INDEX. Revenue Account : Policyholders Account (Technical Account) Profit & Loss Account : Shareholders Account (Non Technical Account)...

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3 Annual Report INDEX Directors Report... 2 Management Report... 4 Auditors Report... 6 Revenue Account : Policyholders Account (Technical Account)... 8 Profit & Loss Account : Shareholders Account (Non Technical Account) Balance Sheet Schedule Annexure to Revenue Account Notes to Financial Statements Cash Flow Statement Balance Sheet abstract & Company s general business profile

4 IRDA Registration No. 116 dated 3 rd August, 2001 DIRECTORS REPORT The Directors have pleasure in presenting their Seventh Annual Report & Audited Statements of Accounts for the year Market scenario in the life insurance industry: Economic growth in emerging markets, including India, continues to outpace that of the industrialized countries. The economic growth for the fiscal year is estimated to be between 8.5 to 9%. However, turbulence in the financial markets, inflation and pressure on industrial growth have added to the difficulties of sustained high growth. Economic growth propels the growth of the insurance sector as the proportion of GDP allocated towards insurance rises with rise in GDP per capita. One of the key vectors that continue to propel the growth of the Indian insurance industry is the presence of a large young population, who are present and potential buyers of life insurance policies. In terms of total premium, India is Asia s fourth largest emerging insurance market after South Korea, China and Taiwan; and India is growing the fastest among them all. The Indian insurance market has grown rapidly since 2000 with the insurance penetration rising from 1.8% in 1997 to 4.8% in (Source: Report by HSBC Global Research on The Insurance Markets of India) Opening up of the insurance market to private and foreign players, and a consequent conversion of a monopolistic market to a liberalized one, has transformed the insurance industry in India. In the past few years, life premiums have been growing at a fast pace. In Financial Year (FY) , the life industry grew at 23%, garnering new business premium of Rs. 930 billion, compared to Rs. 754 billion in FY However private sector returned a high growth of 74% in the financial year Market share of private players increased from 26 % in to 36 % in On a rated basis, private market share grew to 51.9 %. Recently Insurance Regulatory and Development Authority (IRDA) has stipulated greater transparency and uniformity to be adopted in the product brochures for ULIPs. The disclosure includes aspects such as listing out all the charges to be paid by the buyer, benefits to the policyholder and also the effective amount available for investment in each policy year for a given product. This communication initiative should enhance the transparency and enable prospective buyers to make an informed judgement. During the last fiscal, IRDA came to a view that transparency of actuarially funded products was a concern and accordingly asked the companies to stop the sale of all actuarially funded products. 2. Summary of operations for the year: Business Performance Your Company continues to be at the second position amongst the private life insurers on the basis of new business premium and first position on the basis of the number of policies. It wrote new business of Rs. 66,745 million compared to Rs. 43,027 million in the previous year and registered a market share of 7.0% compared to 5.7% in the previous year. Your Company is at first position among the private life insurers on total new business policy basis with 3,744,742 policies issued for the year as compared to 2,079,217 policies in the previous year. The gross premium written for the financial year was Rs. 97,253 million, as compared to Rs. 53,452 million in the previous year. The annualized new business premium (considering single 10% and first year 100%) registered a growth of 85% from Rs. 32,330 million in the previous year to Rs. 59,953 million in the current year. The Company s market share on an annualized new business premium basis grew from 7.4% to 10.3% in the year However business incurred a loss of Rs. 159 million during , compared to a profit of Rs. 662 million in the previous year. The Assets under Management as on 31 st March 2008 include shareholder funds Rs. 11,459 million; traditional policyholder funds Rs. 14,687 million and Unit linked funds of Rs. 109,542 million. The unit-linked funds have increased by 111.2% from Rs. 51,868 million in the previous year. Chief Executive Officer Mr. Kamesh Goyal has been appointed as the Chief Executive Officer of the Company with effect from 1 st October 2007, in place of Mr. Sam Ghosh, on approval from IRDA. Mr. Goyal has rich experience in the Insurance Industry and was earlier the Chief Executive Officer of Bajaj Allianz General Insurance Company Limited. Products Your Company has 32 individual products and 8 Group Products, which cater to various strata of the society. Your Company launched an array of new products in the financial year for catering to various segments of the industry viz for pension, women, children etc. Your Company has also launched a couple of group products in the current fiscal. Pursuant to the IRDA circular stopping the sale of actuarially funded products, the Company has withdrawn its Capital Unit Gain product which was based on actuarially funded platform. Your Company has launched a basket of twelve new products in the current year, with a view to providing additional products to our customers. Corporate Communication Your Company has initiated new strategies for corporate communications in the last fiscal. It has implemented TV Campaign and had focus of its presence on general entertainment, news and niche channels and radio campaigns. Your Company has entered into Indian Premier League, one of the most keenly watched and talked about event in the country by sponsoring Rajasthan Royals, which is one of the most promising team for T20 cricket. 3.1 Capital: The Shareholders contributed Rs billion to the Company s capital during the year. With this, the total funds infused by the shareholders in the Company amount to Rs billion. 3.2 IRDA Registration: The Certificate of Registration from the IRDA to carry on life insurance business has been renewed for the year Particulars regarding conservation of energy and technology absorption: Since the Company does not carry out any manufacturing activity, the Companies (Disclosure of Particulars in the report of the Board of Directors) Rules, 1988 are not applicable. 2

5 Annual Report Foreign exchange earnings and expenditure: Earnings in foreign currency Expenditure in foreign currency NIL Rs. 233 million 6. Particulars of employees: As required by the provisions of sub-section 2A of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the Directors Report. However, as per the provisions of sub-section 1(b)(iv) of Section 219 of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders of the Company excluding the aforesaid information. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. 7. Directors: 1. Dr. P. S. Palande, Director of the Company passed away on 13 th February 2008 at Pune due to cardiac arrest. The members of the Board placed on record the appreciation for the excellent services rendered by him during his association with the Company since its early years. Mr. Niraj Bajaj was appointed as the Director of the Company to fill the causal vacancy arising out of the sad demise of Dr. Palande. 2. Mr. Dietmar Raich was appointed as a Director of the Company to fill the casual vacancy arising out of the resignation of Mr. Craig Ellis. 3. Dr. Werner Zedelius and Mr. Ranjit Gupta retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment as Directors. 8. Directors responsibility statement: In accordance with the requirements of sub-section 2AA of Section 217 of the Companies Act, 1956, the Board of Directors wish to confirm the following: i) that in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii) that such accounting policies have been selected and applied consistently, (except the change in policy as necessitated by the introduction of Accounting Standard 15 issued by the Institute of Chartered Accountants of India) and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31 st March 2008 and of the profit or loss of the Company for that period; iii) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) that the annual accounts have been prepared on a going concern basis. 