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Business Standard
23-06-2025
- Business
- Business Standard
Limit on duration for state debt STRIPS may dent demand, say insurers
The Indian central bank's attempt to create a market for separate trading of principal and interest for state government debt may be dampened by rules on the duration of bonds eligible for such securities, top insurers said. Earlier this month, the Reserve Bank of India enabled Separate Trading of Registered Interest and Principal of Securities (STRIPS) for state debt but said these securities can only be issued for bonds with a residual maturity of up to 14 years. With about half of state debt supply in longer-duration papers, the regulation could curb demand, mainly from insurance companies which are the biggest investors in STRIPS. "As far as life insurance companies are concerned, the demand is more for above 20-year papers. I expect the RBI to eventually remove the duration cap in state debt STRIPS and allow STRIPS even for 30-year papers," said Rahul Bhuskute, CIO at Bharti AXA Life Insurance. STRIPS allow dealers to sell principal and interest payments independently, enhancing liquidity in the state government securities by enabling distinct trading of these components. Until now, STRIPS were allowed only for central government securities, with no limit on duration. "Insurance companies have liabilities up to 40-plus years and hence preference is always towards STRIPS with longer maturities," said Sachin Bajaj, executive vice president and chief investment officer at Axis Max Life Insurance. Bajaj added that insurance companies primarily fulfill their 10-15-year demand through corporate bonds. Indian states raised ₹1.74 trillion ($20.06 billion) through the sale of bonds in April-June, of which over 50 per cent was borrowed through bonds with more than 14 years duration. Traders estimate another ₹8 trillion of state bonds will be issued over the next three quarters with a similar maturity pattern. STRIPS help insurers increase the duration of their asset portfolio as well as improve cash flow matching against certain liabilities, said Ketan Parikh, head of fixed income at ICICI Prudential Life Insurance. "Typically, insurance companies have a larger appetite for STRIPS beyond 15 years, while pension funds are more active in the 8-15 year STRIP segment," Parikh added.
Business Recorder
20-06-2025
- Business
- Business Recorder
Indian bond yields end a tad higher on week amid worries over oil surge
MUMBAI: Indian government bond yields ended marginally higher for the week on Friday, as elevated oil prices dampened sentiment, overshadowing dovish commentary from the central bank chief. The yield on the benchmark 10-year bond ended at 6.3087%, compared with the previous close of 6.3095%. The five-year 6.75% 2029 bond ended at xx% after ending at 6.0176% on Thursday. The yields rose 1 and 2 basis points this week. 'The immediate lookout in the market is the ongoing Iran- Israel conflict and its impact on oil prices and the currency,' said Rahul Bhuskute, CIO at Bharti AXA Life Insurance. 'If the conflict escalates further and the oil price shoots up sharply, the central bank may find itself in a spot to protect the rupee and may have limited room to ease more.' The benchmark Brent crude contract has risen 4.2% so far this week, after jumping 11.7% last week amid ongoing conflict between Iran and Israel. The contract was around $77 per barrel, with uncertainty about potential U.S. involvement stoking caution. Indian bond yields marginally higher; focus on oil, debt supply India imports a bulk of its crude oil needs, and higher prices could impact its inflation outlook. Earlier this month, the Reserve Bank of India reduced its inflation forecast for the current fiscal year to 3.7%, while cutting its key lending rate by a steeper-than-expected 50 basis points. It, however, reverted to a 'neutral' stance from 'accommodative', prompting analysts to forecast the end of the monetary easing cycle. However, RBI Governor Sanjay Malhotra said earlier in the week that inflation below the central bank's current projections could open up policy space. Rates Indian overnight index swap (OIS) rates eased slightly this week, after witnessing paying in the previous week. The one-year OIS rate was at 5.52%, while the two-year OIS rate ended at 5.52%. The liquid five-year ended at 5.75%.
