“PORTFOLIO MANAGEMENT IN Unit Linking Insurance Policy’s”

At

ICICI PRUDENTIAL LIFE INSURANCE

CORPORATION LIMITED

Dissertation submitted to the

Department of Business Management, Sri Venkateswara University

In partial fulfillment of requirement for the Award of the Degree in

MASTER OF BUSINESS ADMINISTRATION (FINANCE)

BY

K.IRSHAD AHMED
(130798017)

ATTENTION PLZZZ LOGO ATACH

(Affiliated to Sri Venkateswara University, Tirupati)

Pulivendula Road, Kadapa, Kadapa (Dist.)

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TO STUDY THE CONCEPT OF PORTFOLIO MANAGEMENT IN ULIPs
AT
ICICI PRUDENTIAL LIFE INSURANCE CORPORATION LIMITED.

A MAJOR PROJECT REPORT SUBMITTED TO

S.V. UNIVERSITY, Tirupati.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR

THE AWARD OF THE DEGREE
OF

MASTER OF BUSINESS ADMINISTRATION.

BY
K.IRSHAD AHMED

K.S.R.M.COLLEGE OF ENGINEERING
(AFFILIATED TO S.V. UNIVERSITY)
Pulivendula Road, Kadapa (DIST),A.P.-516003

DECLARATION

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 I (K.IRSHAD AHMED) hereby declare that this Project Report entitled

“Portfolio Management in ULIPs undertaken for ICICI PRUDENTIAL LIFE

INSURANCE CORPORATION LTD”. Submitted by me in partial fulfillment for the

award of degree of MASTER OF BUSINESS ADMINISTRATION of Sri

Venkateshwara University, Tirupathi and it has not been submitted previously in part

or full time to any University or Institute.

Name : K. Irshad ahmed

Regd.No. 130798017.

Place: Kadapa

Date: 15-11-2007.

CERTIFICATE

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 This is to certify that the Project Report entitled “PORTFOLIO

MANAGEMENT IN Unit Linking Insurance Policies” is a bonafide work done by

K.IRSHAD AHMED in partial fulfillment of requirements for the awarded of degree of

Master of Business Administration 2006-2008 of Sri Venkateshwara University,

Tirupathi.

Guide Head of the Department

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 ABSTRACT

This project studied the portfolio structure in the stock market by using portfolio
returns and risk. Analyzing the stock market wide and portfolio-specific information
effects on portfolio returns, these portfolio is to be estimated by measuring standard
deviation of different portfolio returns. The project represents various plans measuring,
various kinds of risks and returns in view of Investor’s behavior. The protector plan
having the minimum risk and minimum returns. Here, the investor thinking protection
for his / her life. The balancer planning having the medium risks and returns (compare
with the protector plan and maximizer plan). The maximizer plan represents the high
returns and high risk. Here, I am mainly observed that when returns increasing risks
also increasing. Here, I am using to calculating Sharpe’s performance measure to
portfolio.

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 ACKNOWLEDGEMENT

This project work is undertaken as part of the M.B.A (Finance & Systems

management) course. I express my deep sense of gratitude to our college

Principal Sri K.S.N.Reddy

I am also sincerely thankful to Our Head of the Department Sri Dr. G.L.Narayanappa.

I am also thankful to our college Placement Officer Sri. Dr. G. Krishna Mohan

I am also sincerely thankful to my project guide Sri.Dr. V.MALLIKARJUNA

I am also thankful to ICICI PRUDENTIAL LIFE INSURANCE CORPORATION LTD

for giving me the opportunity to do the project named “PORTFOLIOMANAGEMENT

IN ULIPs” in their esteemed organization.

I sincerely thank Sri.M.V. Sai Prasad and Sri. M.N. Vamshi Krishna (Financial services

managers, Bank assurance & Alliances), for their assistance and guidance given to

me during the course of my project. Their advice has proved to be invaluable for me.

I also extend our thanks to all other staff for their sustained help and co-ordination

during the period of project work.

Last but not least I would like to thank my parents, friends and everyone

who helped me directly or indirectly in completing this project.

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 TABLE OF CONTENTS
CONTENTS PAGE NUMBERS

1 College Certificate

Company Certificate

Declaration

Acknowledgement

Executive Synopsis
Chapter I Company Profile
Chapter II Product Profile
Chapter III Conceptual Framework
Chapter IV Research Methodology
Chapter V Data Analysis
Chapter VI Findings & Suggestions
Chapter VII Bibliography.

INTRODUCTION

Portfolio is combination of securities such as stocks, bonds and money market

instruments. As investors acquire different sets of assets of financial nature, such as

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gold, silver, real estate, buildings, insurance policies, post office certificates and

NSC….etc, they are making provision for future. The risk each of such instrument is to

be understood before hand.

Basis of portfolio management in India

In India portfolio management is still in its infancy. Barring a few Indian

banks and faring banks and UTI, no other agency had professional portfolio

management until 1987. After setting public sectors mutual funds since 1987, success

of mutual fund in portfolio management, a number of brokers and investment

consultants some of whom are also professionally qualified have become portfolio

Manager. They have managed the fund of clients on both discretionary and non-

discretionary basis.

Portfolio management services refer to the services of managing the funds of

customer taking in to consideration their long term and short term needs. A portfolio

management services provides usually offers these services ether as discretionary

portfolio management services or non-discretionary

Portfolio management services. In non-discretionary portfolio management services

the service provider offer to handle execution of orders and making available reports

on the transactions , portfolio valuation and the balance in the clients settlement

account whereas in discretionary portfolio management services investor leave the

management of their portfolio to the service provider.

The world of portfolio management services has undergone major structural

change over the last two decades, portfolio management services have been

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reshaped by factors such as increasing sophistication of the customer’s global nature

of investment and advent of new technology.

Some of major players in the industry are Lehman Brother, Suloman smith

Barnay consultants, meryll, lynch and margan Stanley. They are providing wide range

of services including amongst other cash management ,raising or deploying equity

and debt, asset management . in addition to these specialist players, many financial

institutions like Citibank, standard chartered bank and individuals offers portfolio

management services to their retail and corporate clients.

Government regulations play on important role in demarcating the bondries in

which portfolio management services provider operate. The basic objective of

government regulation is to safeguard the interest of the investors. However these

regulations differ from country to country. In India, the Securities and Exchange Board

of India (SEBI) is the regulatory body. These regulations are framed keeping in view

the state of the industry in the term of knowledge levels of the players as well as the

customers.

The customers can be basically looked at individual and institutional

customer. While the individual customer represents their nominee’s interest,

institutional customer includes body corporate, educational institutes, society or

trust.Etc.

Element of portfolio management:

Portfolio management is an on-going process involving the following basic

tasks:

 Identification of investor’s objectives, constraints and preferences, which

will help formulate the investment policy.

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 Strategies are to be developed and implemented in tune with the

investment policy formulated. This will help the selection of asset

classes and securities in each class depending upon their risk-return

attributes.

 Review and monitoring of the performance of the portfolio by continues

overview of the market conditions, companies performance and

investors circumstances.

 Finally, the evaluation of the portfolio for the results to compare with the

targets and needed adjustments have to be made in the portfolio to the

emerging conditions and to make up for any shortfalls in achievement

vis-à-vis targets.

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 STATEMENT OF THE PROBLEM

In our present day economy, finance is defined as the provision of the money at the

time when it is required. Every enterprise, whether big, medium or small needs

finance to carry on its operations and to achieve its targets. In fact, finance is so

indispensable today if it is rightly said to be the lifeblood of the enterprise with out

adequate finance no enterprise can possible accomplish its objective.

Finance Management:

It is a service activity which is associated with providing quantitative information

primarily financial in nature and that which may be needed for making economic

decision regarding reasoned choice among different alternative course of action.

Thus, financial management is a process of identifying management, accumulation

analysis, preparation, interpretation and communication of financial to plan evaluate

and control.

Financial management is that specialized function of general management which is

associated to the procurement of finance and its effective utilization for the

achievements of common goal of the organization.

A combination of such securities with different risk return characteristic will

constitute the portfolio of the investor. Thus, a portfolio is a combination of assets and-

or instruments of investments. The combination may have different features of risk

and return, separate from those of the components. The portfolio is also built up out of

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the wealth or income of the investor over a period of time, with a view suit his risk or

return preferences to that of the portfolio that he holds. The portfolio analysis is thus

an analysis of the risk-return characteristics of individual securities in the portfolio and

changes that may take place in combination with other securities due to interaction

among them selves and impact of each one it of others.

The portfolio theory is the basis of portfolio management and relates to the efficient

portfolio investment in financial and physical assets, including shares and debentures

of companies. A portfolio of an individual is a corporate unit is the holding of securities

and investment in financial asset. These holding stocks the result of individual

preferences and decisions of the holders regard the risk and return and a host of other

considerations. With reasonable review of literature a through work in studying the

effective of portfolio management in Unit Linking Insurance Polices in financial

industrial is felt a necessary. In the explained circumstances portfolio management is

chosen for study in ICICI prudential life insurance.

Need of Portfolio

You will resell that expected return from individual security carries some degree

of risk. Risk was defined as the standard deviation around the expected returns. In

affect equated security’s risk with the variability of returns. More description or

variability about a security’s expected return meant the security was riskier then one

with less dispersion.

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 The simple fact that security carry differing degree of expected risk leads must

investors to the nation of holding more than one security at a time in an attempt to

spread risks not putting all their eggs in to one basket . Diversification of one’s holding

is intended to reduce risk in an economy is which every asset’s returns are subject to

some degree of uncertainty. Even the value of cash suffers from the inroads of

inflation. Must investors hope that if they hold several assets, even if one goes bad,

the others will provides some protection from an extreme loss.