9. Audit Committee: The Audit Committee of Board of Directors constituted in accordance with the provisions of Section 292A of the Companies Act, 1956 held their meetings on 11 th May 2007 and 3 rd December 2007 and reviewed the operations and accounts of the Company. 10. Auditors: In accordance with the IRDA Regulations/Guidelines, the Company appointed M/s. Kirtane & Pandit, Chartered Accountants and M/s. S R Batliboi & Co, Chartered Accountants, as joint statutory auditors of the Company in the last Annual General meeting. They hold office up to the conclusion of the Seventh Annual General meeting of the Company. The shareholders are requested to appoint the auditors for the period from the conclusion of the ensuing annual general meeting till the conclusion of the next annual general meeting and to fix their remuneration. 11. Appreciation: The Board is grateful to the IRDA and other regulatory authorities for their continued support. The Board is also grateful to its Policyholders, Bankers, Intermediaries and Channel Partners for their continued support. The Directors take this opportunity to thank the concerned employees of Bajaj Auto Limited and Allianz SE for their invaluable contribution in guiding the working of the Company. The Directors also take this opportunity to thank the employees at all levels for their hard work, dedication and commitment. On behalf of Board of Directors of Bajaj Allianz Life Insurance Company Ltd. Pune Rahul Bajaj 12 th May 2008 Chairman 3

6 IRDA Registration No. 116 dated 3 rd August, 2001 MANAGEMENT REPORT With respect to the operations of Bajaj Allianz Life Insurance Company Limited ( the Company ) for the financial year 1 st April 2007 to 31 st March 2008 and results thereof, the Management of the Company confirms and declares that: 1. The registration certificate granted by Insurance Regulatory and Development Authority (IRDA) is valid and the same has been renewed for the year All relevant statutory dues payable by the Company have been generally deposited on time. 3. During the current year, the Company has received the copy of the High Court of Judicature Mumbai vide order dated 18 th December 2007 granting approval to the scheme of arrangement whereby the investment in the equity of the company held by erstwhile Bajaj Auto Ltd. is demerged and vests with Bajaj Finserv Ltd. with effect from 1 st April 2007, which transfer has also been approved by the Insurance Regulatory and Development Authority ( IRDA ). As at 31 st March 2008, actual transfer of shares are pending completion of formalities. 4. The management has not directly or indirectly invested outside India, the funds of the holders of policies issued in India. 5. The required solvency margins have been maintained as required by the IRDA. 6. We certify that the values of all the assets have been reviewed on the date of Balance Sheet and in the management s belief, the assets set forth under each of the headings in the Balance Sheet are shown in the aggregate at amounts not exceeding their realizable or market value under their related headings - Loans, Investments, Outstanding Premiums, Income accrued on investments, Amounts due from other entities carrying on insurance business (including amounts due from reinsurers), Cash and the several items specified under Advances and Other Accounts. Market value of investment in debt securities (other than unit linked funds) which are valued at amortised cost as per IRDA regulations, is lower than their carrying amount. 7. We certify that, no part of the life insurance fund has been directly or indirectly applied in contravention of the Insurance Act, 1938 (4 of 1938) relating to the application and investment of the life insurance fund. 8. The Company recognizes the risks associated with the life insurance business and manages the risks by adopting prudent policies to counter the key risks of the Company namely underwriting and investment risks. The Company has established robust underwriting procedures to mitigate underwriting risks. Additionally the Company has entered into reinsurance arrangements wherein it reinsures risk in excess of its retention limits to mitigate its risk exposure. The investment risk is managed by laying down appropriate guidelines in the Investment Policy. The Investment Policy is formulated by the Investment Committee and approved by the Board of Directors. The investment policy is reviewed at least once a year for alignment with the Company s latest business plan and other developments during the year. 9. The Company does not have operations in any other country. 