification


The investment assets shall not be classified/ segregated into any earmarked funds. However, they will be allocated into:

a. Shareholders‟ funds representing solvency margin; and

b. Policyholder funds (i.e. unearned premium/ reserve for unexpired risk, claims outstanding, IBNR etc.) backing technical reserve.

4.3.2 Investment instruments and limits Max Bupa shall invest its funds in the following types of market instruments:

S. No.

Type of Investments

Policy Range (%

of Investment

Assets)

Target Limit (% of Investment

Assets)

Regulatory requirement

i. Central Government Securities or Other Approved Securities

30%-55% 40% Not less than 30% of Investment Assets

ii. Central Government Securities (including T Bills)

Minimum 20% (sub limit of i above)

30% (sub limit of

i above)

Not less than 20% of Investment Assets (sub limit of i above)

iii. State Government Securities

0-20% (sub limit of i above)

10% (sub limit of i above)

N.A.

iv. Investment in housing and infrastructure bonds

Minimum 15%

20% Not less than 15% of Investment Assets


v. Approved Investments Other Investments

Not to exceed 55% of Investment Assets Not to exceed 15% of Investment Assets (Sub-limit under 55% limit for approved and other investments)

4.3.3 Instrument quality

1. All investments capable of rating shall be rated with minimum rating as follows

a. Corporate bonds or debentures - AA+ or equivalent b. Short term papers - P1 or equivalent c. Debt issued by All India Financial Institution - AAA or equivalent

In case of any downgrade of a security below AA or any other minimum threshold level as prescribed by IRDA, then the matter shall be escalated to Investment Committee for decision to hold or sell the security.

2. Investment assets shall comprise minimum 65% of investments in debt securities (including government securities and other approved securities) rated AAA and P1+ for short-term instruments. This shall exclude:

Repo in corporate bonds

Fixed Deposits

Promoter group mutual fund and unrated mutual fund. 4.3.4 Liquidity management

a. A cash flow analysis shall be conducted on a fortnightly basis

b. Liquidity shall be maintained to take care of working capital requirements and meeting short term obligations. For this purpose the following shall constitute liquidity:

i. Cash and current account bank balances


ii. Short term securities with original maturities not more than one year

iii. Fixed deposits with banks and financial institutions (with tenors not more than one year)

iv. Money market instruments, including following securities or other securities as may be permitted by IRDA:

a) Certificates of deposits with required minimum rating b) Commercial paper with required minimum rating c) Repos and reverse repos issued by RBI d) Treasury bills issued by Central Government e) Call, notice and term money f) CBLO (Collateralized Borrowing and Lending Obligation)

instruments issued by Clearing Corporation of India Ltd.

4.4 Investment diversification – adherence to prudential exposure norms 4.4.1 Regulatory guidelines IRDA stipulates the following exposure norms to ensure diversification of investments:

Type of Investment

Limit for 'Investee' Company

Limit for the entire „group‟

of the investee Company

Limit for industry Sector to which

investee Company belongs

(1) (2) (3) (4)

a. 'equity‟, preference shares, convertible Debentures

10% of outstanding equity shares (face value) or 10% investment assets whichever is lower.

Not more than 15% of the investment assets. Subject to exposure limits mentioned in the table above, an insurer shall not have investments of more than 5% in aggregate of its investment assets in all companies belonging to the promoters‟ group. Investment made in all

Investment in any industrial sector* shall not exceed 15% of its total investment exposure to the industry sector as a whole. Industry sector norms shall not apply for investments made in "Infrastructure facility" sector as defined under Regulation 2(h) of IRDA (Registration of Indian Insurance Companies) Regulations, 2000 as amended from time to time. NIC classification shall

b. Debt/ loans and any other permitted investments as per Act/ Regulations other than item „a‟ above

10% of the paid-up share capital, free reserves and debenture / bonds of the investee company or 10% of investment assets, whichever is lower.


companies belonging to the promoters‟ group shall not be made by way of private placement or in unlisted instruments (equity, debt, certificate of deposits and fixed deposits held in a Scheduled Commercial Bank), except for companies formed by Insurers under Note 12 to Regulation 9

not apply to investments made in "Infrastructure facility" The Investment in „Housing Finance Companies‟ as specified in the investment regulation shall not be included under the exposure to „Financial and Insurance Activities‟ of sec K of NIC classification, 2008 and shall be treated as exposure to Housing Sector. The industry exposure limits will continue to apply for such investments.

Note: Industrial sector shall be classified in the lines of NIC for all sectors, except infrastructure sector. Exposure shall be calculated at division level from A to R. For financial and insurance activities sector exposure shall be at section level.

Further, IRDA has specified certain specific exposure limits as under:

1. Investment in immovable property situated in India and free from all encumbrances shall not exceed, at the time of investment, 5% of Investment Assets.

2. Subject to exposure limits mentioned in the table above, investments in

companies belonging to the promoters' groups should not exceed 5% of Investment Assets.

3. The exposure limit for financial and banking sector shall stand at 25%

Investment Assets for all insurers. Investments in fixed deposits, term deposits and certificate of deposits shall not be deemed as exposure to banking sector provided the Company does not keep more than ten percent of its Investment Assets in fixed deposit or current deposit with any one banking company or with any co-operative society registered under Co-operative Societies Act, 1912.Investment in shares of any one banking company or investment company should not be more


than:

a. 15% of Investment Assets, or b. 2% of subscribed share capital and debentures of the banking

company or investment company whichever is less

4. Investment in shares or debentures of any one company other than banking company or investment company should not be more than:

a. 10% of Investment Assets, or b. 10% of subscribed share capital and debentures of the

company, whichever is less

5. No amount shall be invested in the shares or debentures of any private company.

4.4.2 Investment diversification limits applicable for Max Bupa Max Bupa shall follow the above mentioned regulatory guidelines subject to prohibited investments as mentioned below. 4.4.3 Prohibited Investments The following transactions are prohibited for the company –

Equity related securities, commodities & their derivatives, futures contracts, and private placements linked to equity and venture funding, options, immovable properties, investments in promoter group companies and securitized instruments.

Company shall not out of the investment assets invest or keep invested any sum in shares or debentures of any private limited company.

Policyholder funds shall not be directly or indirectly invested outside India.

4.5 Investment Asset valuation Valuation of Investment Assets shall be done at monthly intervals. The investment assets shall be valued as under:

(a) Mutual Funds – market value (b) Debt instruments – at net amortized cost

The regulatory requirements pertaining to market value calculation of investments for submission to IRDA are detailed in Annexure C.


4.6 Stop loss Investment in debt securities are primarily exposed to Credit risk. Credit shall be reviewed by Mid Office periodically. Stop loss would get triggered when the rating of the security is downgraded by one notch, as when reported by any of the rating agencies. Additionally, quarterly review of valuation shall be undertaken and a quarter on quarter drop of 10% in the market value for debt investments shall be put up to the Working Investment Committee by Fund Manager and he/she has to prepare a note to hold the securities as this may be because of some event and FM feel that this may not be appropriate time to sell the securities. Note has to be approved by CIO.

4.7 Non-Performing investments (including loans) In respect of the securities where interest or principal is in arrears, income on such securities shall not be reckoned and appropriate provisions for diminution shall be made in the value of such investments. For this purpose, an investment shall be deemed as non-performing where interest and /or principal (including maturity proceeds) is due and remains unpaid for more than one quarter. All such instances will be reported to the Investment Committee on a quarterly basis. 5. General guidelines for investment function 5.1 Investment Assets All Investment Assets except mutual funds and bank deposits shall be held in dematerialized form. 5.1.1 Bonds Investment in bonds shall adhere to the following rating criterion as under:

a) Corporate bonds or debentures - AA+ or equivalent

b) Short term papers (less than one year of original tenor) - P1 or

equivalent

c) Debt issued by All India Financial Institution - AAA or equivalent

d) Bonds issued as an Infrastructure Debt Fund as approved by IRDA subject to:

(i) IDF issue to be rated AAA or equivalent (ii) IDF issue to be approved by IRDA (iii) Exposure in the IDF to be not more than 10% of the total IDF issue

size


Max Bupa shall not invest in perpetual bonds. 5.1.2 Mutual fund investments

An exhaustive list of approved mutual funds is provided in Annexure D. Investment in Mutual Funds would be restricted to schemes investing in Gilt, G-Sec and liquid money market assets only and would be selectively done in high grade funds as defined under:

a. Investments would be made only in the Liquid, Income or Gilt schemes of the Mutual Funds registered with SEBI.

b. Fund house should have been in existence for a minimum of 3 years and should have AUM of at least Rs.5,000 Crore.

c. Mutual Funds investments would be made to manage the short -term surpluses in various Funds. At all points of time, the funds would be deployed in a reasonable proportion over at least four Fund houses to ensure diversification of risk.

d. Minimum portfolio size of the liquid fund scheme - Rs.1,000 crore;

e. No fund should have exposure to more than two schemes of any single Fund house.

f. Max Bupa‟s investment in any mutual fund would not be more than 10% of the portfolio size of that mutual fund scheme.

g. Investment in Mutual Funds at any point in time shall not exceed 10% of the total corpus, in only approved category.

