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HDFC

HDFC Standard Life Insurance Company Ltd

HDFC Standard Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom.

HDFC Standard Life's Product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment, and Health. Customers have the added advantage of customizing the Plans, by adding optional benefits called riders, at a nominal price. The company currently has 25 retail and 4 group products in its portfolio, along with five optional rider benefits catering to the savings, investment, protection and retirement needs of customers.

HDFC Standard Life continues to have one of the widest reaches among new insurance companies through a network of 595 offices serving over 700 cities and towns across the country. The company has also increased its depth in existing markets with a strong base of more than 2,007,000 Financial Consultants.

Housing Development Finance Corporation Limited is India's leading housing finance institution with a customer base of over 3.3 million and assets under management of over $19.23 billion*. Standard Life plc is a leading provider of financial services from the United Kingdom, with a worldwide customer base of over 6.5 million and over $156.8 billion# in assets.

Both the promoters are well known for their ethical dealings and financial strength, and are both committed to the long term future of the Indian life insurance industry.

Range of Solutions

HDFC SL offers a range of flexible insurance solutions, including retail and corporate products that can be tailored to meet specific customer needs.

HDFC SL corporate solutions have been designed to offer complete flexibility, combined with a competitive charging structure. These corporate solutions include products such as Group Term Insurance, Gratuity, Leave Encashment and Superannuation. These affordable plans can provide valuable benefits for employees, while reducing long-term costs for the employer.

For retail customers, HDFC SL has a wide range of protection and investment products to choose from.

* Figures and exchange rates as at 31^st March 2009

# Figures and exchange rates as at 31^st December 2008

HDFC SL Fund Management / Investment Policy

Security of investment is critical in the insurance business, and this is even more pertinent for corporate business. HDFC SL follows a stringent three tier process for managing client's investments. An investment committee drafts and continuously reviews its investment policies. This committee is assisted and advised by the portfolio management services of HDFC Asset Management Company. This advice is based on comprehensive guidelines for the portfolio asset class of each fund. The investment committee reviews the recommendations of HDFC AMC and decides to invest or divest.

The HDFC SL investment committee has drafted policy guidelines, which focus on value investing, asset liability management, long term investment horizon and risk mapping. We focus on every client and individual member and his / her risk appetite and investment preferences.

HDFC SL has further adopted various best practices towards its investment strategies, keeping in mind the twin objective of wealth creation and safety of funds, in the best interest of policyholders. Regular internal and statutory audits ensure the efficacy and safety of processes being followed.

INVESTMENT PROCESS

Fund Management Structure

HDFC SL has a strong 16-member investment team with relevant experience in the areas of accounting, funds management and dealing. Work experience of the team ranges from 3 to 10 years. The investment team comprises individuals who are experts in managing areas of market research, dealing, back office and mid office functions. HDFC SL also has access to a panel of 40 top research and brokerage firms who assist HDFC SL with sector specific research and feedback.

HDFC SL has an Investment Committee that has drafted an investment policy in compliance with IRDA Investment Regulations. All investment decisions are made by this committee after due consideration of the overall policy and taking view of information provided by the in-house Research team.

HDFC SL follows a 3-tier process for managing the investments of its policyholders.

At the first level is the Investment Committee, which drafts and continuously reviews the Investment Policy. The Investment Committee is also responsible for HDFC SL's long term Investment Strategy, Key decisions on Strategic asset allocation, Decisions on overall Investment guidelines and setting performance benchmarks and limits.

The second level is the HDFC SL core investment team, which has been given the mandate to assist and advice the Investment Committee through detailed research and recommendations. Their recommendations are based on the comprehensive guidelines created for the portfolio asset classes for each fund. The HDFC SL Investment team also refers the Investment committee sector specific recommendations to a panel of 40 empanelled research and brokerage firms, from the equity and debt markets.

The Investment team acquires detailed research and analysis from these empanelled experts, on sector weightages, specific company weightages within sectors, market views, macro and micro economic views based upon which it makes independent recommendations to the Investment Committee.

The third and final level is where the Investment Committee reviews the recommendations of the HDFC SL Investment Team and takes an unbiased decision for investment or divestiture.