10. Claim settlement time for the claims lodged has been around 7 days from the date of receipt of complete requirements. Ageing of claims registered and not settled is given below. For Linked Business (Rs. In lakh) Period No. of Claims Amount Involved 30 days days to 6 months months to 1 year year to 5 years years and above Nil Nil For Traditional Business (Rs. In lakh) Period No. of Claims Amount Involved 30 days days to 6 months months to 1 year year to 5 years years and above We certify that the values, as shown in the Balance Sheet, of the investments (other than unit linked investments), which consists of fixed income securities, equity shares and mutual fund units that have been valued as per accounting policies prescribed by IRDA. Market values have been ascertained for equities on the basis of lower of the closing prices as on the balance sheet date on The National Stock Exchange of India Ltd. (NSE) and The Bombay Stock Exchange Ltd, Mumbai (BSE). For fixed income securities, valuation is based on procedure issued by Fixed Income and Money Market and Derivative Dealers Association of India (FIMMDA). The investments in the Mutual Funds are valued at the Net Asset Values (NAV) of these Mutual funds as on the Balance Sheet date. We certify that the unit linked investments have been valued on the basis as stated below: Equities have been valued at market values which have been ascertained on the basis of the last quoted closing price on the NSE. In case the equity shares are not listed on the NSE, then they are valued on the last quoted closing price on BSE. Government securities are valued at prices obtained from Credit Rating 4

7 Annual Report Information Services of India Ltd. (CRISIL). Corporate bonds and debentures are valued on the basis of CRISIL Bond Valuer. Treasury bills, certificate of deposits and commercial papers are valued at cost plus accretion at yield to maturity. Mutual fund units have been valued at the last available Net Asset Value declared by the respective mutual fund. 12. The Company has invested (other than unit linked funds) mainly in approved Government securities and AAA or AA+ rated bonds. The primary aim while investing is to generate adequate return while minimizing risk. The emphasis is also on the liquidity of investments to ensure that the Company meets all outgoings related to claims and other operations. While most of the investments are in fixed income securities in the form of Government of India securities or Corporate Bonds with strong credit rating, a small portion is also invested in Equity shares. Based on the past track record, the Management is confident of the quality and performance of the investments. 13. The Management of Bajaj Allianz Life Insurance Company Limited certifies that: a) The financial statements of Bajaj Allianz Life Insurance Company Limited have been prepared in accordance with the applicable accounting standards and principles and policies with no departures; b) The management has adopted accounting policies and applied them consistently except for change in accounting policy as discussed in the notes to financial statements and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the operating profit as per Policyholders Account (Technical Account) and of the Loss as per Shareholders Account (Non Technical Account) of the Company for the year; c) The management has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the applicable provisions of the Insurance Act, 1938 (4 of 1938) and Companies Act, 1956 (1 of 1956), for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) The financial statements have been prepared on a going concern basis; e) The Company has an internal audit system commensurate with the size of the Company and nature of the business. 