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Kotak Mahindra Life Insurance Company Limited 21St Annual Report 2020-21

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Kotak Mahindra Life Insurance Company Limited 21St Annual Report 2020-21 Kotak Mahindra Life Insurance Company Limited 21st Annual Report 2020-21 Overview Statutory Reports 1 Financial Statements Contents Board of Directors .................................................................02 Directors’ Report ...................................................................03 Management Report .............................................................31 Auditors’ Report ...................................................................38 Revenue Account ..................................................................47 Profit & Loss Account ............................................................48 Balance Sheet .......................................................................49 Schedules forming part of the Financial Statements ..............51 2 Board of Directors BOARD OF DIRECTORS AS ON 31ST MARCH, 2021 Uday Kotak Non-Executive Director – Chairman Prakash Apte Independent Director Paresh Parasnis Independent Director Anita Ramachandran Independent Director – Woman Director Shivaji Dam Non-Executive Director Dipak Gupta Non-Executive Director Gaurang Shah Non-Executive Director G. Murlidhar Managing Director COMPANY SECRETARY Muralikrishna Cheruvu CIN U66030MH2000PLC128503 REGISTERED OFFICE 2nd Floor, Plot # C- 12, G- Block, BKC, Bandra (E), Mumbai - 400 051 AUDITORS M/s S. R. Batliboi & Associates, LLP M/s Haribhakti & Co., LLP BANKERS Kotak Mahindra Bank Ltd. Standard Chartered Bank ICICI Bank Ltd. HDFC Bank Ltd. REGISTRAR AND TRANSFER AGENT M/S. LINK INTIME INDIA PVT. LTD. C-101, 247 PARK, L.B.S. MARG, VIKHROLI (WEST), MUMBAI – 400 083 WEBSITE https://insurance.kotak.com/ Annual Report 2020-21 Overview Board of Directors Statutory Reports 3 Directors’ Report Financial Statements Directors’ Report To the Members of KOTAK MAHINDRA LIFE INSURANCE COMPANY LIMITED The Directors present their Twenty First Annual Report together with the audited accounts of your Company for the year ended 31st March, 2021. FINANCIAL HIGHLIGHTS Your Company continues to demonstrate consistent performance in a competitive environment. This year your Company continues to be profitable, which it has achieved through a product mix and efficient management of cost. The summarized results of operations of your Company for the Financial Year (“FY”) 2020-21 are as follows: (` in crores) Year ended Year ended Particulars 31st March, 2021 31st March, 2020 New Business Premium 5,257 5,106 Renewal Premium 5,844 5,234 Total Premium 11,100 10,340 Profit/(Loss) before tax 942 813 Profit/ (Loss) after tax 736 582 Bonus to Policyholders 592 418 Net worth 4,045 3,353 New Business Sum Assured 191,924 162,529 Assets Under Management 46,518 34,915 POLICYHOLDER BONUSES The cost of regular / cash / reversionary bonuses declared by the Board of Directors for FY 2020-21 is approximately ` 541.5 crores, an increase of `150 crores from the cost of regular / cash / reversionary bonuses declared in FY 2019-20. Additionally, interim and terminal bonuses of ` 50.2 crores were paid during FY 2020-21 to policy exits. DIVIDEND & RESERVES Your Directors have recommended a final dividend of` 1.60/- per Equity share to the Shareholders of the Company for FY 2020-21. The final dividend shall be subject to approval of the Shareholders at the ensuing Annual General Meeting of the Company. CAPITAL Your Company continues to be amongst the most efficient capital users in the life insurance space and has a good Assets under Management to Capital ratio. During the year under review, the Authorized Share Capital of your Company was ` 625 crores, while the paid up share capital of your Company was ` 510 crores. There has been no capital infusion during the FY 2020-21. LICENSE The Certificate of Registration under Section 3 of the Insurance Act, 1938 was granted by IRDAI on 10th January, 2001. Pursuant to Section 3 read with Section 3A as amended by Insurance Laws (Amendment) Act, 2015, the process of annual renewal of the Certificate of Registration issued to insurers was deleted. Consequently, the Certificate of Registration granted by the IRDAI to insurers continues to be in force provided the insurers pay the annual fees within prescribed time and in prescribed manner. The Company has paid the annual fees to IRDAI for the FY 2021-22. Accordingly, the Certificate of Registration is valid as on 31st March, 2021 and the same continues to be in force. INDUSTRY SCENARIO The industry as a whole registered positive growth of 2.9% in total Adjusted Individual New Business Premium terms (i.e. Single Premium as one tenth), whereas private sector registered a growth of 7.5%. Your Company registered a growth of 10.5%. 