5.1.3 Equities and equity related securities

Max Bupa shall not invest in equity or equity related securities or instruments.

5.1.4 Bank deposits Not more than 15% of aggregate Investment Assets shall be in deposits with any single bank or any single asset management company. 5.2 Operational guidelines

a) The day-to-day management of investment function shall be in accordance with the Standard Operating Procedures (SOPs) to be separately documented.

b) All investment transactions (both purchase and sell) shall adhere to the

approved authority matrix (as per Annexure A)

c) Chief Investment Officer would recommend investments classified as Other Investments to the Working Investment Committee, who will authorize the investment within limits specified in authority matrix. All


investments in Other Investments category shall be reported to the Investment Committee and ratification for the same shall be sought.

d) All transactions shall be routed on DVP (Delivery versus Payment)

basis.

e) No speculative trades shall be undertaken under any circumstances.

f) Under no circumstance, any short position would be assumed. All trades shall be delivery based. Delivery based transaction implies that the sale transaction will be settled either in the same settlement cycle as the preceding purchase contract or in the subsequent settlement cycle so that the delivery obligation under the sale contract is assured of.

g) Monthly review of ratings of all the debt instruments shall be

undertaken by the Chief Financial Officer and put up for review of the Working Investment Committee.

h) Any adverse movement in credit rating shall be reported to the Investment Committee on a quarterly basis detailing the reasons for holding on to the paper, if the same has not been sold.

i) Investment function shall conduct a detailed and comprehensive credit

review of all the debt holdings as at end of every half year and document the same.

j) Primary issues of debt - Following limits, subject to other exposure

norms stated in this policy, shall apply for bidding in the primary markets:

a. Debt Subscription to primary issue of debt shall be governed by the following limit:

i. 10% of the proposed issue size (excluding any green shoe option), or

ii. 10% of the Investment Assets, whichever is lower

Primary market issues which are raised via private placement are permitted.

k) Review of the performance and business worthiness of all intermediaries and brokers would be carried out annually and any suitable inclusions or exclusions in the panel would be made. The panel of intermediaries and brokers would be approved by the Working Investment Committee.

l) All the employees working in the investment function of Max Bupa shall

adhere to the Company‟s code of conduct to prevent insider/personal


trading guidelines (refer Annexure E), approved by the Investment Committee.

m) A detailed review of investment activities and performance measures

would be conducted on a monthly basis and the report would be circulated to Chief Executive Officer, Chief Financial Officer, Appointed Actuary and the Chief Investment Officer.

n) Chief Investment Officer would provide investment performance update

and discuss strategic decisions with the Investment Committee at least on a quarterly basis.

o) The investment department would adhere to all the

guidelines/processes mentioned in the investment function Standard Operating Procedures manual (SOPs). SOP manual would define guidelines, procedures, roles and responsibilities of investment front, middle and back office, access control and risk management systems and processes recommended by the regulator.

5.3 Adoption and Review of Investment Policy The Board of Max Bupa would adopt this investment policy and the policy shall be implemented by the Investment Committee through Investment function‟s adherence to the policy guidelines. The adherence of this policy would be monitored through regular reporting of investment performance (detailed in Annexure B) and compliance with the investment authority matrix (as described in annexure A). This investment policy shall be reviewed semi-annually. 5.4 Standard operating procedures manual Investment function Standard Operating Procedures (SOP) manual would detail various activities, roles and responsibilities of the three divisions of the investment function, i.e. front office, middle office and back office. Amendments to the investment function SOPs shall require approval of the Investment Committee. 5.5 Organizational structure – investment function In order to practice a robust “maker and checker” philosophy and for ensuring independence of decision making, the Investment function shall be segregated into front, middle, and back offices. The front office shall report through the Chief Investment Officer to the Chief Executive Office and the middle and back offices shall report to the Chief Executive Officer through the Chief Financial Officer. Detailed roles and responsibilities of front, middle and back office would be covered in the Investment function SOPs. A pictorial view of the investment


organization structure is given in Annexure C. The investment team shall be located in the National Operating Centre (NOC) at B 1 / I – 2, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi 5.6 Investment Committee The Investment Committee implements the Investment Policy by delegating authority to the Chief Investment Officer to invest assets on their behalf, subject to investment guidelines as mandated by the Investment Committee. The Mid Office team closely monitors investment activities to ensure compliance with the Investment committee mandates & IRDA guidelines. The investment committee shall constitute a minimum of 7 members:

1. Chief Executive Officer 2. Chief Financial Officer 3. Chief Investment Officer 4. 2 Non Executive Directors 5. Appointed Actuary 6. Chief Risk Officer

Decisions taken by the Investment committee shall be recorded.

5.7 Working investment committee The Working Investment Committee would be formed to facilitate investment function operations as per the authority matrix. The members of the WIC will be:

1. CEO 2. Chief Investment Officer 3. Appointed Actuary 4. Principal Officer

5.8 Internal Audit The Internal Audit department of the Company or an independent firm of auditors shall conduct quarterly audits of the Investment function. The scope of work for the internal auditor shall include the following:

1. Validating investment transactions & processes 2. Checking proper reporting (both internal and regulatory) 3. Audit of custodial services 4. Verifying adherence to the investment policy 5. Verifying adherence to regulatory guidelines 6. Reporting on Investment Risk Management Systems &

Processes-Implementation Status 7. Commenting on the Investment Policy and its semi-annual

review


Where the Internal Audit is carried out in house, the internal audit report shall be signed by the Head-Internal Audit. The quarterly internal audit report shall be placed before the Investment and Audit Committee of the Board. 5.9 Banking The Investment Committee will approve the appointment of an intermediary to act as the sole custodian of Max Bupa‟s investment assets. The exposure to banks (other than custody based) shall be monitored as under:

1. A review of Max Bupa‟s exposure to Banks shall be undertaken annually and put up to the Investment Committee

2. Excluding custodial services, the cash and cash equivalents (in form of bank deposits) would be diversified within operational constraints.

3. Any over-drawings in any of the cash/current accounts would immediately be reported to the Chief Financial Officer with reasons thereof.

5.10 Counterparty exposure To mitigate risk of loss on account of counterparty failure, Max Bupa will transact with reputed counterparty with good standing. A list of counterparties or their categories will be detailed out in investment function SOPs. 5.11 Research and Analysis The investment function shall build research capabilities, over a period of time. The research personnel shall submit their research report to the Chief Investment Officer on periodical basis. Such reports shall be exclusive material of the company. 5.12 Reporting Regular reports will be submitted by the Chief Investment Officer to Working Investment Committee, the Investment Committee and the Board of Max Bupa. Various reports, their periodicity and templates would be detailed in investment function SOPs 5.13 Temporary Deviations from the policy While no deviations from the policy would be permitted, certain exigencies could warrant necessary temporary deviations. Any temporary deviation (for a max period of 7 days) from the policy guidelines (but within regulatory requirements) shall need approval by an authority one step above the regular authority as per the delegation of authority matrix (as per annexure A).