Objectives:

1. To understand the concept of Unit Linking Insurance Policy’s

2. To study the concept of Portfolio Management in Unit Linking Insurance

Policy’s and their behavior.

3. To examine usefulness of the performance of the Unit Linking Insurance

Policy’s of the ICICI PRUDENTIAL.

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 HYPOTHESIS

The investors are rational and behave in a manner as to maximize their utility with

a given level of income or money. They have free access to fair and correct

information on the returns and risk. The markets are efficient and absorb the

information quickly and perfectly to the investor’s. The Investor’s are risk averse

and try minimizing the risk and maximizing return. Investor’s base decisions on

expected returns and variance or standard deviation of these returns from the

mean. They prefer higher returns to lower returns for a given level of risk.

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RESEARCH METHODOLOGY:

The study on Unit linked life insurance at ICICI PRUDENTIAL is taken as Portfolio

management practices in ULIP. The study is carried with the following objectives:

Methodology :

The research is descriptive oriented and the data collected for the study is

secondary data that is from the financial news papers, journals, and books internet

and company records. To arrive at the meaningful conclusion the applicable method

of analysis are used.

Primary Data: Discussions with the concerned Officers of Company.

Secondary Data: Company financial details, Portfolio details from records. Other

information from financial news papers, web sites, journals and text books.

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Scope of the study:

The study is carried out on the part of the application of ULIP as a new means

of life insurance. The present money market and capital market movements in the

country along with the government of India’s liberalization and globalization, always

creating the new opportunities and new ways by adopting the globally used innovate

products in these markets. Thus the scope of the study as of the time is from the year

2002 to the present. Therefore this study on the same lines can be continued as and

when new policies are made.

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Limitations of the study:

1. The study was carried out by taking the ULIPs as new means of life

insurance.

2. As the data is from the short time interval the conclusion drawn may not be

the common.

3. The study was conducted on academic lines for period of 45 days due to the

short span of time.

4. In-depth analysis of the study has not carried out due short period of

project work .

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REVIEW OF LITERATURE

In literature of William sharpe has attempted to get a summary measures of

summary of portfolio performance. His measures properly adjust performance for risk.

The Sharpe index measures the risk premiums of the portfolio (where the risk

premium is the excess return required by investors for the assumption of risk) relative

to the total amount in the portfolio.

In literature of Treyner’s portfolio-performance measure is the concept of a

characteristic line. More accurately, this linear representation is an approximation of

what is probably more frequently a curvilinear relationship, it would represent a

portfolio return that was equivalent to the return of market portfolio. When the market

portfolio earns a low or negative return, the ideal portfolio still earns a positive return;

and when the market portfolio earns a positive return, the ideal funds earns a higher

return.

In view of Jensen’s, his attempts to construct a measure of absolute performance on

risk adjusted basis- that is, a definite standard against which performances of varies

funds can be measured. This standard is based on measuring the “portfolio manager’s

predictive ability –that is, his ability to earn returns through successful prediction of

security prices which are higher than

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Those which we expect given the level of riskiness of his portfolio. In other words, they

are attempting to determine if more than expected returns are being earned for the

portfolio’s riskiness.

In view of M. Sitaram, Venugopal, S.Subramanian and U.S.Rao the dynamic

portfolio consisting of both debt and equity that has been selected for each month for

out performed the Sensex throughout the testing period. In addition, it also

dynamically switches from debt to equity during bull phase and vice versa in bear

phase automatically. Thus the model is able to identify the portfolio of equity and debt

securities mix dynamically without human intervention and obtain consistently good

results in both phases. It could used by investors-both individual and institutional for

decision making.

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 Introduction

Insurance :

Insurance is concerned with protection of economic value of assets. Every asset

has a value and it is created at considerable cost. They have a life time during which

time they are expected to perform. But they can be destroyed or made non-functional

through accident occurrences. Such terrible occurrences are called perils. The damage

the perils may cause to the assets is the risk. Risk only means that there is possibility of

loss or damage. There has to be uncertainty about risk. Insurance is relevant only when

there is uncertainty. The occurrences have to be random, accidental and not deliberately

created.

History:

The business of insurance stated with marine business. Traders who use to gather in the

Loyd’s coffee house in London agree to share the losses to their good while being carried

by ships. The losses were on account on ships being pirated is damaged to goods

because of weather conditions or sinking of the ship. The first insurance policy was

issued in 1583 in England. In India, insurance began in 1818 with life insurance being

transacted by English Company, the European and Albert. The first Indian Insurance

Company was formed in 1870 Bombay Mutual Assurance Society Ltd. This was followed

by Oriental Government Securities Life Assurance Co. In 1874, the Bharat in 1896 and

the Empire of Indian 1897. On 1st

September, 1956L.I.C of India came in to existence with amalgamation of 247 Life

Insurance Companies.

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Insurance Industry in last five years:

The Indian insurance sector was thrown open by the private sector in 2000.and

the first company to start selling his policy, ICICI prudential did so on December

12th,2000, today there are 13 private sectors life insurance firms

(together, they have a 26 percent share of the market), and seven non life once(they

boast a similar share)in the country and the penetration of life insurance has increased

from 1.7 percent (premium income as a proportion of GDP) five years ago to 2.6 percent

today (the global average is 4.7 percent).

In the five years before the entry of the private sector firms (1995-2000). Indias

insurance market(current size:rs.45000 crores),grew at an average rate of 10-15 percent

a year. In the five years since, it has grown by 20 percent a year “Most of the new growth

has been coming from the private sector companies”, ICICIprudential life, the countries

largest private sector insurer. The first year premium of the life insurance segment has

grown 260 percent between 2000-01 and 2004-05, Rs.25,350 crores. The gross premium

of the non-life segment 180 percent to Rs.1,8095.25crores. The real achievement of the

private in the insurance industry, however, is the fact that insurance is no longer a seller’s

market. Among the new products launched by private sector life insurance is the Unit

linked insurance plan (ULIP). Today, seven out of ten policies sold by private insurers are

ULIPs.

The popularity of equity-linked ULIPs may have to do with the stock market’s

performance over the past 12 months. And that of debt-linked ULIIPs with tax-

concessions that are still available to insurance firms 2004-05, ULIPs shemes contributed

almost 35 percent of the corporation’s first premium income.

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 Much of the growth (in both life and non-life segments) as come from urban

centers. Most private sector insurance firms don’t even have a presence in rural areas.

IRDA hopes to deregulate tariffs by the end of 2006. For life and non-life insurance firms,

foreign direct investment remains 26 percent (again IRDA believes this should be

increased to 49 percent) a deterrent to growth in an equity incentive business. Should

this change, the next five years could be insurance’s golden age.

COMPARISION OF MARKET SHARE OF DIFFERENT INSURANCE COMPANIES:

Insurance Icici Bajaj Hdfc Birlasun Tata AIG Lic

companies Nameprudential Allianz Standard life

Market Share In7.24 5.68 3.11 1.84 1.67 74.26

percentages
Market share In

thousands
819.75 643.59 352.14 207.93 189.24 8,409,09

T h e 7 lif
%
e In s u r a n c e p ie
6%
3% Ic i c i p r u d e n ti a l
6%
2% B a ja j A lli a n z
2% H d fc S ta n d a r d
B i r la s u n li fe
T a ta A IG
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L ic
74%
o th e r s
- 23 -
COMPARISION OF LIC WITH OTHER PRIVATE PLAYERS:

The life story

25,000
19,785
20,000

15,000
11,402 11,165 12,282
9,700
10,000 8,410
5,556
5,000 2085 2,914
712 180 662
0
2000yr 2001yr 2002yr 2003yr 2004yr 2005yr
LIC 9,700 11,402 11,165 12,282 19,785 8,410
Private 712 180 662 2085 5,556 2,914
LIC Private

2001yr 9,700 712

2002yr 11,402 180
2003yr 11,165 662
2004yr 12,282 2085
2005yr 19,785 5,556
2006yr 8,410 2,914

Why We Need Insurance?

Most people by insurance as an investment. That can save some tax, another

refrain, this one popular among private sector life insurance firms four, five years ago

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went, not as protection. In a volte face of sorts, investments advisers cannot have

enough of unit linked insurance plans, and private insurers are now vending the dual

benefits of protection and returns.

The returns can come from equity and debt, and with the stock market having

been on a hot steak this past year, equity based ULIPs are all the rage ULIPs holders will

be the hardest hit, “In fifteen of the last 25 years, the returns on equity has been 13-22

percent”. If some takes a long-term view and stays invested in an ULIPs, he or she will

definitely gain.

ULIPs are potential market equalizer’s, intruments they can use to catch up with

other private sectors insurance firms. That’s where we make a difference by offering

capital guarantee even in our growth fund where equity allocation could go up to a high of

80 percent. One way of looking at ULIPs returns based on the its investments in

government securities, corporate bonds, and the money market, but with interest rate

headed south in the 2000, that is no longer possible however, ULIP’s are susceptible to

stock market volatility, especially in the short term. We ensure that our agents make

consumers aware of the risks and returns in ULIPs.

In fact, we further enhance this process by ascperate call form the company to

advice prospective customer to take a long term call on ULIPs. ”In developed

Market“such as the US, ULIPs are the preferred insurance intruments. Globally, ULIPs

account for some 80 percent of all life insurance policies. ICICI prudential sees them as

“an irreversible trend”. That may be the case, but ULIPs seems to have succeeded at the

cost of endowment polices. Then in the noise about ULIPs, that’s a voice of reasons that

has not found many listeners.