14. The following are the payments made to individuals, firms, companies and organizations in which the directors of the insurer are interested: Sl. Name of the Director Entity in which Director is interested Interest as Amount of Payment during No. Relative Director the financial year (Rs. In lakh) 1 Mr. Rahul Bajaj, Bajaj Auto Ltd (now known as Director Mr. Sanjiv Bajaj and Bajaj Holdings and Investment Ltd.) Director Mr. Niraj Bajaj Director 2 Mr. Rahul Bajaj, Bajaj Auto Finance Ltd. Director Mr. Sanjiv Bajaj and Director Mr. Niraj Bajaj Director 3 Mr. Rahul Bajaj, Bajaj Allianz General Insurance Director Mr. Sanjiv Bajaj, Company Ltd. Director Mr. Niraj Bajaj and Director Ranjit Gupta Director 4 Mr. Rahul Bajaj, Hind Musafir Agency Ltd. Shareholder 0.20 Mr. Sanjiv Bajaj and Shareholder Mr. Niraj Bajaj Shareholder 5 Dr. Werner Zedelius Allianz Insurance Management Director 7.09 Mr. Craig Ellis Asia Pacific Pte Limited Director For Bajaj Allianz Life Insurance Company Limited Rahul Bajaj Kamesh Goyal Ranjit Gupta Chairman Alternate Director & Chief Executive Officer Director Rajesh Viswanathan Anil Singh Sameer Bakshi Chief Financial Officer Appointed Actuary Company Secretary Place : Pune Date : 12 th May

8 IRDA Registration No. 116 dated 3 rd August, 2001 AUDITORS REPORT To The Members of Bajaj Allianz Life Insurance Company Limited We have audited the attached Balance Sheet of Bajaj Allianz Life Insurance Company Limited ( the Company ) as at 31 March 2008, and the related Policyholders Revenue Account, the Shareholders Profit and Loss Account and the Receipts and Payments Account for the year ended on that date, annexed thereto. These financial statements are the responsibility of the management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The Balance Sheet, the Policyholders Revenue Account, the Shareholders Profit and Loss Account and the Receipts and Payments Account have been drawn up in accordance with the Insurance Act, 1938 (Act 4 of 1938), Insurance Regulatory and Development Act, 1999, Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor s Report of Insurance Companies) Regulations 2002 ( the Regulations ) read with Section 211 of the Companies Act, As required by the Regulations, we set out in the Annexure, a statement certifying the matters specified in paragraph 4 of Schedule C to the Regulations. Further to our comments in the Annexure referred to above, we report that: We have obtained all the information and explanations which, to the best of our knowledge and belief were necessary for the purposes of the audit and have found them to be satisfactory; In our opinion and to the best of our information and according to the explanations given to us, proper books of account as required by law have been maintained by the Company so far as appears from our examination of those books; As the Company s accounting system is centralised at the head office, no returns for the purposes of our audit are prepared at the branches and other offices of the Company; The Balance Sheet, the Policyholders Revenue Account, the Shareholders Profit and Loss Account and the Receipts and Payments Account referred to in this report are in agreement with the books of account; The actuarial valuation of liabilities for life policies in force is the responsibility of the Company s Appointed Actuary ( the Appointed Actuary ). The actuarial valuation of liabilities for policies in force as at 31 March 2008 has been duly certified by the Appointed Actuary. The Appointed Actuary has also certified that, in his opinion, the assumptions for such valuation are in accordance with the guidelines and norms, if any, issued by the Insurance Regulatory and Development Authority ( IRDA ) and the Institute of Actuaries of India in concurrence with the authority. We have relied upon the Appointed Actuary s certificate in this regard in forming our opinion. On the basis of the written representations received from the Directors of the Company, as on 31 March 2008 and taken on record by the Board of Directors, no Director of the Company is disqualified as on 31 March 2008 from being appointed as Director under clause (g) of sub section (1) of Section 274 to the Companies Act, In our opinion and to the best of our information and according