The Investment Committee shall ratify such deviation. A report of such temporary deviations along with the reasons shall be put up to the Board quarterly. 5.14 Risk Management The investment assets are exposed to various risks. Investment function shall be proactive in assessing and managing such risks. The risks can be classified as under:

1. Credit risk – The debt portfolio is exposed to credit risk, which depends

on the investee company, its promoters, managers/agents and their capability, capacity and willingness to pay interest and principle to the investors. The risk shall be managed in the following manner:

a. Following prudential exposure norms on investee company b. Investment in instruments rated not worse than AA+ (AAA in

case of bonds issued by All India Financial Institutions). Ratings from credit rating agencies recognized by the regulator will only be accepted i.e. credit rating agencies registered under SEBI (Credit Rating Agencies) Regulations, 1999

c. Bank deposits (both fixed deposits and certificates of deposits) with the highest short term credit rating by recognized rating agencies

d. Commercial Paper with the highest short term rating from the recognized rating agencies;

e. Investment in mutual funds. Max Bupa will maintain a list of approved Asset Management Companies and their schemes with a semi-annual review. The investment should be within prescribed parameters.

2. Liquidity – Investment assets are exposed to liquidity risk and puts constraints on the investment function in case an exit from an investment is desired. This risk shall be managed by ensuring that no investment (excluding Bank deposits) shall be made in unlisted instruments.

3. Market Risks – All investments are exposed to market risks which are

as under:

a. Currency exchange risk - Since our investments would be denominated in Indian Rupees, the value of investments would not get directly affected by currency exchange risk.

b. Interest rate risk – With high proportion of investments in debt securities, our portfolio would be prone to interest rate risk. The same shall be managed by managing the duration gap between the assets and liabilities on a monthly basis. A duration analysis


on monthly basis shall be conducted for the entire portfolio. Further, following steps will be taken to minimize interest rate risk:

i. In any security, residual maturity at the time of investment

would be in line with maturity mix as prescribed in clause 4.2 of investment policy.

ii. A sensitivity analysis for various interest rate scenarios will be prepared depicting additional capital requirement in case of interest rate variation and presented to the approving authority.

c. Transaction/Systemic risk – Our market transactions are exposed to settlement risk and general systemic risk of the market. Settlement risk shall be managed by undertaking DVP (Delivery Versus Payment) based trades. A business continuity plan (BCP) for the investment function (including BCP plan of the custodian) shall be in place to manage the systemic risk.

4. Operational risk – Daily operations in the investment function are exposed to operational risk on account of potential errors and omissions. A robust maker-checker system as detailed in the investment function SOPs shall be implemented to minimize the risk.

5. Concentration risk – Concentration risk on company, group, industry, counterparty, broker, and tenor shall be reviewed on a continuous basis by adhering to the various limits imposed in the policy.

Annexure A – Authority Matrix For Approval of Transactions In the case of exceptional situations, transactions requiring approval from Investment Committee shall be approved by Working Investment Committee and put up for approval by Investment Committee in their immediately next meeting after such transaction.

Note: Transaction value in the above table is in terms of face value of instruments.


Corporate Bonds + Government Securities Fixed deposits +

Liquid Mutual funds

For Government Securities, Plain vanilla and approved AAA paper (Including CDs and CPs)

Lower than AAA rated paper

Investments classified as „Other Investments‟

Chief Investment Officer

Not more than Rs. 3 crore per transaction and 5 crore per day

Not more than Rs. 1 crore per transaction and Rs. 2 crore per day

NIL Net investment or withdrawal not more 15% of total investment assets in a month

Working investment committee

Above Rs.3 crores but not more than Rs. 10 crore per transaction; Above Rs. 5 crores but not more than Rs. 25 crore per day

Above Rs.1 crores but not more than Rs. 5 crore per transaction; Above Rs. 2 crores but not more than Rs. 10 crores per day

Not more than Rs. 1 crore per transaction and Rs. 2 crore per day

Net investment or withdrawal not more 30% of total investment assets in a month

Investment Committee approval

More than Rs. 10 crore per transaction or Rs. 25 crore per day



No limit


Annexure B – Reporting A. Reporting by Mid Office Mid Office will be responsible for putting up timely and accurate reports (to be detailed in the SOP) to the following:

1. Chief Financial Officer 2. Working Investment Committee 3. Investment Committee 4. Board of Max Bupa


Annexure C – Valuation of Investments

S.NO

PARTICULARS CAT CODE MARKET VALUE –

BASIS FOR FORM-3A, FORM-3B

A CENTRAL GOVTSECURITIES

A01 Central Government Bonds CGSB

Value as per FIMMDA (Fixed Income Money Market and Derivatives Association of India) if rated. If not, valued at applicable Market Yield rates published as per reputed Rating Agency

A02 Special Deposits CSPD At Cost

A03 Deposit under Section 7 of Insurance Act, 1938

CDSS

Value as per FIMMDA if rated. If not, valued at applicable Market Yield rates published as per reputed Rating Agency

A04 Treasury Bills CTRB Valued as per FIMMDA.

B CENTRAL GOVT.,STATE GOVT OR OTHER APPROVED SECURITIES

B01 Central Government Guaranteed Loans / Bonds

CGSL


B02 State Government Bonds SGGB


B03 State Government Guaranteed Loans

SGGL


B04 Other Approved Securities (excluding Infrastructure / Social Sector Investments)

SGOA


B05 Guaranteed Equity SGGE Book Value.


C (a) HOUSING & LOANS TO STATE GOVT. FOR HOUSING/ FFE

C01 Loans to State Government for Housing

HLSH At Cost Less NPA Provisions

C02 Loans to State Government for Fire Fighting Equipments

HLSF At Cost Less NPA Provisions

C03 Term Loan - HUDCO / NHB / Institutions accredited by NHB

HTLH At Cost Less NPA Provisions

C04 Commercial Papers - Institutions accredited by NHB / Institutions accredited by NHB

HTLN


C05 Mortgaged Backed Securities HMBS


C06

Debentures/Bonds/CPs/Loans - Promoter Group

HDPG


C07

Long Term Bank Bonds Approved Investment - Affordable Housing

HLBH


TAXABLE BONDS

C08 Bonds / Debentures issued by HUDCO

HTHD


C09 Bonds / Debentures issued by NHB / Institution accredited by NHB

HTDN


C10

Bonds / Debentures issued by Authority constituted under any Housing / Building Scheme approved by Central / State / any Authority or Body constituted by Central / State Act

HTDA


TAX FREE BONDS


C11 Bonds / Debentures issued by HUDCO

HFHD


C12 Bonds / Debentures issued by NHB / Institution accredited by NHB

HFDN


C13

Bonds / Debentures issued by Authority constituted under any Housing / Building Scheme approved by Central / State / any Authority or Body constituted by Central / State Act

HFDA


(b) OTHER INVESTMENTS (HOUSING)

C14 Debentures / Bonds / CPs / Loans

HODS


C15 Housing - Securitized Assets

HOMB


C16

Debentures / Bonds / CPs / Loans - (Promoter Group)

HOPG


C17 Long Term Bank Bonds Other Investment– Affordable Housing

HOLB


(c)INFRASTRUCTURE INVESTMENTS

C18 Infrastructure/ Social Sector - Other Approved Securities

ISAS



C19 Infrastructure - PSU - Equity shares - Quoted

ITPE

Market Value

C20

Infrastructure - Corporate Securities - Equity shares-Quoted

ITCE

Market Value

C21 Infrastructure - Equity (Promoter Group)

IEPG

Market Value

C22 Infrastructure - Securitized Assets

IESA

At Cost Less NPA Provisions

C23

Infrastructure - Debentures / Bonds / CPs / loans - (Promoter Group)

IDPG


C24

Onshore Rupee Bonds issued by ADB and IFC (Infrastructure- approved)

IORB


C25

Long Term Bank Bonds Approved Investment- Infrastructure

ILBI


C26 Infrastructure / Infrastructure Development Fund (IDF)

IDDF


TAXABLE BONDS

C27 Infrastructure / Social Sector - PSU - Debentures / Bonds

IPTD


C28 Infrastructure / Social Sector - PSU – CPs

IPCP


C29 Infrastructure/ Social Sector - Other Corporate Securities - Debentures/ Bonds

ICTD

Value as per FIMMDA if rated. If not, valued at applicable Market Yield rates published as per


reputed Rating Agency

C30 Infrastructure/ Social Sector - Other Corporate Securities – CPs

ICCP


C31 Infrastructure / Social Sector - Term Loans (with Charge)