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 ICICI prudential life insurance Company has remained the counties largest private

sector life insurance firms over the past five years. Supported by the country’s largest

private sectors ICICI bank, ICICI prudential believes that size and scale are essential to

succeeded in the Indian insurance business.

The returns can from equity and debt, and with the stock market having been on a

hot steak this past year, equity based ULIPs are all the rage ULIPs holders will be the

hardest hit, “In fifteen of the last 25 years, the returns on equity has been 13-22 percent”

If some takes a long-term view and stays invested in an ULIPs, he or she will definitely

gain.

ULIPs are potential market equalizers, intruments they can use to catch up with

other private sectors insurance firms. That’s where we make a difference by offering

capital guarantee even in our growth fund where equity allocation could go up to a high of

80 percent. One way of looking at ULIPs. Returns on these based on its investments in

government securities, corporate bonds, and the money

Market, but with interest rate headed south in the 2000, that is no longer possible

however, ULIP’s are susceptible to stock market volatility, especially in the short term.

We ensure that our agents make consumers aware of the risks and returns in ULIPs.

. In fact, we further enhance this process by ascperate call form the company to

advice prospective customer to take a long term call on ULIPs. ”In developed market”

such as the US, ULIPs are the preferred insurance instruments. Globally, ULIPs account

for some 80 percent of all life insurance policies. ICICI prudential sees them as “an

irreversible trend”. That may be the case, but ULIPs seems to have succeeded at the

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cost of endowment polices. Then in the noise about ULIPs, that’s a voice of reasons that

has not found many listeners.

ICICI prudential life insurance Company has remained the counties largest

private sector life insurance firms over the past five years. Supported by the country’s

largest private sectors ICICI bank, ICICI prudential believes that size and scale are

essential to succeeded in the Indian insurance business.

The delay in increasing ceiling on foreign direct investment in insurance

firms form 26-49 percent is one reason for this. To grow the equity-incentive business (for

instance, in the 12 hike in its equity since December 2000, ICICI prudential brought in Rs.

160 crore to take its capital to Rs.1085 crore), then Indian partner may have to bring in

more money. Insurance regulator IRDA scotched the plans of the insurance companies

to raise capital through preference shares are hybrid instruments other than equity.

ULIPS AND INSURANCE :

It wasn't too long back, when the good old endowment plan was the preferred way to

insure oneself against an eventuality and to set aside some savings to meet one's

financial objectives. Then insurance was thrown open to the private sector. The result

was the launch of a wide variety of insurance plans, including the ULIPs.

Two factors were responsible for the advent of ULIPs on the domestic insurance horizon.

First was the arrival of private insurance companies on the domestic scene. ULIPs were

one of the most significant innovations introduced by private insurers. The other factor

that saw investors take to ULIPs was the decline of assured return endowment plans. Of

course, the regulator -- IRDA (Insurance and Regulatory Development Authority) was

instrumental in signaling the end of assured return plans.

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Today, there is just one insurance plan from LIC (Life Insurance Corporation) -- Komal

Jeevan -- that assures return to the policyholder.

These were the two factors most instrumental in marking the arrival of ULIPs, but another

factor that has helped their cause is a booming stock market. While

this now appears as one of the primary reasons for their popularity, we believe ULIPs

have some fundamental positives like enhanced flexibility and merging of investment and

insurance in a single entity that have really endeared them to individuals.

ULIP BENEFITS:

Given that ULIPs are relatively new and remain an enigma for a large section of

insurance-seekers in this note we compare them to the traditional endowment plans to

give you a perspective.

SUM ASSURED :

Perhaps the most fundamental difference between ULIPs and traditional endowment

plans is in the concept of premium and sum assured.

When you want to take a traditional endowment plan, the question your agent will ask

you is -- how much insurance cover do you need? Or in other words, what is the sum

assured you are looking for? The premium is calculated based on the number you give

your agent.

With a ULIP it works in reverse. When you opt for a ULIP, you will have to answer the

question -- how much premium can you pay?

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Depending on the premium amount you state, you are offered a sum assured as a

multiple of the premium. For instance, if you are comfortable paying Rs 10,000 annual

premium on your ULIP, the insurance company will offer you a sum assured of say 5 to

20 times the premium amount.

In our illustration your sum assured could vary from Rs 50,000 to Rs 200,000. Within this

range, you have to decide how much insurance cover you need. Of course the multiple to

calculate the sum assured varies across life insurance companies.

Ulips and Mutual Funds:

In the case of LIC's ULIP, the sum assured--premium relationship works the traditional

way. So you need to state how much sum assured you are looking for and your premium

is calculated as 1/10th the sum assured. If you have opted for a sum assured of Rs

100,000, your annual premium will be Rs 10,000.

Investments :

Traditionally, endowment plans have invested in government securities, corporate bonds

and the money market. They have shirked from investing in the stock markets, although

there is a provision for the same.

However, for some time now, endowment plans have discarded their traditional outlook

on investing and allocate about 10%-15% of monies to stocks. This percentage varies

across life insurance companies.

ULIPs have no such constraints on their choice of investments. They invest across the

board in stocks, government securities, corporate bonds and money market instruments.

Of course, within a ULIP there are options wherein equity investments are capped.

Expenses :

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ULIPs are considered to be very expensive when compared to traditional endowment

plans. This notion is rooted more in perception than reality. Let us take agent

commissions to understand this better.

Sale of a traditional endowment plan fetches a commission of about 30% (of premium) in

the first year and 60% (of premium) over the first five years. Then there is ongoing

commission in the region of 5%.

Sale of a ULIP fetches a relatively lower commission ranging from as low as 5% to 30%

of premium (depending on the insurance company) in the first 1-3 years. After the initial

years, it stabilizes at 1-3%. Unlike endowment plans, there are no IRDA regulations on

ULIP commissions.

Mortality expenses for ULIPs and traditional endowment plans remain the same as also

the administration charges. One area where ULIPs prove to be more expensive than

traditional endowment is in fund management. Since ULIPs have an equity component

that needs to be managed actively, they incur fund management charges.

These charges fluctuate in the 0.80%-1.50% (of premium) range. We could not get a fix

on the fund management charges of traditional endowment plans after having spoken to

several insurance companies.

Flexibility :

As we mentioned at the very beginning of this article, one aspect that gives ULIPs an

edge over traditional endowment is flexibility. ULIPs offer a host of options to the

individual based on his risk profile.

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There are insurance companies that offer as many as five options within a ULIP with the

equity component varying from zero to a maximum of 100%. You can select an option

that best fits your objectives and risk-taking capacity.

Having selected an option, you still have the flexibility to switch to another option. Most

insurance companies allow a number of free 'switches' in a year.

Another innovative feature with ULIPs is the 'top-up' facility. A top-up is a one-time

additional investment in the ULIP over and above the annual premium. This feature

works well when you have a surplus that you are looking to invest in a market-linked

avenue, rather than stash away in a savings account or a fixed deposit.

ULIPs also have a facility that allows you to skip premiums after regular payment in the

initial years. For instance, if you have paid your premiums religiously over the first three

years, you can skip the fourth year's premium. The insurance company will make the

necessary adjustments from your investment surplus to ensure the policy does not lapse.

We however recommend that you do not skip your premium payments. Remember,

ultimately its your investment surplus that is being eroded with every skipped premium.

With traditional endowment, there are no investment options. You select the only option

you have and must remain with it till maturity. There is also no concept of a top-up facility.

Your premium amount cannot be enhanced on a one-time basis and skipped premiums

will result in your policy lapsing.

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Transparency :

ULIPs are also more transparent than traditional endowment plans. Since they are

market-linked, there is a price per unit. This is the net asset value (NAV) that is

declared on a daily basis. A simple calculation can tell you the value of your ULIP

investments. Over time you know exactly how your ULIP has performed.

ULIP’s also disclose their portfolios regularly. This gives you an idea of how your money

is being managed. It also tells you whether or not your mutual fund and/or stock

investments

Coincide with your ULIP investments. If they are, then you have the opportunity to do a

rethink on your investment strategy across the board so as to ensure you are well

diversified across investment avenues at all times.

With traditional endowment, there is no concept of a NAV. However, insurers do send

you an annual statement of bonus declared during the year, which gives you an idea of

how your insurance plan is performing.

Traditional endowment also does not have the practice of disclosing portfolios. But given

that there are provisions that ensure a large chunk of the endowment portfolio is in high

quality (AAA/sovereign rating) debt paper, disclosure of portfolios is likely to evoke little

investor interest.

Liquidity :

Another flexibility that ULIPs offer the individual is liquidity. Since ULIP investments

are NAV-based it is possible to withdraw a portion of your investments before

maturity. Of course, there is an initial lock-in period (3 years) after which the withdrawal is

possible.

- 32 -
Traditional endowment has no provision for pre-mature withdrawal. You can surrender

your policy, but you won't get everything you have earned on your policy in terms of

premiums paid and bonuses earned. If you are clear that you will need money at regular

intervals then it is recommended that you opt for money-back endowment.

TAX BENEFITS :

Taxation is one area where there is common ground between ULIPs and traditional

endowment. Premiums in ULIPs as well as traditional endowment plans are eligible for

tax benefits under Section 80C subject to a maximum limit of Rs 100,000. On the same

lines, monies received on maturity on ULIPs and traditional endowments are tax-free

under Section 10.

INSURANCE PLANS LOOK BEFORE ULIP :

UNIT-linked insurance plans (ULIPs) are the flavor of the season. Launched a couple of

years ago, these plans have contributed over 50 per cent of the new business of

insurance companies such as ICICI Prudential and Birla Sun Life.