to the explanations given to us, we further report that: Investments have been valued in accordance with the provisions of the Insurance Act, 1938 and the Regulations or orders / directions issued by IRDA in this behalf; The accounting policies selected by the Company are appropriate and are in compliance with applicable accounting standards and with accounting principles, as prescribed in the Regulations and orders or directions issued by IRDA in this behalf; The Balance Sheet, the Policyholders Revenue Account, the Shareholders Profit and Loss Account and the Receipts and Payments Account referred to in this report are in compliance with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956; and The Balance Sheet, the Policyholders Revenue Account, the Shareholders Profit and Loss Account and the Receipts and Payments Account together with the notes thereon and attached thereto are prepared in accordance with the requirements of the Regulations, the Insurance Act, 1938, the Insurance Regulatory and Development Act, 1999 and the Companies Act, 1956, to the extent applicable and in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India as applicable to insurance companies: i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2008; ii) in the case of the Policyholders Revenue Account, of the surplus for the year ended 31 March 2008; iii) in the case of the Shareholders Profit and Loss Account, of the loss for the year ended 31 March 2008; and iv) in the case of the Receipts and Payments Account, of the receipts and payments for the year ended 31 March Further, on the basis of examination of books and records of the Company and according to the information and explanations given to us and to the best of our knowledge and belief, we certify that: 6

9 Annual Report We have reviewed the management report attached to the financial statements for the year ended 31 March 2008 and there is no apparent mistake or material inconsistencies with the financial statements; and Based on information and explanations received during the normal course of our audit, management s representations made to us and the compliance certificate submitted to the Board by the officers of the Company charged with compliance and the same being noted by the Board, nothing has come to our attention which causes us to believe that the Company has not complied with the terms and conditions of registration as per subsection 4 of section 3 of the Insurance Act, KIRTANE & PANDIT Chartered Accountants S. R. BATLIBOI & Co. Chartered Accountants Suhas Deshpande per Hemal Shah Partner Partner Membership No Membership No Place : Pune Place : Mumbai Date : 12 th May 2008 Date : 12 th May 2008 Annexure to the Auditors Report (Referred to in the Auditors Report to the members of Bajaj Allianz Life Insurance Company Limited ( the Company ) on the accounts for the year ended 31 March 2008) Auditor s Certificate To the Members of Bajaj Allianz Life Insurance Company Limited Based on the information and explanations given to us and to the best of our knowledge and belief, we certify that: We have verified the cash balances, to the extent considered necessary, securities relating to the Company s loans and investments by actual inspection or on the basis of certificates / confirmations received from custodians and / or Depository Participants appointed by the Company, as the case may be. At 31 March 2008, none of the Company s assets involve reversion or life interests; The Company is not the trustee of any trust; and No part of the assets of the policyholders funds has been directly or indirectly applied in contravention to the provisions of the Insurance Act, 1938 relating to the application and investments of the policyholders funds. This certificate is issued to comply with the requirements of Schedule C of Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor s Report of Insurance Companies) Regulations 2002 ( the Accounting Regulations ) read with Regulation 3 of the Accounting Regulations and may not be suitable for any other purpose. KIRTANE & PANDIT Chartered Accountants S. R. BATLIBOI & Co. Chartered Accountants Suhas Deshpande per Hemal Shah Partner Partner Membership No Membership No Place : Pune Place : Mumbai Date : 12 th May 2008 Date : 12 th May