HDFC SL recognizes that the funds we manage represent the aspirations and dreams of our clients. We acknowledge that the Trustees, in their fiduciary capacity, have shared their responsibility of securing a comfortable retirement for the members to us. Keeping these factors in mind, the HDFC SL fund strategy is based on 2 simple tenets:

� Safety of the funds

� Wealth creation

Based on these two guiding principles, the HDFC SL Investment Committee has drafted each Fund's policy guidelines that are focused on:

Primarily Value Investing - This will ensure that the assets invested in are fundamentally strong and poised to deliver consistent returns in the form of dividend yield and capital appreciation over a period of time.

Long Term Investment Horizon - Given the nature of the maturity requirements, the assets selected have a longer maturity profile to coincide with the time when the member retires.

Risk Mapping - HDFC SL has created 6 fund options, Liquid, Stable, Sovereign, Secure, Defensive and Balanced. These funds vary from completely risk averse to aggressive in their composition. Trustees can choose one particular or a mix of these funds and match their investments in accordance to their risk appetite.

Switching - In a marked to market product, option to divert funds in extreme situations helps to not only book profits, but also to prevent losses.

Special Investment Tools

Every client has its own risk appetite and investment preference. HDFC SL uses special investment tools that help every corporate on a group level to create a portfolio that they are comfortable with. One such tool is :

Liability Profiling - The age and salary data of the Client is studied in detail. Based on categorization of this data, an appropriate fund can be selected. This is based on the perceived risk that each category is capable of bearing according to their age profile. HDFC SL offers this service to the trustees on a group level.

Corporate Segment

Employee benefit packages provided by Indian companies can be broadly divided into insurance benefits, such as life or disability insurance, and retirement benefits, such as Gratuity, Provident and Superannuation. Gratuity and Provident Fund benefits are mandatory for all companies, but all other benefits are offered on a voluntary basis.

Indian companies are progressively moving towards providing more appropriate compensation packages and benefit programs for employees. Increasingly, companies are finding that life insurance and employer funded retirement benefits are on the wish list of every prospective employee. While life insurance companies are currently not permitted to manage Provident Fund arrangements in India, all other insurance and retirement benefit products are offered by HDFC SL.

Prior to the liberalization in 1999, the nationalized insurance companies dominated the industry. The life insurance company was concentrating on the retail savings related policies such as money back and endowment products while the most popular product by far in employee benefit insurance in India has been the Group Personal accident policy. This has been mainly because of the requirement of the Workmens compensation Act, which requires any company employing workmen to pay compensation in the eventuality of death or disability (permanent or temporary) due to an accident. This product also comes priced at significantly lower levels as this covers only the accidental risk.

With the advent of multinationals and other private companies, the trend started changing. People were taking up high-pressure jobs, which meant that health became a major concern in employee welfare. It was evident that death due to health reasons was becoming more prevalent and that this risk was not covered by something as basic as the accident policy. Also there was an increasing role played by insurance companies in managing providing for retirement benefits such as Gratuity & Superannuation, which were beginning to be seen as an integral part of the employee benefit package.

Broadly, the employee benefit solutions provided by Insurance companies can be divided into insurance benefits and retirement benefits. Of all these benefits, only Gratuity is a mandatory benefit and the Accident insurance is taken to cover for the Workmens Compensation Act. The rest are all voluntary benefits offered by organizations. Other than life Insurance, retirement benefits, such as Gratuity, Superannuation and Leave-encashment, are all provided by life insurance companies. Most of these schemes today are offered in a new platform called the unit-linked platform that enables trustees of these funds to generate more realistic market linked returns and also enjoy the transparency and flexibility of their investments.

The focus in Indian industry is therefore shifting to in-depth research on employee requirements in order to design appropriate compensation packages and employee benefit programs. Increasingly, companies are finding that life insurance, and employer funded retirement benefits are on the wish list of every prospective employee. The recently introduced competition in the Indian insurance sector has ensured that they can now extend benefits specific to their employees needs.