Encouraged by the response, other players, too, are launching variants of savings and

endowment plans in the unit-linked format. A recent addition to the range of insurance

products,

ULIPs claim to give an investor the best of both worlds — high returns and risk cover. But

look deeper and you find shortcomings. So do consider the following points before going

in for a ULIP.

 It is prudent to make equity-oriented investments based on an established track

record of at least three years over different market cycles. ULIPs do not fulfil this criterion

- 33 -
 Insurance and savings are two different goals and it is better to address them

separately rather than bundle them into a single product. A combination of a term plan

and a mutual fund could give better results over the long term.

 If investment returns are your priority, you should compare alternative investment

products before locking in your money.

 Tax advantages do work in favour of ULIPs for debt-oriented funds. For equity-

oriented funds, equity-linked savings products, which enjoy tax advantages and provide

market-linked returns, are comparable.

 The expense structure of insurance products does significantly dent returns.

Returns not sustainable...

The core selling point for unit-linked plans is the high returns generated over the past

couple of years.

The growth options have recorded annualized returns of over 20 per cent — a distant

dream for an insurance product in an era of non-guaranteed returns. Most non-linked

savings plans declare annual bonuses (investment returns) in the 4-5 per cent range. As

insurance companies have the discretion to decide on their investment portfolios, ULIPs

can even have a 100 per cent equity component. But non-linked plans do have an IRDA-

stipulated cap on investment in various asset classes. A minimum of 50 per cent has to

be invested in State and Central Government securities and only 35 per cent can put into

corporate debt or equity.

- 34 -
In the long run (say, a 20-year term), the average return from a non-linked plan might

work out to 5-6 per cent. In comparison, a linked plan appears far more attractive, at least

on the face of it.

... but one has to remember that

These high returns (above 20 per cent) are definitely not sustainable over a long term, as

they have been generated during the biggest bull run in recent stock market history.

The free hand given to ULIPs might prove risky if the timing of exit happens to coincide

with a bearish market phase, because of the inherently high equity component of these

schemes.

While a debt-oriented ULIP scheme might be superior to a debt option in a conventional

mutual fund due to tax concessions that insurance companies enjoy, such tax incentives

may not last.

Look beyond Naves:

The appreciation in the net asset value (NAV) of ULIPs barely indicates the actual returns

earned on your investment. The various charges on your policy are deducted either

directly from premiums before investing in units or collected on a monthly basis by

knocking off units.

Either way, the charges do not affect the NAV; but the number of units in your account

suffers. You might have access to daily NAVs but your real returns may be substantially

lower. A rough calculation shows that if your investments earn a 12 per cent annualized

return over a 20-year period in a growth fund, when measured by the change in NAV, the

real pre- tax returns might be only 9 per cent. The shorter the term, the lower the real

returns.

- 35 -
INSURANCE PENETRATION IN DIFFERENT COUNTRIES :

US 4.38 5.23
UK 8.62 4.75
BRAZIL 1.28 1.68
RUSSIA 1.12 2.13
INDIA 2.26 0.62
CHINA 2.3 1.03

insurance penetration

10 8.62
8
6 5.23 4.75
4.38
4
2.13 2.26 2.3
1.68
1.28 1.12
2 0.62 1.03
0
RUSSI
US UK BRAZIL INDIA CHINA
A
life 4.38 8.62 1.28 1.12 2.26 2.3
non life 5.23 4.75 1.68 2.13 0.62 1.03

life non life

PORTFOLIO MANAGEMENT :

Insurance plans under ULIP require the fund management in terms of the portfolio

management. Therefore it is relevant to have brief description of the portfolio

management.

- 36 -
 Individual securities, as we have seen, have risk-return characteristics of their

own. Portfolio, which is combinations of securities, may or may not take on the aggregate

characteristics of their individual parts.

Portfolio analysis considers the determination of future risk and return in holding

various blends of individual’s securities.

PORTFOLIO:

You will recall that expected return from individual securities carries some degree

of risk. Risk was defined as the standard a security was riskier than one with less

dispersion.

The simple fact that securities carry differing degrees of expected risk leads most

investors to the notion of holding more than one security at a time, in an attempt to

spread risks by not putting all their eggs in to one basket 2.Diversification of one’s

holdings in intended to reduce risk in an economy in which every asset’s returns are

subject to some degree of un certation. Most investors hope that if they hold several

assets, even if one goes bad, the others will provide some protection from an extreme

loss.

PROCESS OF PORTFOLIO MANAGEMENT :

We own portfolios because we believe that investment risk can be diversified by

spreading our investment across a number of assets. Ideally, we would like to own a

- 37 -
portfolio. Which provides the maximum return for a given level of risk? Portfolio

management is primarily concerned with the process of building and managing such

portfolios.

PORTFOLIO SELECTION:

RISK AND INVESTOR PREFERENCES:

Markowitz-type diversification revealed the substance behind the determination of an

efficient frontier, or locus of portfolio opportunities. The issue now is, How should

investors (analysts) choose a “best” option on the efficient frontier?

Our central vehicle for attacking this problem is the satisfaction an investor receives from

investment opportunities. Our assumption has been that risk-return measures on

portfolios are the main determinants of an investor’s attitude toward them. We need to

look closely at the manner in which risk affects preference.

SELECTING THE “BEST” PORTFOLIO:

Establishing efficient portfolios (minimum risk for a given expected return) comprising

broad classes of assets(e.g., stocks, bonds, real estate)lends it self to the mean-variance

methodology suggested by markowitz. Determining efficient portfolios within an asset

class (e.g. stocks)can be achieved with the single index (beta) model proposed by

Sharpe.

- 38 -
VISION:

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a

premier financial powerhouse and prudential plc, a leading international financial

services group headquartered in the United Kingdom. ICICI Prudential was amongst the

first private sector insurance companies to begin operations in December 2000 after

receiving approval from Insurance Regulatory Development Authority (IRDA).

ICICI Prudential's equity base stands at Rs. 11.85 billion with ICICI Bank and Prudential

plc holding 74% and 26% stake respectively. In the financial year ended March 31,

2005, the company garnered Rs 1584 crore of new business premium for a total sum

assured of Rs 13,780 crore and wrote nearly 615,000 policies. The company has a

network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate

agent tie-ups. For the past four years, ICICI Prudential has retained its position as the

No. 1 private life insurer in the country, with a wide range of flexible products that meet

the needs of the Indian customer at every step in life.

- 39 -
PROMOTERS:

ICICI Bank :

ICICI Bank (NYSE:IBN) is India’s second largest bank and largest private sector bank

with over 50 years of financial experience and with assets of Rs. 1812.27 billion as on

30th June, 2005. ICICI Bank offers a wide range of banking products and financial

services to corporate and retail customers through a variety of delivery channels and

through its specialized subsidiaries and affiliates in the areas of investment banking, life

and non-life insurance, venture capital and asset management. ICICI Bank is a leading

player in the retail banking market and has

over 13 million retail customer accounts. The Bank has a network of over 570 branches

and extension counters, and 2,000 ATMs.

Prudential plc :

Established in London in 1848, Prudential plc, through its businesses in the UK and

Europe, the US and Asia, provides retail financial services products and services to

more than 16 million customers, policyholder and unit holders worldwide. As of June 30,

2004, the company had over US$300 billion in funds under management. Prudential

has brought to market an integrated range of financial services products that now

includes life assurance, pensions, mutual funds, banking, investment management and

general insurance. In Asia, Prudential is the leading European life insurance company

with a vast network of 24 life and mutual fund operations in twelve countries - China,

Hong Kong, India,

- 40 -
Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and

Vietnam.

ICICI Prudential is also the only private life insurer in India to receive a National Insurer

Financial Strength rating of AAA ( Ind ) from Fitch ratings. The AAA rating is the highest

credit rating, and is a clear assurance of ICICI Prudential’s ability to meet its obligations

to customers at the time of maturity or claims.

DISTRIBUTION :

ICICI Prudential has one of the largest distribution networks amongst private life

insurers in India, having commenced operations in over 116 cities and towns in India,

stretching from Bhuj in the west to Guwahati in the east, and Amritsar in the north to

Trivandrum in the south.

The company has 8 bank assurance tie-ups, having agreements with ICICI Bank, Bank

of India, Federal Bank, South Indian Bank, Ernakulam Bank, Lord Krishna Bank and

some co-operative banks, as well as about 290 corporate agents and brokers. It has

also tied up with NGOs, MFIs and corporates for the distribution of rural policies and

organizations like Dhan for distribution of Salaam Zindagi, a policy for the socially and

economically underprivileged sections of society.

ICICI Prudential has recruited and trained more than 65,000 insurance advisors to

interface with and advise customers. Further, it leverages its state-of-the-art IT

infrastructure to provide superior quality of service to customers.

PRODUCTS :

Insurance Solutions for Individuals

- 41 -
ICICI Prudential Life Insurance offers a range of innovative, customer-centric products

that meet the needs of customers at every life stage. Its products can be enhanced with

up to 5 riders, to create a customized solution for each policyholder.

Savings Solutions :

• SecurePlus is a transparent and feature-packed savings plan that offers 3 levels

of protection.

• Cash Plus is a transparent, feature-packed savings plan that offers 3 levels of

protection as well as liquidity options.

• Save’n’Protect is a traditional endowment savings plan that offers life protection

along with adequate returns.

• CashBak is an anticipated endowment policy ideal for meeting milestone

expenses like a child’s marriage, expenses for a child’s higher education or purchase of

an asset.

• LifeTime & LifeTimeII offer customers the flexibility and control to customize the

policy to meet the changing needs at different life stages. Each offer 4 fund options ?

Preserver, Protector, Balancer and Maximiser.

• LifeLink II is a single premium Market Linked Insurance Plan which combines

life insurance cover with the opportunity to stay invested in the stock market.