ILWC At Cost less opening NPA Provisions

TAX FREE BONDS

C32 Infrastructure / Social Sector - PSU - Debentures / Bonds

IPFD


C33 Infrastructure/ Social Sector - Other Corporate Securities - Debentures/ Bonds

ICFD


(d) INFRASTRUCTURE - OTHER INVESTMENTS

C34 (d)Infrastructure - Equity (including unlisted)

IOEQ

Market Value

C35 Infrastructure - Debentures / Bonds / CPs / loans

IODS


C36 Infrastructure - Securitized Assets

IOSA


C37 Infrastructure - Equity (Promoter Group)

IOPE

Market Value

C38

Infrastructure - Debentures / Bonds / CPs / loans - (Promoter Group)

IOPD



C39

Onshore Rupee Bonds issued by ADB and IFC (Infrastructure- others)

IOOB


C40

Long Term Bank Bonds Other Investment– Infrastructure

IOLB


D APPROVED INVESTMENT SUBJECT TO EXPOSURE NORMS

ACTIVELY TRADED

D01 PSU - Equity shares - quoted EAEQ Market Value

D02 Corporate Securities - Equity shares (Ordinary)-quoted

EACE Market Value

D03

Equity Share - Companies incorporated outside India (invested prior to IRDA Regulations)

EFES

If quoted, valued at Market Value (last Quoted price should not be later than 30 days). In unquoted, Book Value Less Provisions (Provisions shall be made at the end of the Year. For the purpose of Quarterly Returns, if there exist any Provision for any Equity Share at the beginning of the year, the same shall be reduced from the Book Value)

D04 Equity Shares (incl. Equity related Instruments) - Promoter Group

EEPG



D05 Corporate Securities - Bonds - (Taxable)

EPBT


D06 Corporate Securities - Bonds - (Tax Free)

EPBF


D07 Corporate Securities - Preference Shares

EPNQ At Cost less Provision for diminution

D08 Corporate Securities - Investment in Subsidiaries

ECIS At Cost less Provision for diminution

D09 Corporate Securities - Debentures

ECOS


D10

Corporate Securities - Debentures / Bonds/ CPs /Loan - (Promoter Group)

EDPG


D11 Municipal Bonds - Rated

EMUN


D12 Investment properties – Immovable

EINP At Cost

D13 Loans - Policy Loans ELPL At Cost

D14 Loans - Secured Loans - Mortgage of Property in India (Term Loan)

ELMI At Cost Less NPA Provisions

D15 Loans - Secured Loans - Mortgage of Property outside India (Term Loan)

ELMO At Cost Less NPA Provisions

D16

Deposits - Deposit with Scheduled Banks, FIs (incl. Bank Balance awaiting Investment), CCIL, RBI

ECDB At Carrying Cost

D17 Deposits - CDs with Scheduled Banks

EDCD At Carrying Cost

D18 Deposits - Repo / Reverse Repo

ECMR At Cost

D19 Deposits - Repo / Reverse Repo - Corporate Securities

ECCR

At Cost


D20 CCIL – CBLO ECBO Mark to Market

D21 Commercial Papers issued by a Company or All India Financial Institutions

ECCP At Carrying Cost

D22 Application Money ECAM At Cost

D23 Deposit with Primary Dealers duly recognized by Reserve Bank of India

EDPD At Cost

D24 Perpetual Debt Instruments of Tier I & II Capital issued by PSU Banks

EUPD


D25 Perpetual Debt Instruments of Tier I & II Capital issued by Non-PSU Banks

EPPD


D26

Perpetual Non-Cum. P.Shares & Redeemable Cumulative P.Shares of Tier 1 & 2 Capital issued by PSU Banks

EUPS


D27

Perpetual Non-Cum. P.Shares & Redeemable Cumulative P.Shares of Tier 1 & 2 Capital issued by Non-PSU Banks

EPPS


D28 Foreign Debt Securities (invested prior to IRDA Regulations)

EFDS At Carrying Cost

D29 Mutual Funds - Gilt / G Sec / Liquid Schemes

EGMF At NAV as on the reporting date

D30 Mutual Funds - (under Insurer's Promoter Group)

EMPG At NAV as on the reporting date

D31 Net Current Assets (Only in respect of ULIP Business)

ENCA At book value

D32 Passively Managed Equity ETF (Non Promoter Group)

EETF

At NAV as on the reporting date

D33 Passively Managed Equity ETF (Promoter Group)

EETP


D34 Onshore Rupee Bonds issued by ADB and IFC

EORB

Value as per FIMMDA if rated. If not, valued at applicable Market Yield


rates published as per reputed Rating Agency

D35 Debt Capital Instruments (DCI-Basel III)

EDCI


D36

Redeemable Non-cumulative Preference Shares (RNCPS- Basel III)

ERNP

At cost less Provision for diminution

D37

Redeemable Cumulative Preference Shares (RCPS- Basel III)

ERCP


E OTHER INVESTMENTS

E1 Bonds - PSU – Taxable OBPT


E2 Bonds - PSU - Tax Free OBPF


E3 Equity Shares (incl Co-op Societies)

OESH


E4 Equity Shares (PSUs & Unlisted)

OEPU

If quoted, valued at Market Value (last Quoted price should not be later than 30 days). In unquoted, Book Value Less Provisions (Provisions shall be made


at the end of the Year. For the purpose of Quarterly Returns, if there exist any Provision for any Equity Share at the beginning of the year, the same shall be reduced from the Book Value)

E5 Equity Shares (incl. Equity related Instruments) - Promoter Group

OEPG


E6 Debentures OLDB


E7 Commercial Papers OACP At Carrying Cost

E8 Debentures / Bonds/ CPs / Loans etc. - (Promoter Group)

ODPG


E9 Municipal Bonds

OMUN


E10 SEBI approved Alternate Investment Fund (Category I)

OAFA

E11 SEBI approved Alternate Investment Fund (Category II)

OAFB

E12 Preference Shares OPSH At cost less Provision for diminution


E13 Short term Loans (Unsecured Deposits)

OSLU At Cost Less opening amortization / NPA Provisions

E14 Term Loans (without Charge) OTLW At Cost Less opening amortization / NPA Provisions

E15 Mutual Funds - Debt / Income / Serial Plans

OMGS At NAV as on the reporting date

E16 Mutual Funds (under Insurer's Promoter Group)

OMPG At NAV as on the reporting date

E17 ABS & SRs OPSA


E18 Investment properties - Immovable

OIPI


E19 Passively Managed Equity ETF (Non Promoter Group)

OETF


E20 Passively Managed Equity ETF (Promoter Group)

OETP


E21 Onshore Rupee Bonds issued by ADB and IFC

OORB


E22 Debt Capital Instruments (DCI-Basel III)

ODCI


E23

Redeemable Non-cumulative Preference Shares (RNCPS - Basel III)

ORNP


E24

Redeemable Cumulative Preference Shares (RCPS - Basel III)

ORCP


E25

Reclassified Approved Investments - Debt (Point 6 under Note for Regulation 4 to 9)

ORAD



E26

Reclassified Approved Investments - Equity (Point 6 under Note for Regulation 4 to 9)

ORAE

Market Value


Annexure D – List of Approved Mutual Fund AMC Investment will be restricted to those mutual fund schemes investing in Gilt, G-sec, or liquid money market assets.