Typical benefit plan

 A typical benefit plan for a multinational in India would include Gratuity & PF, which are mandatory benefits, where benefits are defined as per the statute and other voluntary benefits such as encashment of leave, a Superannuation benefit where 15% of monthly wages are contributed into a fund for purchase of pension on retirement and a life cover that is typically 3 to 5 times the annual emoluments.

HDFC Standard Life Insurance offers the most comprehensive range in Group Insurance Solutions. These include:

Group Unit Linked Plans for Retirement Benefit Fund Management:

• Group Gratuity
• Defined Contribution Superannuation
• Defined Benefit Superannuation
• Group Leave Encashment
• Annuities

Group Insurance:

• Group Term Insurance (Vanilla Plan)
• Group Term Insurance with optional riders
• Group Term Insurance to cover housing/vehicle loans provided by the employer
• Group Term Insurance with Experience Discount (Profit Share)

Group Term Insurance:

Group Insurance is a one year renewable term insurance plan. There is one master policy issued covering all members of the group. The Sum assured is payable on death (either due to natural causes or accidents and excludes suicide cover in the first year of coverage). The Sum assured benefits could vary from company to company depending on the benefit structure they would like to offer to their employees.

- Benefit level:

- sum insured based on salary multiple

- Graded cover - Where the sum insured is fixed for a specific grade / designation

- Uniform cover for all employees

Optional riders:
The most popular riders are Accidental & Critical Illness

1. Additional Accidental Death Benefit
This benefit provides for the payment of an additional (over and above the basic sum assured) amount on death as a result of an accident. Death must occur within 90 days of the event of the accident. The additional amount payable would be a percentage of the basic sum assured. The allowable percentages are 50% and 100%.

2. Total Permanent Disability
This benefit provides for the acceleration of the basic sum assured as a result of total permanent disability due to an accident. Total permanent disability is defined as disability, resulting from an accident, such that there is neither at the time of disability or at any time thereafter, any work, occupation or profession that the Scheme Member can ever be capable of doing or following to, earn or obtain wages, compensation or profit, as a result of the accidental injury.

3. Total Permanent and Partial Disability Benefit
This benefit provides for the acceleration of the basic sum assured as a result of total permanent disability or an additional amount on specified injuries to body parts of the member caused due to an accident.

4. Critical Illness Benefit
This benefit provides for the additional amount as a result of the diagnosis of one of the critical illnesses mentioned below. The life assured must be alive till the end of the survival period to be able to claim under this benefit. The additional amount payable would be 50% of the basic sum assured on the main policy. The �critical illnesses� that are cover under this benefit are:
(i) cancer
(ii) coronary artery bypass
(iii) heart attack
(iv) kidney/renal failure
(v) major organ transplant (as recipient)
(vi) stroke

Key Features of the HDFC Standard Life Group Term Insurance plan:

Our product has been designed to offer innovative features and a high degree of customization. These are:

Convenient medical procedures: The members do not need to undergo any medical examination up to the 'Free Cover Limit'. This limit is dependant upon the sum assured and the size of the group.

Flexibility for members to join or leave: Flexibility for new members of the group to join or outgoing members of the group to leave the scheme during the policy term

Premium options: Premium can be borne by employer or employee or both in some agreed proportion

Size of group: Minimum size is 10 members. There is no upper limit.

Flexible cover: The amount of cover can be constant for all members or vary on the basis of their grade or salary.

Amount of sum assured: The minimum sum assured is Rs.10,000 per person and there is no pre-defined cap on the maximum cover extended for each member

Limited exclusion: Only exclusion for main benefit is suicide in the first year.

Globally valid: Resident Indians are covered for the risk whilst travelling anywhere in the world



Highlights of Financial Year 2008-09

HDFC Standard Life Declares Results for FY2008-09; Total Premium Income grows by 15%; Renewal Premium Income increases by 34%

May 5, 2009, Mumbai: HDFC Standard Life, one of India's leading private life insurance companies, declared its annual results for the financial year ending March 31, 2009. The company generated Total Premium Income of Rs. 5564.69 crores in FY2008-09 registering a year-on-year growth of 15%. The growth was primarily driven by the company's structured sales processes based on customer needs and their assessments, wide range of product portfolio and diverse distribution network.