• Premier Life is a limited premium paying plan that offers customers life

• Insurance cover till the age of 75.

• InvestShield Life is a Market Linked plan that provides capital guarantee on the

invested premiums and declared bonus interest.

- 42 -
• InvestShield Cash is a Market Linked plan that provides capital guarantee on

the invested premiums and declared bonus interest along with flexible liquidity options.

InvestShield Gold is a Market Linked plan that provides capital guarantee on

the invested premiums and declared bonus interest along with limited premium payment

terms.

Protection Solutions :

• LifeGuard is a protection plan, which offers life cover at very low cost. It is

available in 3 options ? level term assurance, level term assurance with return of

premium and single premium.

• HomeAssure is a mortgage reducing term assurance plan designed specifically

to help customers cover their home loans in a simple and cost-effective manner.

Child Plans:

• SmartKid education plans provide guaranteed educational benefits to a child

along with life insurance cover for the parent who purchases the policy. The policy is

designed to provide money at important milestones in the child’s life. SmartKid plans

are also available in unit-linked form ? both single premium and regular premium.

Retirement Solutions :

• ForeverLife is a retirement product targeted at individuals in their thirties.

• SecurePlus Pension is a flexible pension plan that allows one to select between

3 levels of cover.

- 43 -
Market-linked retirement products :

• LifeTime Pension IIis a regular premium market-linked pension plan

• LifeLink Pension II is a single premium market-linked pension plan.

• InvestShield Pension is a regular premium pension plan with a capital

guarantee on the investible premium and declared bonuses.

• Golden Years: is a limited premium paying retirement solution that offers tax

benefits up to Rs 100,000 u/s 80C, with flexibility in both the accumulation and payout

stages.

ICICI Prudential also launched “Salaam Zindagi”, a social sector group insurance

policy targeted at the economically underprivileged sections of the society.

Health Solution

• Health Assure: Is a regular premium plan which provides l ong term cover

against 6 critical illnesses by providing policyholder with financial assistance,

irrespective of the actual medical expenses.

• Health Assure Plus: Is a regular premium plan which provides long term cover

against 6 critical illnesses by providing financial assistance, irrespective of actual

medical expenses, as well as an equivalent life insurance cover

Group Insurance Solutions:

ICICI Prudential also offers Group Insurance Solutions for companies seeking to

enhance benefits to their employees.

• ICICI Pru Group Gratuity Plan: ICICI Pru’s group gratuity plan helps employers

fund their statutory gratuity obligation in a scientific manner. The plan can also be

- 44 -
customized to structure schemes that can provide benefits beyond the statutory

obligations.

• ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined

contribution superannuation scheme to provide a retirement kitty for each member of

the group. Employees have the option of choosing from various

annuity options or opting for a partial commutation of the annuity at the

Time of retirement.

• ICICI Pru Group Term Plan: ICICI Pru’s flexible group term solution helps

provide affordable cover to members of a group. The cover could be uniform or based

on designation/rank or a multiple of salary. The benefit under the policy is paid to the

beneficiary nominated by the member on his/her death.

Flexible Rider Options :

ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginal

cost, depending on the specific needs of the customer.

• Accident & disability benefit: If death occurs as the result of an accident during

the term of the policy, the beneficiary receives an additional amount equal to the rider

sum assured under the policy. If the death occurs while traveling in an authorized mass

transport vehicle, the beneficiary will be entitled to twice the sum assured as additional

benefit.

• Accident Benefit: This rider option pays the sum assured under the rider on

death due to accident.

- 45 -
• Critical Illness Benefit: protects the insured against financial loss in the event of

9 specified critical illnesses. Benefits are payable to the insured for medical expenses

prior to death.

• Income Benefit: This rider pays the 10% of the sum assured to the nominee

every year, till maturity, in the event of the death of the life assured. It is available on

SmarKid, Secure Plus and Cash Plus

• Waiver of Premium: In case of total and permanent disability due to an

accident, the premiums are waived till maturity. This rider is available with Secure Plus

and Cash Plus.

Management:

Board of Directors

The ICICI Prudential Life Insurance Company Limited Board comprises reputed people

from the finance industry both from India and abroad.

Mr. K.V. Kamath, Chairman

Mr. Mark Norbom

Mrs. Lalita D. Gupte

Mrs. Kalpana Morparia

Mrs. Chanda Kochhar

Mr. HT Phong

Mr. M.P. Modi

Mr. R Narayanan

- 46 -
Ms. Shikha Sharma, Managing Director

Mr. N.S. Kannan, Executive Director

Management Team

Ms. Shikha Sharma, Managing Director & CEO

Mr. N.S. Kannan, Executive Director

Mr. V. Rajagopalan, Chief – Actuary

M. Sandeep Batra, Chief Financial Officer & Company Secretary

Ms. Anita Pai, Chief - Customer Service and Operations

Mr. Puneet Nanda, Chief - Investments

The plan, as per IRDA norms, will have a 3–year lock–in.

ICICI Prudential Life Insurance is launching a unit–linked insurance plan

(ULIP) that will be the first to conform to the Insurance Regulatory and Development

Authority’s (Irda) regulations on ULIPs.

ICICI Prudential’s LifeLink Super single premium insurance product will be a

modification of the existing LifeLink plan.

- 47 -
The revised product will have a three–year lock–in, a crucial clause in the ULIP

regulations that seek to differentiate ULIPs from mutual fund investments. The older

LifeLink II plan has a one–year lock–in.

The country’s largest private sector life insurer will stop selling the existing LifeLink

product from March 13, 2006, when it launches LifeLink II.

ICICI Prudential’s managing director & CEO, Shikha Sharma, said modifications in

other ULIP products will be carried out in phases before the July 1, 2006 deadline set

by the Insurance Regulatory and Development Authority (Irda).

ICICI Prudential has 16 unit–linked products. Of the total assets under management of

Rs 7,650 crore, ULIPs account for Rs 5,800 crore.

LifeLink Super will open with a new fund series on March 13, 2006 and will

offer units to customers at an NAV of Rs 10 per unit on the opening day.

The target customers for the modified products are individuals who want to invest a

lumpsum in one shot and don’t want the pressure of regular future payouts. These

include sportsmen, artists, freelancers and those with windfall profits.

The new product will offer option to choose between two levels of sum assured – 125

per cent and 500 per cent. There will also be 100 per cent allocation for premium of Rs

5 lakh and above.

LifeLink Super opens with New Fund Series at Rs 10/unit

ICICI Prudential Life Insurance Company, India’s No. 1 private life insurance company,

has become the first life insurer in India to introduce a single premium product –

- 48 -
LifeLink Super - which is structured along the new ULIP guidelines that were issued by

Insurance Regulatory and Development Association (IRDA) in

December 2005. LifeLink Super will open with a New Fund Series that allocates units to

customers at an NAV of Rs 10 per unit on the opening day - March 13, 2006.

Explaining the rationale behind the launch of LifeLink Super, Ms Shikha Sharma,

Managing Director and CEO, ICICI Prudential Life Insurance said, “The new ULIP

guidelines have created a level field for the structure of single premium products, and

we are excited to be the first movers in this space. With LifeLink Super, we believe we

have a product that can compete with the single premium products available in the

market, without diluting the concept of life insurance as a long-term instrument for

protection and wealth creation.”

As per the new ULIP guidelines, LifeLink Super has a minimum term of 5 years, giving

the policyholder the opportunity to adopt a long-term perspective and earn

commensurate returns. Other key features include:

Option to choose between 2 levels of Sum Assured (125% or 500%). For e.g, if an

individual chooses to pay Rs. 50,000, his sum assured will be either Rs. 62,500 (125%)

or Rs. 2,50,000 (500%).

4 fund options – equity, balanced, debt, and money markets & cash

Flexibility of switching between funds, 4 times in a year – free

Liquidity after three years of the policy

100% allocation for premium of Rs 5 lakh and above

Tax benefits under 80C and 10 (10D) as per the prevailing tax laws

- 49 -
Life Link Super is ideal for individuals who want to invest a lumpsum and earn returns

over the long-term, without the pressure of regular future payouts, and is

Likely to find great appeal amongst sportsmen, artists, freelancers, and those who want

to invest windfall profits, bonus, etc.

To give an example of the benefits that would flow from investing Rs 1 lakh in LifeLink

Super:

Term LifeLink Super can be purchased by anyone between the ages of 0-65 years.

Those aged 44 years or less pay a single premium of atleast Rs 25,000 and those 45

years and above pay a single premium of atleast Rs 50,000.

ICICI Prudential Life Insurance crosses two million policies milestone

DISTRIBUTION:

ICICI Prudential has one of the largest distribution networks amongst private life

insurers in India, having commenced operations in over 116 cities and towns in India,

stretching from Bhuj in the west to Guwahati in the east, and Amritsar in the north to

Trivandrum in the south.

The company has 8 bancassurance tie-ups, having agreements with ICICI Bank, Bank

of India, Federal Bank, South Indian Bank, Ernakulam Bank, Lord Krishna Bank and

some co-operative banks, as well as about 290 corporate agents and brokers. It has

also tied up with NGOs, MFIs and corporates for the distribution of rural policies and

organisations like Dhan for distribution of Salaam Zindagi, a policy for the socially and

economically underprivileged sections of society.

- 50 -
ICICI Prudential has recruited and trained more than 65,000 insurance advisors to

interface with and advise customers. Further, it leverages its state-of-the-art IT

infrastructure to provide superior quality of service to customers.