1. ICICI Prudential Mutual Fund 2. Axis Mutual Fund 3. Sundaram Mutual Fund 4. L&T Mutual Fund 5. HDFC Mutual Fund 6. Tata Mutual Fund 7. Invesco India Mutual Fund 8. Kotak Mutual Fund 9. JM High Liquidity Fund 10. DSP BlackRock Liquidity Fund 11. HSBC Cash Fund 12. LIC MF Liquid Fund


Annexure E – Code of conduct to prevent insider/personal trading

Max Bupa Health Insurance Company Limited Code of Conduct to prevent insider/personal trading


Table of Contents

1. Objective 37 2. Definitions 38 3. Applicability 41 4. Role of the Head-Compliance 41 5. Preservation of Unpublished Price Sensitive Information and the Investment Decisions 42 6. Trading in Securities 43 7. Contra Trade 41 8. Investigation 42 9. Communication of findings 47 10.Auditor 48 11.Exemptions to trading for the purpose of this Guideline 48 12.Disclosure Requirements 49 13.Penalty for Contravention of this Code 44 14.General Standards of Conduct for Connected Persons 45 15.Review 46


1. Objective

1.1 The Insurance Regulatory and Development Authority of India (“IRDAI”)

has amended the Insurance and Regulatory Development Authority (Investment) Regulations, 2000 by way of the Insurance and Regulatory Development Authority (Investment)(Fifth Amendment) Regulations, 2013 (“Investment Regulations”) and inter alia introduced Regulation 13 (B)(2) which requires insurance companies to put in place a model code of conduct to prevent insider/ personal trading of officers involved in the various levels of investment operations in compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 2015 (as amended from time to time)(“2015 Insider Trading Regulations”).

1.2 The Company already has in place an insider trading policy “Guidelines for Personal Trading in Securities,” as amended from time to time. The Company has now amended the existing Guidelines for Personal Trading in Securities to bring it in line with the requirements of the Investment Regulations, 2015, Insider Trading Regulations and applicable provisions of the Companies Act, 2013 (“Companies Act”).

1.3 The Connected Persons of Max Bupa Health Insurance Company Limited (the “Company”) may be privy to / may acquire Unpublished Price Sensitive Information (as defined hereinafter) in relation to publicly listed companies. Dealing in securities of publicly listed companies on the basis of 1) Unpublished Price Sensitive Information or 2) Investment Decisions made by the Company is unethical and illegal. The Company‟s “Guidelines for Personal Investment/Trading in Securities” (these “Guidelines”) seek to prevent such unethical dealings.

1.4 The Company endeavors to preserve the confidentiality of all

Unpublished Price Sensitive Information(s) and Investment Decisions made by the Company and to prevent misuse of such information(s). The Company is committed to transparency and fairness in dealing with all stakeholders and ensuring adherence to all laws and regulations.

1.5 The objectives of these Guidelines are: a. to ensure that all transactions by the Connected Persons in Securities

are conducted in such manner so as to avoid any actual or potential conflict of interest or any abuse of an individual‟s position of trust and responsibility;

b. to ensure that the Connected Persons do not take undue advantage of

any Unpublished Price Sensitive Information or any knowledge regarding the Investment Decisions that they may have;


c. to guide the Connected Persons towards maintaining a high standard of probity that one would expect from an employee in a position of responsibility; and

d. to set out the required disclosure for the Connected Persons. 2. Definitions

For the purpose of these Guidelines, the terms below shall have the following meanings: 2.1 “Board of Directors” or “Board” shall mean the board of directors of the Company; 2.2 “Audit Committee” shall mean the Audit Committee of the Board of the Company 2.3” “Connected Person” means: a. An officer or employee of the Company who directly or indirectly, has

access to Unpublished Price Sensitive Information or is reasonably expected to allow such access

b. Employees of the Company in the Investment Department, front office, middle office and back office.

c. Any other persons designated as Connected Person by the HOC. d. Immediate Relatives of any of the above and/or any

firm/HUF/association of the persons wherein such persons and / or his relatives hold more than 10% stake.

e. A former employee of the Company (satisfying the requirements in sub-clause (i) above, while in employment) till the expiry of a period of 6 months from the date of termination or expiry of his employment

”HOC”shall mean the Head of Compliance; 2.5 “Derivatives” shall include (a) a security derived from a debt instrument, share, loan, whether

secured or unsecured, risk instrument or contract for differences or any other forms of security; (b) a contract which derives its value from the prices or index of prices of underlying securities.

2.6 “Director” means a director on the board of the Company 2.7 “Immediate Relative” means the spouse, and includes parents, siblings and child of the Connected Person or of his/her spouse who is/are (i) dependent financially on the Connected Person; or (ii) consult the Connected Person in relation to Trading in Securities. 2.8 “Insider” shall mean any person who is:

a. A connected person, or b. In possession of or having access to unpublished price sensitive

information.


2.9 “Insider trading” shall mean

a. An act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or deal in any Securities by any Connected Person of the company either as principal or agent if such Connected Person of the company is reasonably expected to have access to any non-public price sensitive information in respect of securities of company or/and investment decisions coming into their possession or control or awareness; or

b. An act of counseling about procuring or communicating directly or indirectly any non-public price-sensitive information or/and investment decisions to any person;

2.10 “Investment Decisions” means decisions with respect to investments made/ or to be made by the Company as per the Insurance Act, 1938 and the Insurance Regulatory and Development Authority (Investment) Regulations, 2015 based on data analysis and research reports; 2.11 “Investigating Authority” shall have the meaning provided to the term in

clause 8.1 of these Guidelines. 2.12 “Key Managerial Personnel” in relation to a company means: (a) the Chief Executive Officer (CEO), managing director or manager; (b) the company secretary; (c) the whole-time director; (d) the Chief Financial Officer (CFO); and (e) such other officer as may be prescribed by or under Companies Act, 2013. 2.13 “Personal Account” is any brokerage account maintained by or for the benefit of a Connected Person. Personal account includes any account in which any of the Connected Persons holds a direct or indirect beneficial interest, retains discretionary investment authority or exercises a power of attorney; 2.14 “Prohibited List” is a list of securities that cannot be traded by persons so identified in the list of Designated Persons and Covered Persons. The Prohibited List as applicable as on date of these Guidelines is attached as Annexure G; 2.15 “Promoter” has the meaning assigned to it under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 or any modification thereof. 2.16 “Restricted List” is a list of securities identified in writing from time to time by the HOC. The Restricted List as applicable as on date of these Guidelines is attached as Annexure F. This would typically include those securities for which the Company may possess Unpublished Price Sensitive Information. or such Securities which forms or may in the future form a part of the Company‟s investment portfolio. 2.17 “Securities” shall mean and include:


i. shares, scripts, bonds, debentures, debenture stock or other marketable

securities of a like nature in or of any incorporated company or other body corporate;

ii. Derivative; iii. Units or any other instrument issued by any collective investment

scheme to the investors in such schemes; iv. Security receipt as defined in clause (zg) of section 2 of the

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

v. Units or any other such instrument issued to the investors under any mutual fund scheme;

vi. Units or any other such instrument issued to the investors under any mutual fund scheme;

vii. Any certificate or instrument (by whatever name called), issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable including mortgage debt, as the case may be;

viii. Government securities; and ix. Rights or interests in securities.

It is clarified that securities listed on a stock exchange outside India will not be included within the definition of “Securities”. 2.18 “Trading” shall mean and include subscribing, buying, selling, dealing, or agreeing to subscribe, buy, sell, deal in any Securities. 2.19 “Unpublished Price Sensitive Information” means any information, which relates, directly or indirectly, to a company or its securities, that is not generally available, which upon becoming available is likely to materially affect the price of the Securities and shall, ordinarily including but not restricted to, information relating to the following:

a. Periodical financial results of the company; b. Intended declaration of dividend (both interim and final); c. Change in capital structure; d. Mergers, De mergers, acquisitions, delisting, disposals and expansion

of business and such other transactions; e. Changes in Key Managerial Personnel; and f. Material events in accordance with the listing agreement in relation to

the company. 2.20 “Working day” shall mean the working day when the regular trading is permitted on the concerned stock exchange where the concerned Listed Securities are traded/listed. 2.21 Other definitions


Reference to any specific department or any designation of a Connected Person shall mean the relevant department or designation of a Connected Person of the Company. If any definition or any of the provisions under these Guidelines is unclear, please contact the Head-Compliance (HOC). 3. Applicability

These Guidelines shall be applicable to Trading in Securities by Connected Persons and such other actions by the Connected Persons that are either prohibited or restricted under this guideline and under the 2015 Insider Trading Regulations. 4. Role of the Head-Compliance

4.1 The Company has appointed the Head - Compliance of the Company

as the Head - Compliance, having direct access to the Board for purposes of fulfilling his obligations under the Guidelines.