Mr. Paresh Parasnis, Principal Officer and Executive Director, said, "The financial year 2008-09 was a defining year with the unfolding of several unexpected events - sharp correction in financial markets and a spread of recessionary trends. These events also had an impact on the Indian life insurance industry. We are happy that our new policies issued grew by 16% over the last year. However, given the uncertainty in the overall scenario, customers have reduced their annual premium commitment on new policies. At the same time, existing policies continued to be in force reflected in our renewal premium, which posted a healthy growth of 34%."

In line with overall market conditions, growth in Effective Premium Income (EPI) in respect of retail business increased by 5%, growing from Rs. 2,425 crores in 2007-08 to Rs. 2,552 crores in 2008-09. HDFC Standard Life tracks its New Business Premium on the basis of Effective Premium Income (EPI). EPI is calculated by giving only a 10% value to a Single Premium policy and is an internationally accepted indicator of an insurance company's performance.

HDFC Standard Life maintained its healthy pipeline of products last year by launching 11 products apart from slashing the premium rates of its Term Assurance Plan premium rates by about 25% across different age bands. "Our entry into the health insurance market last year with the launch of two products : SurgiCare and Critical Care was a significant move in line with our business objective. The low penetration of health insurance in India gives us a tremendous opportunity to provide quality health insurance. Our health products along our complete range of life insurance and pensions portfolio meet almost every aspect of an individual's requirements," Mr. Parasnis added.

Highlights of Financial Year 2008-09

• Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs. 4858.56 crores in FY2007-08.
• Renewal premium collected increased to Rs. 2913.58 crores from Rs. 2173.19 crores in the previous year, registering a growth of 34%.
• Effective Premium Income (EPI) in respect of retail business increased by 5%, growing from Rs 2,425 crores in 2007-08 to 2,552 crores in 2008-09.
• Alternate Channels, including bancassurance, contributed about 47% to the Effective Premium Income (EPI).
• A well balanced product portfolio with pension comprising over 40% children plans around 25% and the remaining constituting protection and savings plans,
• Total assets under management increased to Rs. 10,595 crores, registering a growth of 21% over FY2007-08.
• Assets under management for the Group business have increased to Rs. 1075 crores, registering a growth of 12% over FY2007-08.
• Company products and services are now available through a network of 595 offices serving over 700 cities and towns across the country. This is further complemented by corporate agency relationships with public, private and cooperative banks.
• Strength of Financial Consultants reported year-on-year growth of 43% to over 2,07,000 in FY2008-09 compared to 1,45,000 last financial year.
• The sum assured in-force for 2008-09 was Rs. 57,158 crores as compared to Rs. 45,743 crores for the pervious year.

Towards improving the quality of training imparted, the company started an in-house training facility to cater to the mandatory training required to be given as well as for other sales training requirements. The company has received accreditation from the Insurance Regulatory and Development Authority (IRDA) for 149 training centers housed in its branches. During the year, HDFC Standard Life also launched a three-month insurance and management programme in collaboration with Manipal Education to select, train, and groom talent from across the country and ensure a ready pool of insurance-trained sales professionals for the company.

HDFC Standard Life has revamped its corporate website (www.hdfcinsurance.com) in line with its communication philosophy. The new improved, interactive, and user-friendly website is in sync with its need-based communication strategy of helping individuals through their decision of selecting the right life insurance plans that fit their needs.

To meet the demands arising from the company's rapid growth, the promoters contributed an additional Rs. 525 crores of equity to take the paid-up share capital as on March 2009 to Rs. 1796 crores.

About HDFC Standard Life: HDFC Standard Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom.

HDFC Standard Life's Product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment, and Health. Customers have the added advantage of customizing the Plans, by adding optional benefits called riders, at a nominal price. The company currently has 25 retail and 6 group products in its portfolio, along with five optional rider benefits catering to the savings, investment, protection and retirement needs of customers.

The company has also increased its depth in existing markets with a strong base of more than 2,07,000 Financial Consultants.