HOW WE INVEST…. ICICI PRUDENTIAL:

THE PHILOSOPHY & STRATEGY

As a life insurance company, we know that our customers trust their monies

with us for the long-term and hope to use these funds to protect and achieve the

dreams and aspirations of their families. With this in mind, our investment focus is to

ensure long term safety, stability and profitability of our customer’s fund. Our aim is to

achieve superior returns for a given level of risk. In order to meet this objective, we

have developed an investment framework that is based on a sound investment

process coupled with a rigorous and sophisticated risk management strategy.

Our investment management process relies on analytics & research to achieve

positive risk-adjusted returns in each product category, be it for child plans, retirement

solutions or there endowment-related funds. We clearly define an asset allocation

strategy that matches the risk characteristics of the corresponding liability or, put

simply, we ensure that the promise we have made to the customer will be met.

Debt investments, which comprise the majority of our protector fund, part of our

balancer fund and a minor portion of our maximiser fund, target a mix of government

and corporate bonds. The investment process is backed by intense research and

analysis and comprises qualitative as well as quantitative measures. We make calls

- 51 -
after carefully studying all the factors that influence interest rate direction, such as RBI

policy and stance, inflation, growth of money supply, credit off take, fiscal deficit,

global interest rate scenario and market sentiment.

Detailed research reports obtained from credit rating agencies from the primary

basis for investment decisions. In addition, the term’s assessments of economic cycle,

industry health, its perception of management quality and demand and supply

situation in stock of a particular entity influence the investment decision.

The investments in equity are targeted at long-term capital appreciation. We are

not bound by traditional pure value or growth driven strategy and continuously look

when we both co-exit. Portfolio diversification lies at the core of our investment

strategy. We have a clearly articulated benchmark for each of our funds and have

well-defined deviation limits vis-à-vis benchmark at both the sector and stock level.

We combine top-down and bottom-up approach while choosing stocks for our

investment, considering several factors like management quality, performance track

record(in relation to the sector), dividend track record, transparency in disclosures,

execution capabilities etc.

Our equity portfolio has a large cap bias, as we believe that they offer higher risk

adjusted returns. However, we do invest in mind-caps providing they satisfy at least

one of the criteria viz. presence in high growth industry ,one of the industry segment

leaders, niche player, offer a play on outsourcing opportunity or structural turnaround

in performance. Thus the focus is on

Ensuring consistent, stable and better risk adjusted performance over long term for

our policy holders.

- 52 -
 In summary, our investment process is a function of extensive research and is

based on data and reasoning, backed by superior risk control measures. This, we

believe, would enable us to deliver to our customers safety, stability and returns on

their investments with us.

The generally accepted asset mixes for the portfolio construction with different

objectives is given the table ‘Table : Asset Mixes’

The analysis part covers the comparison of the portfolios of the company with

standard generally accepted asset mixes, the behavior of portfolio from inception and

also the risk of the portfolios.

- 53 -
 Investment objectives and Asset Mixes In General

Primary Secondary Asset mix Notes

Objective Objective
Stability of Current income Short-term debt Minimum maturies necessary to achieve

principal current stability of portfolio fixed- required income flow.

income principal income portfolio

Growth of 40-60% debt Stability of principal third. Within the debt

income 40-60% equities portfolio the portioninvested short-term will

depend on the need for stability of

principal relative to stability of income.

Growth of 50-65% equities Appreciation third, fixed income is to

income 35-50%debt secure needed level and stability of

income. Maturity of debt is not constrained

by a need for stability is principal.

Growth of Current income 60-100%equities Appreciation should be third and debt

income 0-40%debt portion could be tax-exempt issue.

Stability is fourth goal.

Appreciation Appreciation 75-100%equities Current income should be third; stability is

Growth of 0-25%debt fourth goal.

income 0-10%debt

90-100%equities

PROTECTOR PLAN: Protector has the objective of providing the policy holder safe

and steady returns over a period of time. Keeping this objective, protector invests in

various kinds of corporate bonds and government securities that provides fixed and

safer returns to investor.

- 54 -
TABLE : ASSET MIX

% NET ASSETS

PROTECTER PLAN(INCOME) (DEC)

NAME 2003 2004 2005 2006 2007
Certificate of Deposite ICICI Bank 2004 1.50%

DEBENTURES/BONDS

Gujarat ambuja cement 7.80% 1.30% 0.74% 0.44%

INDOGULF INDUSTRIES 7.70% 1.90%
TATA TEA 7.00%
HDFC 6.00% 2.20% 1.84% 4.45% 6.60%
Rural electrification 5.30% 1.20% 3.97% 0.62%
NACLCO 5.00%
Tata steel 4.50%
Reliance Petroleum 3.40%
IPCL 2.50% 0.23%
49.20

NABARD % 0.07% 1.53%

Indian Railway finance corporation 4.40% 4.66%
Grasim Industries 4.00% 2.91% 1.55%
power finance 3.70% 0.99% 4.34%
Reliance Industries 3.60% 4.49% 4.11% 2.04%
LIC Housing Finance 3.10% 2.30%
BHEL 2.70% 1.60% 1.82%
Exim Bank 2.60% 2.55% 2.20% 1.93%
Indo gulf industries 1.90%
Associates India 1.60%
Bharath petroleum corp. 1.50% 0.85% 0.53%
IDFC 1.50% 0.90% 0.53% 2.55%
National thermal power corporation 1.00% 0.52% 1.02%
Hindalco industries 0.80% 2.49% 4.17% 1.61%
Iara chemicals 1.40% 0.81%
Indian petro chemicals corp 0.90% 0.50%
ABN Amro Bank 0.47%
Citi Finance consumer 2.27% 7.50%
IDBI 6.05% 6.56% 0.71%
Indian oil corp 2.25%
power grid 2.03% 0.84%
State Bank of India 0.46% 1.84% 0.55%
ICICI Securities 1.35%
Kotak Mahendra 1.31% 0.67%
Standard charted bank 1.19%

- 55 -
Kotak Mahendra Primus 1.18% 1.35%
GE Capital 1.57% 0.99%
cholamandalam investment and finance 0.94% 3.41%
sundaram finance 0.88% 1.00%
citi corp finance 0.86% 2.83%
Indian Rural electrification corp 4.52%
ICICI Securities 0.60% 0.46%
State bank of Travancore 0.59% 0.49%
Binolere cabels 0.45%
UTI Bank 0.44% 0.13%
Mahindra & Mahendra Finance 0.21% 0.90%
Standard charted loans & investments 0.17%
American Express Bank 0.15%
Hindustan petrolium corporation 2.22%

GOVERNMENT SECURITIES, [TREASUSY BILLS] 14.68

11.91% GOI 2005 1.87%
8.07% GOI 2017 14.1% 0.20% 5.43% 1.34%
7.40% GOI 2012 13.0% 12.5%
9.81% GOI 2013 8.00% 4.40%
11.50% GOI 2011 7.30% 3.80%
11.40% GOI 2008 5.80% 4.00%
7.37% GOI 2001 7.40% 4.00%
7.27% GOI 2013 5.80% 0.56%
7.55% GOI 2010 3.20% 6.13%
11.99% GOI 2009 2.30%
7.49% GOI 2017 2.00% 3.09%
9.39% GOI 2011 2.00% 0.51%
6.05% GOI 2019 1.20%
10.25% GOI 2017 4.61%
6.96% GOI 2009 1.16% 3.09%
7.40% GOI 2035 2.72%
8.35% GOI 2022 1.55%
6.20% GOI 2010 1.53%
6.40% GOI 2010 1.28% 1.00%
6.00% GOI 2010 0.74% 0.59%
11.50% GOI 2006 0.50%
5.59% GOI 2016 0.45%
7.38% GOI 2015 14.68%
6.18% GOI 2005 5.96%
Accrued Interest 2.50% 1.70%
17.46

cash/call/money at short notice %

other net current Assets 0.00% 7.20% 7.72% 3.14%
27.34

Deposits with Bank 6.22% 6.03% %

- 56 -
Total 100% 100% 100% 100% 100%

2003 2004 2005 2006 2007

• Equity - - - -
• Debentures /Bonds 49.2% 40.5% 42.75% 64.82% 48.40%
• Got Securities 48.3% 49.0% 43.3% 26.01% 34.14%
• Current Assets 2.5% 9.0% 7.72% 3.14% 17.46%

Interpretation:

The protector portfolio reveals that the portfolio is entirely with Debentures/Bonds and

Government Securities with current assets. The corporate debentures/bonds range

between 40.5 % to 64.82% and Government securities range between 26.01 to

49.0%. Particularly as on July 2007 the Government Securities are 34.14% and

Debentures/bonds 48.40%. This may be due the changes in the interest rates.

Return details of 2005:

Returns ICICI Pru CRISIL composite Bond

index
Last quarter 0.97% 1.03%
Last One year 8.19% 8.12%
Last Two years 15.10% N.A
Since Inception 16.93% N.A

Return details of 2006:

Returns ICICI Pru Bench mark

Last one year 0.00% -0.33%
Last Two years 4.10% 3.89%

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 Since Inception 11.52% N.A

Return details of 2007:

Period Fund Bench mark

Last one year 3.97% 4.76%
3 years 4.00% 4.12%
Since Inception 8.76% N.A

Interpretation: Last one year returns shows 0 % returns in the year 2004 the Crisil

Bench mark return during that time period is – 0.33%. Therefore it shows that the

portfolio is better than the bench mark. In other time periods the portfolio has shown

the positive returns.