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Business Standard
20-05-2025
- Business
- Business Standard
Bharti AXA Life Insurance plans to break even by FY27: MD & CEO Parag Raja
Parag Raja, managing director (MD) and chief executive officer (CEO), Bharti AXA Life Insurance, outlines the company's five-year roadmap — after stake acquisition (of 15 per cent) by 360 ONE Asset Management — in an interview with Aathira Varier in Mumbai. Edited excerpts: Following 360 ONE's stake acquisition, what changes is the company implementing strategically? We also had to solve for growth capital, which we did with 360 ONE coming onboard with around ₹450-500 crore. This sets up well for what we are internally calling Bharti AXA 2.0, which is the next five years (FY30). The first goal is to achieve 3x revenue. Our new business premium (NBP) is around ₹700 crore, which we want to take to ₹2,000 crore. Our aim is to take the gross premium of ₹3,000 crore to about ₹7,000 crore in five years. The second big goal is to ensure that our margins and embedded value grow. We are targeting a value of new business (VNB) margin at 25 per cent in the next five years. We also intend to have another investment coming in the next 2-3 years. The last piece is the profits that we will start to generate from here on. That also, we will plough back. We will need about ₹1,500-1,600 crore in the next five years. As you aspire to plough back profits, when do you plan to break-even? Our break-even is planned for FY27. We saw about ₹37 crore loss in FY25; it was ₹146 crore in FY24. We do not intend to be over indexed on either a particular distribution channel or product segment. About 30-40 per cent of our business will come from non-par; 15-20 per cent from unit-linked insurance plans (Ulips); and 15-20 per cent will be par products. Currently, the mix is a little skewed towards non-par. Since you don't want to be indexed on a particular channel, what are your plans for distribution? Our focus is to make sure that minimum 50 per cent of our sales come from proprietary channels. We want to expand distribution and we are going to enter into new partnerships as well. In FY20, more than 50 per cent of our sales came from corporate agents and brokers. Today, it has come down to 25 per cent. We have also increased our bancassurance partnerships to eight banks. With 360 ONE coming on board, it helps us in two ways — we have got growth capital and it also gives us access to a very different super high net worth (HNI) clientele. We have also signed up with Nuvama, Spark and Blue Chip — some of the key marquee partnerships in the last 4-5 months. This is all happening with a view of launching the Bharti AXA 2.0. In FY25, performance of the life insurance industry was muted both in premium and sale of policies… The retail segment of the industry posted 8-9 per cent growth in FY25. The industry growth was 20 per cent in H1FY25 and H2 was almost muted due to surrender-value regulations. The regulations, which are beneficial for the customer, are also good in the long term. But in the short term, the industry had to make some changes. The industry had to relook at distributor compensation and commercial deals with institutions and agents. This led to a readjustment. While the growth in policies has been flat, the ticket size has increased by 20 per cent for almost five years. There has been a change in the customer segment and distribution channel. Owing to this, ticket sizes are growing while policy growth in numbers has been flat.
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Business Standard
20-05-2025
- Business
- Business Standard
Intend to have new investment in 2-3 years: Bharti AXA Life Insurance CEO
Parag Raja outlines the 5-year roadmap of Bharti AXA Life Insurance Premium Listen to This Article Parag Raja, managing director (MD) and chief executive officer (CEO), Bharti AXA Life Insurance, outlines the company's five-year roadmap — after stake acquisition (of 15 per cent) by 360 ONE Asset Management — in an interview with Aathira Varier in Mumbai. Edited excerpts: Following 360 ONE's stake acquisition, what changes is the company implementing strategically? We also had to solve for growth capital, which we did with 360 ONE coming onboard with around ₹450-500 crore. This sets up well for what we are internally calling Bharti AXA 2.0, which is the next five years (FY30). The first goal
Business Standard
09-05-2025
- Business
- Business Standard
Bharti AXA Life Declares Record Bonus of Rs. 202 Crore for Policyholders, Reflecting Strong and Stable Performance
VMPL Mumbai (Maharashtra) [India], May 9: Bharti AXA Life, one of India's leading private life insurers, has announced a bonus of Rs202 Cr. for the financial year 2024-25. The bonus will benefit approx. 2 lac policyholders who have invested in the Company's participating (with-profit) products. Policyholders with traditional participating policies in force as of March 31, 2025, are eligible to receive this bonus. Bharti AXA Life offers a diverse range of participating products, including Bharti AXA Life Samriddhi, Bharti AXA Life Monthly Income Plan+, Bharti AXA Life Child Advantage, Bharti AXA Life Monthly Advantage, Bharti AXA Life Unnati designed to provide customers with enhanced flexibility to meet their varied life goals. These products are non-linked, participating individual life insurance savings plan. These participating policies offer consumers the dual benefits of enhancing their investments and mitigating risks associated with market-linked products. The cash bonuses, in particular, provide increased liquidity and the opportunity to accumulate wealth, contributing to the overall financial well-being of policyholders alongside the life cover provided throughout the policy term. Speaking on this announcement, Mr. Parag Raja, MD & CEO, Bharti AXA Life Insurance, said, "This announcement reflects Bharti AXA Life Insurance's strong fundamentals and well-strategized investment management, underscoring our focus on creating value for our policyholders. This milestone also demonstrates our customer-first strategy, with our bonuses directly reflecting the long-term financial welfare of the people we serve. We continue to remain committed to enabling our customers to accomplish their life goals with confidence, through solutions that are both performance-oriented and dependable, enabling them to derive enduring value from our products." With a robust solvency ratio of 167%, well above the regulatory requirement of 150%, Bharti AXA Life Insurance remains committed to the security and welfare of its policyholders. This accomplishment reiterates the company's dedication to providing consistent value, enabling its policyholders to confidently realise their life aspirations with our dependable and customer-centric solutions. Note: Bonuses are distributed at the time of policy maturity or exit, with applicable cash bonuses paid annually on the policy anniversary or as per the terms outlined in the policy document. About Bharti AXA Life Insurance Bharti AXA Life Insurance Company Limited is a subsidiary company of Bharti Life Ventures Private Limited (Bharti Group Company), a prominent business group in India with interests in telecom, agribusiness, and retail. Established in 2006, the company has a pan-India presence with over 200+ offices and offers a wide range of value-for-money and need-based insurance catering to individuals and groups. With 'Customer First' as one of its core values, the company is committed to providing a hassle-free experience to its customers at every level. For more information, please visit the website