4.2 The Head Compliance shall be responsible for:

a. Setting forth policies, framing rules and procedures to ensure compliance with the 2015 Insider Trading Regulations and the Guidelines and maintenance of records in relation to compliance with the Guidelines and 2015 Insider Trading Regulations;

b. Pre-clearing of proposed Dealings by Connected Persons and their

Relatives and monitoring of trades after clearance; and

c. Implementation of these Guidelines under the overall supervision of the Board of Directors of the Company.

4.3 The Head-Compliance shall maintain record of the Connected Persons and any changes therein. 4.4 The Head-Compliance shall maintain records of all the applications, undertakings, declarations etc. submitted by Connected Persons, for a period of five years from the date of receipt of such document. 4.5 The Head-Compliance shall place before the Chief Executive Officer (CEO), on a monthly basis, a summary of the trading in the Securities by the Connected Persons and if requested, the accompanying documents that such persons had executed as required under these Guidelines. Further, the Head - Compliance shall place before the Audit Committee a similar report on a quarterly basis. 4.6 Head Compliance shall rely on the Chief Investment Officer (CIO) for the list of Prohibited and Restricted Securities (the “Prohibited List” and


“Restricted List”) which shall be used as the basis for approving or rejecting applications for pre-clearance of trade. 4.7 The Head-Compliance shall also take appropriate steps for educating the employees of the Company on disclosure policies and procedure. 4.8 The Head-Compliance shall assist all the Connected Persons in addressing any clarifications regarding (2015Insider Trading) Regulations and these Guidelines. 5. Preservation of Unpublished Price Sensitive Information and the Investment Decisions

5.1 All the Connected Persons shall maintain the confidentiality of all Unpublished Price Sensitive Information and Investment Decisions coming into their possession or control. 5.2 Connected Persons shall not communicate, provide or allow access to Unpublished Price Sensitive Information and/or Investments Decisions to any person including other Connected Persons except where the communication is in furtherance of legitimate purposes, performance of duties or discharge of legal obligations. The Connected Persons shall not:

a. Pass on Unpublished Price Sensitive Information and/or any information regarding Investment Decisions to any person directly or indirectly by way of making a recommendation for the purchase or sale of any securities/ making any investments, or

b. Disclose Unpublished Price Sensitive Information and/ or any

information regarding Investment Decisions to their family members, friends, business associates or any other individuals, or

c. Discuss Unpublished Price Sensitive Information and/ or any

information regarding Investment Decisions in public places, or

d. Recommend to anyone that they may undertake Trading in securities while being in possession, control or knowledge of Unpublished Price Sensitive Information and/ or any information regarding Investment Decisions, or

e. Be seen or perceived to be Trading in Securities or making

personal investments on the basis of Unpublished Price Sensitive Information and/or making Investment Decisions on their own account, or a client‟s account.

Provided nothing contained above shall be applicable to any communication required to be made by the Connected Persons in the ordinary course of business or profession or employment or under any law.


5.3 All Connected Persons shall:

a. Keep secure all files/papers containing confidential Unpublished Price Sensitive Information(s) and/or Investment Decisions. Computer files containing Unpublished Price Sensitive Information(s) and/or Investment Decisions must have adequate security of login and password, etc.

b. Handle the Unpublished Price Sensitive Information(s) and/or information regarding Investment Decisions on a “need to know” basis, i.e. such information shall be disclosed only to those persons within the Company who need the information to discharge their duty and whose possession of such information will not give rise to a conflict of interest or appearance of misuse of the information(s).

5.4 No person shall procure from or cause the communication by any Insider, relating to a company or securities listed or proposed to be listed, except in furtherance of legitimate purposes, performance of duties or discharge of legal obligations. 5.5 Chinese Wall

5.5.1 To prevent the misuse of the Unpublished Price Sensitive Information, the Company shall adopt a “Chinese Wall” policy which separates those areas of the Company which routinely have access to Unpublished Price Sensitive Information and/or Investments Decisions, considered “inside areas” from those areas of the Company which deal with sale/marketing or other departments providing support services, considered “public areas”.

5.5.2 The employees in the “inside area” shall not communicate any Unpublished Price Sensitive Information and /or Investments Decisions to anyone in the public area. 7

5.5.3 The employees in “inside area” may be physically segregated from employees in the public area.

5.5.4 Demarcation of various departments as “inside area” may be implemented by the Company.

5.5.5 In exceptional circumstances, employees from the public areas may be brought “over the wall” and given confidential information on the basis of „need to know‟ criteria, under intimation to the Chief Compliance Officer. 6. Trading in Securities

6.1 Pre-clearance of Dealings

a. Connected Persons shall apply in the form prescribed in Annexure A to the HOC for its prior approval for the purpose of any Trading in any Securities. For trades by the HOC, the HOC


shall seek pre-clearance from the Managing Director and the Chief Executive Officer of the Company. The primary Connected Person will be responsible for the secondary Connected Person (i.e. the Immediate Relative of the primary Connected Person) complying with the Guidelines. It is clarified that the pre-clearance, to be taken by the secondary Connected Person, i.e., the Immediate Relative of the Connected Person, will be done through the primary Connected Person.

b. The above mentioned prior approval application by Connected Persons shall be accompanied by an undertaking in the form as set out in Annexure D executed in favor of the Company.

c. The HOC shall intimate approval or refusal of pre-clearance

within two working days, following the date on which the request for clearance is received by the HOC, subject to the request for clearance having been received within the working hours of the Company.

d. The decision of the HOC on such application for Trading in

securities shall be final and binding. The Head - Compliance may delegate his/ her authority of according trade pre-approvals to Head-Legal in his / her absence from work.

e. The approval of HOC for carrying out Trading in Securities shall

be valid for not more than seven (7) Working Days from the date of approval. In case the order is not executed within seven (7) Working Days after the approval, the concerned person must re-apply to the HOC for the clearance of such Trading in Securities.

f. The HOC shall coordinate with the investments department of

the Company, wherever necessary, for the purpose of clearing requests of Trading in Securities. All requests for Trading in Securities shall be promptly forwarded/ informed by the HOC to the Chief Investment Officer (“CIO”). The CIO shall within one Working Day of the request being forwarded, inform the Head - Compliance as to whether there has been any Trading in the securities by the Company at any time within seven (7) days prior to such request or any Trading in the securities is proposed to be made by the Company at anytime within seven (7) days from the date of such request. In a situation, where the trade request/ information has not been received from CIO or CIO being unavailable, such information may be sought from the fund manager (equity/debt) regarding the trade in the security by the Company in the past seven (7) days or a likelihood that a particular scrip/security is likely to be traded by the Company in the next seven (7) days.

All the above requirements are also applicable for investments through primary markets such as IPOs.


6.2 Short Term Trading:

a. Connected Persons should refrain from short term trading and

profiting from Trading in Securities which involves the purchase and sale or sale and purchase of the same Security within a period of thirty (30) calendar days from the date of the last transaction in IPO or in secondary market.

b. In case of personal emergencies, the Head - Compliance may, on being satisfied by the justification received from the concerned person, allow sale of Securities before the completion of thirty (30) day period after recording in writing his/her reasons in this regard.

c. The holding period does not apply to ESOPs from the date of allotment, rights issues, bonus, splits and other corporate actions over which the Connected Person has no control.

6.3 Other restrictions:

a. Connected Persons shall not insist or ask brokers to charge reduced brokerage, or accept any contract with a reduced brokerage charge on the basis that the broker is the Company‟s broker.

b. Trading in Derivatives of any listed Securities is not allowed for Connected Persons.

c. Connected Persons shall not engage in short selling.

6.4 All Trading in Securities may be undertaken only in accordance with the

provisions of these Guidelines. 6.5 In case of Connected Person, the onus of establishing, that they were

not in possession of Un-Published Price Sensitive Information or do not have information of any Investment Decision(s), shall be on such Connected Person.

7. Contra Trade 7.1 A Connected Person shall not execute a contra trade for a period of six

months. It is clarified that a contra trade is a trade in which a person offsets a previous share purchase with an equivalent sale or vice versa. It is clarified that the Head - Compliance may provide a relaxation from this requirement in accordance with the 2015 Insider Trading Regulations. Further, it is clarified that a contra trade pertains to buying or selling of stocks without having to pay for the cost of the stocks. For instance, if someone buys stocks on contra, he will have to sell the


stock after a period of time. Before the end of that period, he will either have to pay for the contract value or sell the stock or settle the difference between the initial buying price and the selling price.