Risk of the Portfolio:

Year Period Fund (r) (r – ra) (r – ra)2

2004 Last One year 8.19% 4.137 17.114
2005 Last one year 0.00% - 4.053 16.426
2006 Last one year 3.97% - 0.083 0.006
2007 Last One Year 5.88% 1.37% 1.876%

Average return (ra ) = 4.51%

Variance σ 2 = 9.01225

Standard deviation σ = 3.01%

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Risk of the Portfolio: CRISIL&Composite bond&Bench mark

Year Period Fund (r) (r – ra) (r – ra)2

2004 Last One year 8.12% 3.717 13.816

2005 Last one year -0.33% -4.073 16.589

2006 Last one year 4.76% 0.357 0.127

2007 Last one year 5.88% 1.443 2.082

32.614
Average return (ra ) = 4.403%

Variance σ 2 = 32.614/4 = 8.15%

S.D. σ = 2.93%

BALANCER PLAN :

Balancer has the objective of providing the policy holder a reasonable mix of
capital appreciation on the investments and consistent returns, so that you can
achieve dual objective with one investment option. More over a balance between the
two is maintained to provide appropriate returns on investments.
Keeping this objective, balancer invests in a mix of equity in various
corporate bonds or debentures and government securities . while the equity
investments in the companies would provide investor with a capital appreciation, the
investment in government securities and corporate bonds provide you the security
and safety of your investments.

BALANCER PLAN : %Net Assets (Dec)

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Name 2003 2004 2005 2006 2007
Equity shares
Ashok leyland 0.5%
Associated cement co ltd 0.8% 1.5% 1.03%
Bajaj Auto ltd 1.7% 0.80%
Bajajn petrolieum corp ltd 0.7% 1.28% 0.30%
BHEL 1.4% 1.8% 1.80% 2.09% 3.20%
Corporation bank 1.0%
Digital global soft ltd 0.8%
Dr.reddy Laboratories 1.8% 0.08%
Hindustan lever ltd 3.2% 1.4% 2.02% 0.79%
Hindustan petroleum corp 1.1%
Indian petrochemical corp 0.5% 1.1%
Indo gulf corporation ltd 0.3%
Info sys technologies ltd 3.5% 3.3% 1.55% 3.26% 1.72%
Lic ltd 2.0% 0.0% 1.97% 1.68% 0.10%
Larsen & Tourbo Ltd 1.0% 0.46% 1.62%
Mahanagar telephone ltd 0.3%
Mphasis Bfl ltd 0.8% 1.3%
Ranbaxy labs ltd 2.0% 0.25%
Reliance industries ltd 3.5% 3.5% 3.86% 2.31% 4.79%
State bank of india 3.2% 2.0% 1.82% 2.00% 2.24%
Tata chemicals ltd 0.5% 0.55% 0.18%
Tata iron & steel co ltd 1.3% 2.3% 1.73%
Telco ltd 2.4% 1.6%
Wipro ltd 2.9% 1.1% 0.63%
37.4%

Moser-baer (i) ltd 1.0%

Mahindra & mahindra ltd 1.7% 1.78%
Maruti udyog ltd 1.2% 0.19%
Hero Honda motors ltd 1.0%
Escorts India ltd 0.5%
Cummins India ltd 1.2%
Asea brown boveri ltd 1.2%
Hindalco industries ltd 1.6% 0.56%
Oriental bank of ommernce 1.6%
Grasim industries 2.0%
Great eastern shipping co 1.7%
Sun pharmaceuticals 1.2%
Century textiles ltd 1.0%
HDFC bank 1.62% 1% 2.73%
Punjab national bank 1.52% 0.93%
Uti bank 0.90% 0.76% 2.03%
HDFc ltd 1.53% 1% 0.40%
Indian info line 0.02% 0.05%
Satyam computer ltd 2.31% 1.76%
HCL infosystems ltd 0.41% 0.15%

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Tata consultancy services

ltd 0.45% 0.22%

Asian paints ltd 0.27% 0.22%
Procter & gamble health ltd 0.11% 0.06%
Mario industries ltd 0.08%
Ongc corp ltd 0.10% 2.00%
Hpcl 0.95% 0.30%
Indian oil corporation ltd 0.68% 0.26% 0.29%
Chennai petroleum corp ltd 0.35% 0.13%
Bharathi tele venture ltd 1.65% 2.36%
Tata steel ltd 0.55%
Jsw steel ltd 0.24%
Cipla ltd 0.84% 0.68%
Jet airways India ltd 1.18%
Emco ltd 0.29%
Motherson sumi systems 0.09% 0.07%
Gas authority of India 1.26%
National aluminum 0.44%
Gujarat ambuja cements 1.32%
Associated cement

companies ltd 1.03%

Colgate Palmolive India ltd 0.16%
Sun Parma ltd 0.77%
Tata motors 0.26%
Punjab tractors ltd 0.35%
Ge shipping 0.69%

BALANCER PLAN %Net Assets (Dec)

Name 2003 2004 2005 2006 2007

Debentures / Bonds 2.5%
Bharat petroleum corp 2.50%
Gujarath ambuja cement
0.90% 0.18% 0.06%
HDFC 4.10% 1.00% 0.62% 3.42% 3.34%
Indo gulf industries 3.50% 1.90%
Ipcl 5.50% 0.40%
Nuclear power corp. 4.40%
Reliance petroleum 3.80%
Rural electrification 4.50% 0.30% 0.36%
Tata steel
Tata tea 0.31%
Hindustan petroleum ltd 2.07%

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Reliance industries 3.40% 2.59% 2.47% 0.40%
Grasim industries 2.90% 0.75% 0.31%
LIC housing finance 2.70% 1.07%
Indian railway finance corp 2.20% 2.43%
Exim bank 1.30% 1.02%
Power finance 1.00% 3.40% 0.38%
Hindalco industries 1.00% 1.41% 2.02%
Bharath petroleum corp
0.70% 0.04%
Bhel 0.70% 0.12% 0.38%
National thermal power

corporation 0.70% 0.12% 0.34%

Idfc 0.50% 0.42% 0.14% 1.07%
Tata chemicals 0.50% 0.09%
Indian petro chemical ltd 0.50% 0.08%
NABARD 1.95% 1.93%
Citi financial consumer 0.91% 4.95% 2.45%
IDBI 3.28% 0.47%
Indian rural electrification

corp 2.20%
Cholamandalam investment 2.16%

and finance 1.82%

Standard charted bank 1.66%
Indian oil corp 1.54%
State bank of india 0.30% 1.28% 0.34%
Exim bank 0.83% 1.26%
Citi corp finance 1.14% 1.48%
Power grid corp 1.08% 0.33%
Ge capital 1.13% 0.94% 0.60%
Sundaram finance 0.93% 1.57%
American bank 0.93%
ICICI Securities 0.84%
Standard charted loans &

investment 0.74%
Kotak mahindra bank 0.71% 1.15%
Uti bank 0.64% 0.58%
State bank of travan core 0.59% 0.21%
Abn amro bank 0.40%
Finolex cables 0.25% 0.17%
ICICI 0.24% 0.12%
Mahindra & mahindra 0.75%

finance 0.24%
Punjab national bank 0.23% 0.09%
Indian Petroleum 0.16%

- 62 -
corporation
State bank of indore 0.03%
State bank of bikaner &

jaipur 0.62% 0.00%

Power finance corp 3.61% 1.18%
IDBI 3.28%
Total 33.7% 21.6% 22.30% 42.40% 30.12%
GOVERNMENT

SECURITIES
Treasury bills 10.55%
11.40% GOI 2.1% 3.7% 0.39% 0.13% 0.06%

2008
11.50% GOI 7.7% 3.9%

2011
7.40% GOI 9.1% 6.5%

2021
8.07% GOI 2.7% 2.6% 3.84% 0.03%

2017
9.81% GOI 4.9% 0.7%

2013
7.55% GOI 5.6%

2010
7.37% GOI 2.32%

2014
11.99% GOI 2.5%

2009
6.05% GOI 1.2%

2019
Treasury bill 10.55%
7.38% GOI 7.50%

2015
11.19% GOI 4.95%

2005
6.18% GOI 4.06%

2005

- 63 -
7.55% GOI 3.53%

2010
6.96% GOI 0.46% 0.78% 0.04%

2009
5.59% GOI 0.21%

2016
9.39% GOI 0.16%

2011
Bank fixed deposits 3.01%
10.25% GOI 2.78%

2021
7.40% GOI 1.69%

2035
8.35% GOI 0.96%

2022
6.20% GOI 0.86% 0.28%

2010
6.40% GOI 0.61%

2010
6.00% GOI 0.38% 0.20%

2010
7.27% GOI 0.37%

2013
11.50% GOI 0.26%

2006
Treasury bills 0.01%
Deposits with banks 3.01% 3.29% 18.16%

Totals 26.5% 30.8% 31.82% 15.01% 7.10%

Accrued interest 2.0% 1.0% 5.45% 2.42% 6.14%

Cash/call/money at short

notice/other
Net current Assets 0.5% 9.0%
Totals 100% 100% 100% 100% 100%

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 2003 2004 2005 2006 2007
• Equity 37.4% 37.6% 37.42% 36.88% 38.39%
• Debentures /Bonds 33.7% 21.6% 22.30% 42.40% 30.12%
• Govt Securities 26.5% 30.8% 31.82% 15.01% 25.26%
• Current Assets 2.5% 10.0% 5.45% 2.42% 6.14%

Interpretation:

The Balancer portfolio from 2003 to 2007 reveals that Equity percentage is at or

around 39%.The Debt proportion in the portfolio is particularly of the Debentures/Bond

has ranging between the 21.60 % to 42.40% and the Government Securities ranging

from 15.01 % to 31.82 % . The current assets are fluctuating between 2.42 % to

10.00 %.

