June 9, 2011
Customer sentiments
Bull run from 2003 to 2007
investment option
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Protecti on Liquidit y
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Return Safety
E NS SE X
2009-10: net FII inflow of $12.1 billion 2008-09: net FII outflow of $10.3 billion 2008 - 09
1500
-1500
2009 - 10
-4500
14.0%
9.0%
4.0%
-1.0%
Ju l-0 8 Se p08 N ov -0 8 Ja n09 Ju l-0 9 Se p09 N ov -0 9 Ja n10 M M M
Index of Industrial Production (IIP) has been consistently high in last one year
Strictly for internal circulation only. Should not be further circulated/ used for presentation to a
Ju l-1 0
ay -1 0
ay -0 9
ar -0 9
ar -1 0
The challenge
Combining customer expectations with market reality
Investment solution that offers varying exposure to equities along with downside protection
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Presenting
A Unit Linked Insurance Plan
Highest daily NAV of the Pinnacle II Fund in the first 7 years, Guaranteed at maturity
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Key benefits
Combining guarantee with growth
Highest NAV recorded in first 7 years guaranteed at maturity No cap on equity exposure; can be up to 100% Death benefit is Sum Assured plus Fund value Loyalty Addition @ 2% of FV at maturity Limited premium payment term of 5 yrs & fixed term of 10 yrs
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Guaranteed NAV
Guaranteed NAV
Highest NAV recorded on a daily basis in the first 7 years of the Pinnacle II Fund is guaranteed at maturity
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NAV (Rs.)
Years
Loyalty Addition
Loyalty Addition is allocated at maturity @ 2% of the fund value recorded as on maturity date
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1 2 Maturity
10
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Pinnacle II Fund
Objective: Generate optimal returns through an actively managed equity portfolio while using debt instruments to manage the guarantee
Investment will be done through tranches of close ended% Potential Fund Asset Mix Min % Max funds
risk reward
Pinnacle II Equity and Equity Related 0% 100% Moderate Renewal premiums will go into same tranche as first premium Fund Securities Debt Instruments and derivatives
* 7 days notice will be given before the close of the fund
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0%
100%
Investment strategy
Market Based Asset Allocation
At inception, assets will be largely invested in equities Asset allocation between equity and debt will be dynamically and continuously managed depending on prevalent market conditions
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Pinnacle II Fund
Assets in equity may be reallocated to debt if equity markets or if interest rates fall, in order to manage the guarantee Since the fund has a mix of equity and debt, the Guaranteed NAV will not be the same as the highest level of the equity markets over the 7 yr period E.g. If Sensex moves from 15 K to 30 K (100% growth), the Pinnacle II Fund NAV will not necessarily move from Rs.10 to Rs.20 (100% growth) In case of unexpected falls in the equity market or interest rates, fund allocation will completely move to debt to protect the highest NAV achieved prior to the fall. Post this the fund allocation may not be shifted back to equities again Under normal circumstances, returns will be
At a glance
Features Min / Max Premium Min Sum Assured Max Sum Assured
Min / Max Age at Entry
8 / 65 years 18 / 75 years 10 years (fixed) 5 years (fixed) Sum Assured plus Fund Value
Min / Max Maturity Age Policy term Premium Payment Term Death Benefit
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Maturity benefit
Higher of (Guaranteed NAV ,NAV as on the maturity date) X number of units as on the maturity date
+
Loyalty Addition
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Illustration I
30
NAV (Rs.)
15
1 9
2 10
4 Policy years
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Illustration II
NAV (Rs.)
30
15
1 9
2 10
4 Policy years
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Other benefits
Features
Death
Details
SA plus Fund Value Allowed on policy anniversary before life assured attains age 60 Allowed on policy anniversaries subject to the minimum SA One partial withdrawal every year from 6th year onwards; up to 20% of FV
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Premium discontinuance
If the policy is not revived within the revival period, the life insurance cover shall cease and the Fund Value shall be transferred to the discontinued policy fund after deduction of discontinuance charge
Premium discontinuance charge
4% of lower of (AP or FV), subject to a max of Rs. 5 k 3% of lower of (AP or FV), subject to a max of Rs. 4 k 2% of lower of (AP or FV), subject to a max of Rs. 2 k NIL
Thereafter, no other charges shall be deducted. At the end of the fifth policy year, the discontinued policy fund value shall be paid to the policyholder. Guaranteed NAV will not be applicable for premium discontinuance
* AP = Annual Premium
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Surrender benefits
Surrender is allowed only after completion of five policy years On surrender after five policy years, the fund value will be paid Guaranteed NAV will not be applicable for policy surrender
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Charge structure
Other charges
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Sustainability matrix
Age at entry Up to 20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 Maximum SA multiple of yearly premium 85 75 65 50 30 20 15 10 5 5
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Target customers
Mass Affluent and HNI
Customer mindset Worried about volatility Passive
(Does not track investments regularly)
Product features
Guarantee of highest NAV Protection from market volatility Dynamic asset allocation as per market conditions
Explorer
(looks for new investment opportunities)
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Comparison
Pinnacle PPT Death Benefit Minimum SA Premium allocation charge 3 years Pinnacle II
Plan a Unit Linked Insurance
5 years
Higher of (SA , FV) SA PLUS FV 5 times of premium 10 times for age < 45; 7 times for age > = 45 Yr 1: 14%; Yr 2: 4%; Yr 1: 6%; Yr 2 : 5%; Yr 3: 2% Yr 3 to 5: 3%
Policy admin charge Yr 1 to 5: 0.6% pm Yr 1 to 5: 0.25% pm (up to 2 lac) Yr 6 to 10: 0.10% pm Customer Yield ( at 1 lac premium) 7.09% 7.71%
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Logins start on October 22, 2010 Issuances start on October 26, 2010 with an NAV of Rs. 10
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Thank you
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Partial withdrawals
One partial withdrawal from the 6th policy year onwards Maximum partial withdrawal amount 20% of the FV as on the date of partial withdrawal Minimum partial withdrawal amount - Rs.2,000 Guaranteed NAV will not be applicable for partial withdrawals Partial withdrawals will impact the death benefit Partial withdrawals are allowed only if the Life Assured is at least 18 years of age
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