7.2 In case of contra trades in violation of clause 7.1 above, inadvertently or

otherwise, the profits from such trade shall be remitted to SEBI for credit to the Investor Protection and Education Fund.

8. Investigation 8.1 If the Head - Compliance is of the view that any of the Connected

Person(s) have violated any of the provisions of the 2015 Insider Trading Regulations or this Guidelines (“Reviewed Person”), it may make enquiries into such violation and appoint one or more officers of the Company to undertake an investigation (“Investigating Authority”).

8.2 Before undertaking any investigation, the Head - Compliance shall give

a reasonable notice to the Reviewed Person in question. The Head - Compliance may, by an order in writing, direct the investigation to be taken up without such notice if it is required in the interest of the of shareholders and / or policyholders.

8.3 The Reviewed Person will be required to produce to the Investigating

Authority such books, accounts and other documents in their custody or control and furnish the Investigating Authority with statements and information relating to the transactions in securities marked within such time as the Investigating Authority may require.

8.4 The Reviewed Person shall allow the Investigating Authority to have

reasonable access to the premises occupied by such person and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the stock-broker or any other person and also provide copies of documents or other materials which in the opinion of the Investigating Authority are relevant.

8.5 The Investigating Authority shall, within reasonable time of the

conclusion of the investigation, submit an investigation report to the Head - Compliance.

9. Communication of findings 9.1 The Head - Compliance shall, after consideration of the investigation

report communicates the findings to the Reviewed Person. 9.2 Such Reviewed Person shall reply to the same within 21 days; and 9.3 On receipt of such a reply or explanation, if any, from such person, the

Head - Compliance may take such measures as it deems fit. Actions that may be undertaken by the Head - Compliance may include


suspension, wage freeze, etc. SEBI/ IRDAI may take additional action against such person as they may deem fit.

10. Auditor 10.1 The Board of Directors may appoint an external auditor to investigate

into the books of account or the affairs of the Reviewed Persons. The auditor shall have the same authority as the Investigating Authority as provided for in clause 8.3 to 8.5 of this Guidelines.

10.2 The Reviewed Person shall allow the external auditor to have

reasonable access to the premises occupied by such person and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the stock-broker or any other person and also provide copies of documents or other materials 10 which in the opinion of the Investigating Authority are relevant.

11.. Exemptions to Dealings for the purpose of these Guidelines The Guidelines shall not be applicable to the following:

a. Fixed deposits issued by Banks;

b. Bank certificates of deposit;

c. Commercial paper/ money-market security;

d. Mutual funds;

e. Events non-volitional in nature e.g. stock splits, stock dividends, exchanges and conversions, pro rata distributions to all holders of a class of securities;

f. Exchange traded funds like gold funds etc. that are generic in nature

and not company specific, hedge funds and commodity and currency derivatives;

g. Tax Savings Bonds;

h. Corporate and Government Bonds open for retail subscription; and

i. Rights issues by companies.


12. Disclosure Requirements 12.1 Initial Disclosure:

a. Every Connected Person, who is a Key Managerial Personnel, shall upon being appointed or categorized as above, as the case may be, shall disclose their holding of Securities of the Company as on the date of their appointment to the Head - Compliance of Max Bupa within 7 days of such appointment as per the format in Annexure B.

b. Other Conected Persons shall submit, as per the format in Annexure B, details of their Securities held by them to the HOC within thirty (30) working days of the date of these Guidelines coming into force. Any Individual becoming a Connected Person shall also make the above disclosure to the HOC within thirty (30) working days of becoming a Covered Person or Designated Person as per the format in Annexure B.

12.1 Continual Disclosures:

a. Quarterly report: Connected Persons (who are employees of the Company) shall submit, as per the format in Annexure C, details of their Securities Holding on a quarterly basis within thirty (30) calendar days from the end of every quarter.

b. Annual report: Connected Persons (who are employees of the Company) shall submit, as per the format in Annexure E, details of the Securities held 11 by them on an annual basis within thirty (30) calendar days from the end of the financial year.

The HOC and his Compliance team will also carry out annual reviews of compliance to these Guidelines including review of any pre-clearances provided with the demat statements, and place the reports before the Audit Committee. It is clarified that the primary Connected Person will be responsible for making necessary disclosures on behalf of the secondary Connected Person (Immediate Relative of the primary Connected Person) as required under the Guideline. It is clarified that Immediate Relatives will not have to separately provide the initial, quarterly or annual disclosures.

13. Penalty for Contravention of these Guidelines

a. Any contravention of these Guidelines by Connected Persons shall be escalated to CEO, HOC, and Head HR. Appropriate action shall be taken as recommended by HOC and Head HR, including warning, severe reprimand or termination.


b. Any violation of the 2015 Insider Trading Regulations, detected by the Company shall be informed to Audit Committee, Board and SEBI (as required as per the 2015 Insider Trading Regulations) by the HOC. .

c. If any person contravenes the provisions of Section 195 of the

Companies Act, he/she is punishable under the Companies Act with an imprisonment for a term which may extend to five years or with fine which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees or three times the amount of profits made out of Insider Trading, whichever is higher, or with both..

14. General Standards of Conduct for Connected Persons

a. No disclosure of the Company’s information: Connected Persons shall not pass on information to any person/ entity regarding the Company‟s past, current or proposed investment activity or Investment Decision or activity unless required under regulations/laws;

b. No disclosure of Sensitive Information: No Conected Persons shall

communicate or counsel or procure directly or indirectly any Unpublished Price Sensitive Information and/ or Investment Decisions to any person who, while in possession of such Unpublished Price Sensitive Information and/ or Investment Decisions, may undertake Trading in securities. (This is not applicable to any communication required in the ordinary course of business or profession or employment or under any law, in which case the Connected Person shall adequately address the requirement to make such disclosure to the Company);

c. Priority of Company transaction: Transactions by the Company of

Listed Securities shall have priority over transactions by Connected Persons in the Listed Securities or other investments of which they are a beneficial owner so that such transactions do not operate adversely to the Company‟s interests;

d. Avoid conflict of interest: Connected Persons must avoid any

potential conflict of interest between their personal investing activities and those of the Company‟s;

e. Avoid any fraudulent ploys: When any Connected Person purchases

or sells a Listed Security, he/ she may not employ any device, scheme or artifice to defraud the Company or engage in any manipulative practice, act, or course of business that would operate as a fraud or deceit upon the Company;

f. No personal Trading in the Securities Prohibited List: No

Connected Person shall deal in Listed Securities mentioned in the Prohibited List as published by the HOC;

g. No personal and professional dealing when in possession of

Sensitive Information: Connected Persons shall on his/ her own


behalf or on behalf of any other person or on behalf of the Company,

undertake any Trading in Securities mentioned in the Restricted

mentioned in the Restricted List when in possession of any Unpublished Price Sensitive Information and/ or Investment Decisions.

h. No circumvention of the Guideline: No Connected Persons should engage in any Trading in Securities so as to circumvent this Guideline in any manner.

In addition, Connected Persons may not purchase or sell a Listed Security if he or she has actual knowledge at the time of purchase or sale that such Listed Security is being considered for purchase or sale by the Company or is being purchased or sold by the Company. A Listed Security shall be deemed to be “being considered for purchase or sale” when a recommendation to purchase or sell a Listed Security has been made or communicated to an investment professional engaged in the investment functions for the Company or is an Investment Decision. Additionally, with respect to the person making the recommendation, a Listed Security is “being considered for purchase or sale” when such person first considers making such a recommendation. 15. Review The Audit Committee shall review and update this Guideline of conduct once every two years to give effect to such amendments as appropriate and necessary, and to recommend the revised Guideline to the Board for its approval.


Annexure A: Pre-clearance Request for Personal Securities Trading Date: To Head-Compliance Max Bupa Health Insurance Co. Ltd., Max House, 1 Dr. Jha Marg, Okhla New Delhi-110020 Name of Covered/Designated Person: Designation / Employee Code: Trades must be made within 7 working days once approval is received.