Return details of 2005:

Returns ICICI Pru Bench march

Last Quarter 12.3% 11.3%
Last One year 36.1% 27.7%
Last Two year 29.8% N.A
Since Inception 11.52% N.A

Return details of 2004

Returns ICICI Pru Bench march

Last One year 7.04% 4.39%
Last Two year 22.85% 16.66%
Since Inception 24.41% N.A

Return details of 2005

Period Fund Bench march

One year 14.62% 15.89%
3 years 18.63% 15.59%
Since Inception 18.59% N.A

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Risk of the Portfolio:

Year Period Fund(r ) (r – ra) (r – ra)2

2004 Last one year 36.1% 16.265% 264.38

2005 Last one year 7.04% -12.795% 163.58

2006 Last one year 14.62% -5.125% 26.265

2007 Last one year 21.58% 1.745% 3.045

79.34 457.26

Average Return (ra) = 79.34/4 = 19.835%

Variance σ 2 = 457.26/4 = 114.31

S.D. σ = 10.53%

Risk of the Portfolio:Bench Mark

Year Period Fund (r) (r – ra) (r – ra)2

2004 Last One year 27.7% 10.58 111.93
2005 Last one year 4.39% -12.73 162.05
2006 Last one year 15.89% -1.23 1.512

Average return (ra ) = 17.12%

Variance σ 2 = 287.812/4 = 71.95

S.D. σ = 8.48%

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MAXIMIZER PLAN:

Maximizer has the objective of providing the policy holder potential

appreciation of investments over a long time. With investments in maximizer the policy
holder can achieve returns that have the potential to be inflation comfortably in the
long term.
Keeping the objective in mind, maximizer invests in companies that have sound
track record and the potential to give long term returns
If high growth is priority, this is the plan for investor . The investor can enjoy
long term appreciation from a port folio that is invested primarily in equity and equity
related securities.

MAXI MISER(GROWTH)PLAN %Net Assets(Dec)

Name 2003 2004 2005 2006 2007
Equity Shares
Ashok Leyland ltd. 1.10%
Associared cement co ltd 1.80% 3.80% 2.43%
Basis Auto Ltd 4.00%
Bharath petrolium corp ltd 1.50% 3.05%
BHEL 3.30% 4.50% 4.70% 7.88%
corporation Bank 2.20%
Digital global soft ltd 1.90%
Dr.reddys laboratories 4.10% 0.16%
Hindustan lever ltd 7.40% 3.50% 1.71%
Hindustan lever petroluium 2.50%
indian petro chemicals corp 1.20% 2.60%
infosys technologies ltd 8.00% 8.00% 4.40% 5.00%
indo gulf corporation ltd 0.70%
itc ltd 4.50% 0.00% 5.93% 2.93%
larsen&tourbo ltd 2.20% 1.00% 8.58%
mahanagar telephone nigam 0.80%
mphasis bfl ltd 2.00% 3.10%
ranbaxy labs ltd 5.20% 1.09%
statebank of india 7.00% 4.90% 4.18% 4.40% 3.63%
reliance industries 9.10% 8.70% 9.21% 11.69%
tata chemicals ltd 1.10% 0.18%
tata iron&steel co ltd 3.00% 5.60% 3.73%
telco ltd 5.60% 3.90%
wipro ltd 6.90% 2.80% 1.16%
moser-baer 2.30%
mahindra&mahindra ltd 4.20% 1.80% 4.29%
maruti udyog ltd 3.00% 0.64%
hero honda motors ltd 2.60%
escorts india ltd 1.20%

- 67 -
cummins india ltd 2.90% 1.30%
asea brown boveri ltd 2.80% 1.44%
hindalco industries 3.90% 4.84%
oriental bank of commerce 4.00% 0.41%
grasim industries ltd 4.90% 2.10%
great eastern shipping ltd 4.10%
sun pharma ceuticals ltd 3.10% 1.74%
century textiles ltd 2.50%
HDFC bank 4.19% 4.42% 0.95%
punjab national bank 4.00% 2.24%
HDFC ltd 3.88% 2.15% 7.25%
UTI bank 2.30% 1.42% 4.85%
indian infoline ltd 0.04% 0.04%
satyam computers ltd 5.73% 4.75%
tata consultancy services 0.91% 1.41%
HCL info system ltd 1.23% 0.08%
asian paints 0.88% 0.34%
prodter&gamble hyg&health ltd 0.42% 0.33%
marico& industries ltd 0.44% 0.22%
ONGC corporation ltd 5.42%
Gas authority of india 3.36%
HPCL 2.41%
Indian oil corp 1.44%
chennai petroleum corp ltd 0.80%
national aluminium company ltd 0.88%
gujarat ambuja cements ltd 3.27%
colgate palmolive india ltd 0.57%
cipla ltd 2.29%
bharathi televentures ltd 4.98%
tata motors 0.64%
punjab tractors 0.91%
GE shipping 1.50%
century textiles ltd 0.72%
92.47

Total 87.1% 93.6% 94.12% % 86.81%

DEBENTURES/BONDS

Tata tea 4.30%

gujarat ambuja cement 1.20%
cholamandalam invest

ment&finance 0.51% 0.84%

standard charted

loans&investments 0.00%
total 5.50% 0.84%

- 68 -
GOVERNMENT SECURITIES
11.30% goi 2012 0.30%
11.50% goi 2011 1.40%
7.40% goi 2012 3.60%
total 5.30%
accrued

interest/cash/call/money 0.20% 0.00%

at short notice/other net current

assets 1.70% 7.10% 5.895 6.69% 13.19%

total 100% 100% 100% 100% 100%

2003 2004 2005 2006 2007

• Equity 87.4 92.9% 94.11% 92.75% 86.19%
• Debentures /Bonds 5.5% - - 0.52%
• Govt Securities 5.2% - - -
• Current Assets 1.9% 7.1% 5.89% 6.74% 13.19%

Interpretation:

The maximiser portfolio reveals that the Equity is maintained between 87.4 % to
94.11% and the Debt in the form of Debentures/Bonds 0% and 5.5.% and
Government Securities 0 to 5.2 %. The current assets fluctuate between 1.9 % and
7.1%.
Return details of 2005:

Returns ICICI Pru S&p CNX Nify 50

Last quarter 30.5% 32.6%
Last One year 85.1% 71.9%
Last Two years 52.3% 40.7%
Since Inception 52.2% 38.3%
Return details of 2006:

Returns ICICI Pru Benchmark

Last quarter 17.44% 10.90%
Last One year 58.68% 45.32%
Since Inception 47.28 32.24%

Return details of 2007:

Period Fund BSE 100

One year 36.88% 38.47%
3 years 43.79% 38.16%

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 Since Inception 34.45% N.A

Risk of the Portfolio:

Year Period Fund (r ) (r – ra) (r – ra)2

2004 Last one year 28.98% 839.84
85.1%
2005 Last one year 2.56% 6.55
58.68%
2006 Last one year -19.24% 370.17
36.88%
2007 Last one year -12.3% 151.29
43.82%
1367.85
224.48

Average Return (ra) = 224.48/4 = 56.12%

Variance σ 2 = 1367.85/4 = 341.96
S.D. σ = 18.52%

Risk of the Portfolio:Bench mark&Bse:

Year Period Fund (r) (r – ra) (r – ra)2

2004 Last One year 71.9% 22.67 513.92

2005 Last one year 45.32% -3.91 15.28

2006 Last one year 38.47% -10.76 115.77

2007 Last one year 41.23% -8 64

196.92 708.97

Average return (ra ) = 196.92/4 = 49.23%

Variance σ 2 = 708.97/4 = 177.24

S.D. σ = 13.35%.

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FINDINGS and SUGGESTIONS

Findings:

• The protector portfolio reveals that the portfolio is entirely with

Debentures/Bonds and Government Securities with current assets. The
corporate debentures/bonds range between 40.5 % to 64.82% and
Government securities range between 26.01 to 49.0%. Particularly as
on December 2005 the Government Securities are 26.01 % and
Debentures/bonds 64.82 %. This may be due the changes in the
interest rates.

• The Balancer portfolio from 2002 to 2005 reveals that Equity percentage
is at or around 37 %. The Debt proportion in the portfolio is particularly
of the Debentures/Bond has ranging between the 21.60 % to 42.40%
and the Government Securities ranging from 15.01 % to 31.82 % . The
current assets are fluctuating between 2.42 % to 10.00 %.

• The maximizes portfolio reveals that the Equity is maintained between

87.4 % to 94.11% and the Debt in the form of Debentures/Bonds 0%
and 5.5.% and Government Securities 0 to 5.2 %. The current assets
fluctuate between 1.9 % and 7.1%.

• Return and Risk in Protector Plan are 4.053% and 3.3439% and in the
respective benchmark portfolio are 4.403% and 3.190%. Performance of
this plan is more or less the same with benchmark.

• Return and Risk in Balancer Plan are 19.253% and 12.307% and in the
respective benchmark portfolio are 15.993% and 9.516%. The return
and risk of the plan are more than benchmark.

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 • Return and Risk in Maximizer plan are 60.22% and 19.71% and in the
benchmark respective portfolio are 51.89% and 14.41%. The return and
risk of the plan are more than the benchmark.

Suggestions:

o The portfolio performance of the company indicates that Balancer and

Maximizer plans returns are more than benchmark but risk is also more
than benchmark. Therefore the risk is to be reduced to the possible
extent.
o The portfolio management practices revealed by the portfolios of the
plans at different time intervals indicate the revision of the portfolio. This
process should be taken with due care in the present bullish trend.
o The portfolio practices should not be passive or aggressive but should
be active. The appropriate parameters like alpha, beta, standard
deviation etc. of stocks should be considered regularly in pace with the
market movements to take them into the portfolio as per the plan.

- 72 -
BIBILIOGRAPHY

- 73 -