10 IRDA Registration No. 116 dated 3 rd August, 2001 Revenue Account for the year ended 31 st March 2008 Policyholders Account (Technical Account) Particulars Schedule Current Year Participating Individual Assurance Individual Pension PREMIUMS EARNED - Net (a) Premium 1 97,253,110 3,431,785 65,575 (b) Reinsurance ceded (Refer Schedule 16 Note 16) (132,718) (33,189) (585) (c) Reinsurance accepted SUB-TOTAL 97,120,392 3,398,596 64,990 INCOME FROM INVESTMENTS (a) Interest, Dividend & Rent - Gross 1,958, ,794 19,315 (b) Profit on sale / redemption of investments 9,000, ,390 - (c) (Loss on sale / redemption of investments) (1,552,580) (24,332) (44) (d) Transfer/Gain on revaluation/ change in fair value (3,008,441) - - (e) Other investment income 603, ,001, ,852 19,271 OTHER INCOME 117,643 32, Contribution from the Shareholders account 2,951, (Refer Schedule 16 Note 15) SUB-TOTAL 10,071, ,110 19,660 TOTAL (A) 107,191,780 4,075,706 84,650 COMMISSION 2 14,968, ,591 1,280 OPERATING EXPENSES RELATED TO INSURANCE BUSINESS 3 20,043, ,996 9,559 Provision for doubtful debts Bad Debts written off Provision for Fringe Benefit Tax 93,313 3, Provisions (other than taxation) (a) For diminution in the value of investments (net) (b) Others TOTAL (B) 35,105, ,669 10,884 BENEFIT PAID (Net) 4 8,514, ,654 2,258 Interim Bonuses Paid 2,728 2,728 - Change in valuation of liability in respect of life policies in force (Refer Schedule 16 Note 1 (e) and Note 8 ) (a) Gross 3,916,140 2,462,954 72,401 (b) Fund Reserve (Refer Schedule 16 Note 1(e)) 57,673, (c) Amount ceded in Re-insurance (d) Amount accepted in Re-insurance TOTAL (C) 70,106,169 2,784,336 74,659 SURPLUS/ (DEFICIT ) (D) = (A) - (B) - (C) 1,980, ,701 (893) Balance of previous year 670, ,104 4,383 Transitional Adjustments on revision to Valuation of employees benefit (67,505) (5,705) (70) (Refer Schedule 16 Note 1) APPROPRIATIONS Reserve for lapsed unit linked policies unlikely to be revived (1,601,620) - - (Refer Schedule 16 Note 1(e) and Note 8) Transfer to Shareholders account (32,706) (31,678) (1,028) Balance being funds for future appropriations 949, ,422 2,392 DETAILS OF TOTAL SURPLUS Interim Bonuses Paid (a) 2,728 2,728 - Allocation of Bonus to policyholders (b) 294, ,105 9,250 Surplus shown in the Revenue Account (c) 1,980, ,701 (893) Total Surplus [ (a)+ (b)+ (c) ] 2,277, ,534 8,357 8

11 Annual Report Non Participating Linked (Amount in Rs. 000 ) Individual Individual Individual Group Individual Individual Group Group Assurance Health Annuity Assurance Assurance Pension Superannuation Gratuity 36, ,838 16, ,576 88,217,832 3,262, ,891 1,393,431 (2,505) (17,346) - (16,019) (63,026) (48) ,084 98,492 16, ,557 88,154,806 3,262, ,891 1,393,431 15,283 1,220 4,307 22,978 1,273,737 47,849 6,368 34, ,265, ,232 9,883 55,243 (52) - (46) (114) (1,441,220) (79,330) (1,137) (6,305) (2,661,741) (309,353) (5,667) (31,680) ,556 27, ,324 15,347 1,220 4,261 23,447 6,005, ,060 10,400 57, ,850 2, ,257 2,539, ,506 4,391 31,666 15,499 1,332 4,263 34,762 8,626, ,189 14,817 89,122 49,583 99,824 20, ,319 96,781,440 3,851, ,708 1,482,553 2,520 25, ,431 14,464, , ,118 21, ,310 18,684, ,873 5,982 39, ,025 2, ,676 47, ,803 33,236, ,725 6,010 39,563 19,070 7,245 4, ,430 7,259, ,314 2,766 44, ,284 25,302 19, ,486 1,137,626 53,873-4, ,486,426 2,565, ,920 1,394,418 43,354 32,547 23, ,916 61,883,442 3,084, ,686 1,442,928 (4,447) 19,408 (3,207) (23,400) 1,661,519 1, ,757 11,204 7,019 23, (137) - (3) (56) (59,899) (1,561) (12) (62) (1,601,620) ,173 30,612 3, (4,447) 19,408 (3,207) (23,400) 1,661,519 1, (4,447) 19,408 (3,207) (23,400) 1,661,519 1,