Security Name

Stock Code/ Symbol

No. of shares to be traded

Approx. Price or Range (Rs.)

Total Amount or Range (Rs.)

Purchase/ Sell

Direct Ownership (D)/ Joint Ownership with immediate relative**

*Date when security was last purchased/ sold

Approved/ Denied

* Date when the security was last purchased/sold for the specific lot of shares which are proposed to be purchased/sold. **”Immediate Relative” means the spouse, and include parents, siblings and child of the connected person or of his / her spouse who is / are (i) dependent financially on the connected person; or (ii) consult the Connected Person in relation to the Trading in Securities. Terms not defined herein shall have the meaning accorded to such terms under the Max Bupa Health Insurance Company Limited‟s Code for Personal Investment / Trading in Securities Signature Date


Annexure B: Initial Report - Certification of Securities Holdings Date: To Head-Compliance Max Bupa Health Insurance Co. Ltd., Max House, 1 Dr. Jha Marg, Okhla New Delhi-110020 Name of Covered / Designated Person: Designation / Employee Code: Date of becoming a Covered / Designated Person: ___________ (the Initial Report) I certify that the Securities listed below are the ONLY Securities in my Personal Account(s) and the Personal Accounts of my Relatives and any firm/HUF/association of the persons wherein I and / or my relatives hold more than 10% stake, as of the above date:

Security Name

Stock Code/ Symbol

Number of shares held

Estimated Market Value as of Qtr end (Rs.)


Date of Transaction

Demat Account No.

**”Immediate Relative” means the spouse, and include parents, siblings and child of the connected person or of his / her spouse who is / are (i) dependent financially on the connected person; or (ii) consult the Connected Person in relation to the Trading in Securities. OR I certify that there are NO Securities holdings for my Personal Account(s) or the Personal Accounts of my Relatives and any firm/HUF/association of the persons wherein I and / or my relatives hold more than 10% stake, as of the above date. Signature ___________________________ Date


Annexure C: Quarterly Report - Certification of Securities Holdings and Securities Transactions Date: To Head-Compliance Max Bupa Health Insurance Co. Ltd., Max House, 1 Dr. Jha Marg, Okhla New Delhi-110020 Name of Covered / Designated Person: Designation / Employee Code: Certification for the quarter ending: _________________ (Quarterly Report) Section A – Certification of Securities Holdings Following is the list of Securities held by me and my Relatives in Personal accounts and by a firm/HUF/association of the persons wherein I and / or my relatives hold more than 10% stake and these are the ONLY Securities as of the above date:

Security Name

Stock Code/ Symbol


Estimated Market Value as of Qtr end


Date of Transaction

Date of Approval

Demat Account No.

**”Immediate Relative” means the spouse, and include parents, siblings and child of the connected person or of his / her spouse who is / are (i) dependent financially on the connected person; or (ii) consult the Connected Person in relation to the Trading in Securities. OR I certify that there are NO Securities holdings for my Personal Account(s) or the Personal Accounts of my Relatives and any firm/HUF/association of the persons wherein I and / or my relatives hold more than 10% stake, as of the above date. Signature ___________________________


Section B - Certification of Securities Transactions Following is the list of all transactions done by me and my Relatives in Personal Accounts and by any firm/HUF/association of the persons wherein I and / or my relatives hold more than 10% stake, during the last quarter.

Security Name

Stock Code/ Symbol

Number of shares traded

Purchase/ Sell

Price at which transaction was executed

Direct Ownership(D)/ Joint Ownership with immediate relative**

Date of Transaction

Date of Approval

Total amount

OR I certify that there are NO transactions which have been done by me or my Relatives in a Personal Account or by any firm/HUF/association of the persons wherein I and / or my relatives hold more than 10% stake during the last quarter, in India. __________________________ Signature ___________________________ Date


Annexure D: Letter of Undertaking Date: To Head-Compliance Max Bupa Health Insurance Co. Ltd., Max House, 1 Dr. Jha Marg, Okhla New Delhi-110020 Name of Covered/Designated Person: Designation / Employee Code: I confirm that the following is true and correct:

a. That I do not have any access or have not received “Unpublished Price Sensitive Information” up to the time of signing this undertaking.

b. That I do not have access to or have received “Unpublished Price Sensitive Information” in relation to securities of [Insert name of security in which individual will deal in].

c. That I would completely refrain from Trading in the said securities for which Dealing approval is being sought till the time such information becomes public.

d. That I have not contravened the Guidelines or SEBI (Prohibition of Insider Trading) Regulations, 1992 as notified by SEBI (as amended from time to time).

e. That I have not violated the provisions of section 195 of the Companies Act, 2013.

f. That there is no conflict of interest in the requested Trading with respect to Max Bupa Health Insurance portfolio.

g. That these Dealings are not Private Placements. h. That I have made a full and true disclosure in the matter.

Best regards, __________________________ Signature ___________________________ Date


Annexure E: Annual Securities Holding Report and Certification Annual Certification for the year ending: Instructions: All the Connected Persons as defined in the Guidelines for Personal Investment / Trading in Securities (“Code”) are required to disclose their Trading in Securities and holdings of Securities to the Company. Please complete the table in Section A below and attach the copy (ies) of your broker‟s statement(s) with this certification. Please note that even if there are no holding of Securities holdings or there are no brokerage account(s) for which you have a direct or indirect beneficial interest, this certification still has to be completed and submitted to the Head - Compliance. Declaration: I hereby acknowledge that I have received and read the Code and have understood the standards and principles contained therein. I certify that I have complied with the provisions of the said Code. I undertake that I shall continue to comply with the provisions of the said Code and all amendments thereto as well as any other policies or procedures established by the Company that are applicable to the Investment Decisions. I further undertake to obey the rules of any regulatory bodies with which the Company may be required to comply either directly or indirectly prevailing from time to time or any addition, amendment or replacement that is set out in any written notice which is subsequently given to me. I further acknowledge that should there be any violations that I am aware of or suspect to have occurred, to be ongoing or likely to occur, I will immediately report the same to the Head - Compliance.


1. Section A – Securities Holdings Following is the list of Securities held by me and / or Jointly with my Immediate Relative* in Personal Accounts and these are the ONLY securities as of the above date: Please „√‟ box as appropriate:

1/ List of securities holdings

Security Name

Stock Code/ Symbol


Estimated Market Value (Rs.)

Name of Broker/ Dealer/ Bank

Account #

*“Immediate Relative” means the spouse, and includes parents, siblings and child of the Connected Person or of his/her spouse who is/are (i) dependent financially on the Connected Person; or (ii) consult the Connected Person in relation to Trading in Securities. OR

2/ I certify that there are NO securities holdings for my Personal Account(s) or the Personal Account(s) of my Immediate Relative, as of the above date.


Section B- Acknowledgement I acknowledge that if, in the future, I choose to open an investment account in which I have a direct or indirect beneficial interest, I will intimate the Head - Compliance within 14 Working Days after the opening of such account. ___________________________ Signature ___________________________ Name and Title ___________________________ Company ___________________________ Date


Annexure F: Restricted List of Securities [This includes the portfolio of Max Bupa and such other Securities that are being considered by Max Bupa for Investment] Other restrictions in Dealings

1. As per sub-clause 6.1 (f) under Pre-Clearance of Trading, dealing in any security(ies) would be restricted if there is dealing in such Listed Securities by the Company at anytime within seven calendar (7) days prior to such request or any Dealing is proposed to be made by the Company in respect of such Listed Securities at any time after seven calendar (7) days from the date of such request.


Annexure G: Prohibited List of Securities 1. Max India Limited. 2. MS&AD Insurance Group Holdings, Inc. Other prohibition in Dealings 3. Trading in Derivatives of any Listed Securities (Clause 8.4 d). 4. Short selling (Clause 8.4 a).


Annexure F – Organization Chart: Investment Function

Chief Investment Officer

CFO

Head - Mid Office

CEO

Working Investment Committee

Head – Back office

Manager (Back Office)

Manager (Mid Office)

Fund Manager

Dealer

Documents

MAX BUPA HEALTH INSURANCE CO LTD Bupa Health Insurance Company Ltd. ... Target Limit (% of Investment Assets) Regulatory requirement i. ... CBLO (Collateralized