4 BUSINESS AND DISTRIBUTION CHANNELS Individual Business The year witnessed increased focus towards traditional products and an increasing trend towards Participating products, which augurs well for the Company. Your Company has driven Protection and Long Term Savings Products (PALTS) across its distribution verticals. Your Company continues to focus on distribution efficiency. Investment in training Life Advisors and sales hierarchy has been stepped up to ensure productivity is improved and the distribution team is equipped to meet customers’ expectations. Besides Kotak Mahindra Bank Limited, your Company has agency tie-ups with cooperative banks, commercial banks, corporate agents and brokers which also contribute to the premium income. Group Business Group portfolio comprises of traditional and unit linked products catering to gratuity, leave encashment and superannuation needs of employer-employee groups. In addition, your Company also offers Term and Credit Insurance products. Your Company generated a premium income of ` 2619 crores [includes New Business ` 2312 crores & Renewal ` 307 crores] FY 2020-21 vs ` 2990 crores [includes New Business ` 2707 crores & Renewal ` 283 crores] from group insurance business registering a de-growth of 12.39% over FY 2019-20. PRODUCTS During the Financial Year 2020-21, for the first time Kotak Life Insurance forayed into the Health Insurance Segment. A fixed benefit health insurance product – Kotak Health Shield- was introduced. Our focus has been on need based solutions and in continuation with that thought we launched another unique proposition, Kotak Wealth Optima, a whole life unit linked product. On the group side, Kotak Assured Return Employee Benefit Plan, which is a group non par product and gives the Corporate clients the flexibility to invest for longer durations (beyond 1 year) with guaranteed interest rate was launched. Apart from these 3 key new products there were 9 product modifications that were done during the year. One of the key modification done was extending the retail annuity product to group clients as well. This will expand the outreach of our annuity product substantially. MARKETING Your Company’s marketing efforts during the year were focused on activities that were designed to improve customer experience, drive the brand promise, and expand adoption of newer, digital servicing technologies. To this end, your Company has: • Invigorated all stakeholders during the pandemic with the Badlenge Hum Toh Jeetenge Hum war cry. • Enforced the importance of complete insurance with the Poora Plan campaign by leveraging the newly launched Kotak Health Shield. The campaign was displayed in outdoor media in multiple locations across the country, too. • Focused on customer centricity by internalizing the brand promise, and by using the Net Promoter System®. This has brought about consistency in customer communication and experience. • Driven adoption of Smart Sell marketing and engagement tool. It is currently used by our agents across multiple channels as an integral part of their pitch. HUMAN RESOURCES Your Company earnestly strives to distinguish itself from the peers and aspires to be counted amongst the best places to work across various sectors. During the year under review, the Company has undertaken various initiatives to support business through organisational efficiency, and various employee engagement programmes to enable achievement of higher productivity levels. The Company continued to focus on developing leadership capability as well as technical and functional capabilities of employees in order to meet future talent requirement. Your Company continued its development focus on the people capital. Our focus on human capital continued to manifest as Building Scale, Building Capability and Becoming Employer of Choice. The following initiatives were taken: • U matter (the employee engagement survey) was launched for the second time in the Company. The engagement score improved to 73% from 68%, positioning the Company above LI top quartile (72%). • Segmented approach for leadership development was adopted through programs like LEAP, Emergence, MP-DC and GOLD. Talent Review of senior leaders was done by the talent council (Talent Council comprised by CXOs). • ‘The MD Excellence Award’ was introduced as part of KLAPS (KOTAK LIFE APPRECIATION SYSTEMS). KLAPS annual award was conferred to recognise the talent of employees. KLAPS quarterly awards have also been launched in each function /department and is part of the Quarterly Functional Reviews (QFMs) • Catering to the ‘Digitization’ imperative of organization, HR has brought all its services to employees’ palm through an integrated and mobile enabled platform – myHR. This encompasses leave and attendance, ATS (Applicant Tracking System), transfers, confirmation, L&G (Learn and Grow), myLakshya (incentives) • Our endeavour towards
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