12 IRDA Registration No. 116 dated 3 rd August, 2001 Revenue Account for the year ended 31 st March 2008 Policyholders Account (Technical Account) Particulars Schedule Previous Year Participating Individual Assurance Individual Pension PREMIUMS EARNED - Net (a) Premium 1 53,452,422 3,535,562 67,680 (b) Reinsurance ceded (Refer Schedule 16 Note 16) (92,595) (36,049) (739) (c) Reinsurance accepted SUB-TOTAL 53,359,827 3,499,513 66,941 INCOME FROM INVESTMENTS (a) Interest, Dividend & Rent - Gross 1,153, ,827 12,774 (b) Profit on sale / redemption of investments 3,714,626 36,147 - (c) (Loss on sale / redemption of investments) (1,055,011) (23,282) - (d) Transfer/Gain on revaluation/ change in fair value (1,036,646) - - (e) Other investment income 320, ,096, ,692 12,774 OTHER INCOME 52,239 22, Contribution from the Shareholders account 972, (Refer Schedule 16 Note 15) SUB-TOTAL 4,121, ,447 13,113 TOTAL (A) 57,481,242 3,871,960 80,054 COMMISSION 2 9,466, ,943 1,472 OPERATING EXPENSES RELATED TO INSURANCE BUSINESS 3 10,730, ,903 10,855 Provision for doubtful debts Bad Debts written off Provision for Fringe Benefit Tax 73,054 6, Provisions (other than taxation) (a) For diminution in the value of investments (net) (b) Others TOTAL (B) 20,270,056 1,327,020 12,402 BENEFIT PAID (Net) 4 6,985, ,276 1,338 Interim Bonuses Paid 1,996 1,996 - Change in valuation of liability in respect of life policies in force (Refer Schedule 16 Note 1 (e) and Note 8 ) (a) Gross 2,669,859 2,156,995 60,944 (b) Fund Reserve (Refer Schedule 16 Note 1(e)) 26,175, (c) Amount ceded in Re-insurance (d) Amount accepted in Re-insurance TOTAL (C) 35,832,407 2,462,267 62,282 SURPLUS/ (DEFICIT ) (D) = (A) - (B) - (C) 1,378,779 82,673 5,370 Balance of previous year 564, ,747 - APPROPRIATIONS Reserve for lapsed unit linked policies unlikely to be revived (1,241,074) - - (Refer Schedule 16 Note 1(e) and Note 8) Transfer to Shareholders account (31,303) (30,316) (987) Balance being funds for future appropriations 670, ,104 4,383 DETAILS OF TOTAL SURPLUS Interim Bonuses Paid (a) 1,996 1,996 - Allocation of Bonus to policyholders (b) 281, ,843 8,885 Surplus shown in the Revenue Account (c) 1,378,779 82,673 5,370 Total Surplus [ (a)+ (b)+ (c) ] 1,662, ,512 14,255 10

13 Annual Report Non Participating Linked (Amount in Rs. 000 ) Individual Individual Individual Group Individual Individual Group Group Assurance Health Annuity Assurance Assurance Pension Superannuation Gratuity 68,279 32,174 19, ,098 47,256,650 1,770,696 68, ,652 (1,703) (4) - (10,289) (43,746) (65) ,576 32,170 19, ,809 47,212,904 1,770,631 68, ,652 10,039-3,046 15, ,278 28,308 2,502 9, ,489, , (143) - - (14) (969,045) (56,819) (1,088) (4,620) (1,003,416) (36,802) 681 2, ,927 16, ,232 9,896-3,046 15,601 2,554, ,550 2,538 10, , , ,265 1,007 6,775 10,032-3,048 15,627 3,445, ,689 3,555 16,942 76,608 32,170 22, ,436 50,658,866 2,011,320 71, ,594 4,896 6, ,733 8,944,424 69, ,488 3, ,930 9,534, ,486 2,110 9, ,822 1, ,510 9, ,724 18,543, ,702 2,147 9,754 9,596 2,894 1, ,496 6,141, ,140 14,100 21, ,181 8,343 13,178 71, ,562 17,432 (57) (144) ,422,891 1,390,046 56, , ,777 11,237 14, ,921 30,874,527 1,693,618 70, ,840 12,321 11,203 7,019 19,791 1,241,074 - (672) - 27, , (1,241,074) ,757 11,204 7,019 23, ,320 11,204 7,019 19,791 1,241,074 - (672) - 12,320 11,204 7,019 19,791 1,241,074 - (672) - 11

14 IRDA Registration No. 116 dated 3 rd August, 2001 Revenue Account for the year ended 31 st March 2008 Policyholders Account (Technical Account) Notes to Financial statements 16 As required by Section 40-B of the Insurance Act, 1938, we certify that all expenses of Management in respect of Life Insurance business transacted in India by the Company have been fully debited to the Policyholders Revenue Account as expenses. The accompanying notes and schedules form an integral part of the financial statements. As per our report of even date attached For Kirtane & Pandit For S R Batliboi & Co. For Bajaj Allianz Life Insurance Company Limited Chartered Accountants Chartered Accountants Suhas Deshpande Hemal Shah Rahul Bajaj Kamesh Goyal Partner Partner Chairman Alternate Director and Membership No Membership No Chief Executive Officer Ranjit Gupta Director Anil Singh Appointed Actuary Rajesh Viswanathan Chief Financial Officer Sameer Bakshi Company Secretary Place : Pune Place : Mumbai Place : Pune Date : 12 th May 2008 Date : 12 th May 2008 Date : 12 th May

15 Annual Report Form A- PL Profit & Loss account for the year ended 31 st March 2008 Shareholders Account (Non Technical Account) Particulars Current Current Previous Previous Year Year Year Year Amounts transferred from the 32,706 31,303 Policyholders Account (Technical Account) INCOME FROM INVESTMENTS (a) Interest, Dividends & Rent - Gross 764, ,062 (b) Profit on sale / redemption of investments 53,980 23,824 (c) (Loss on sale / redemption of investments) (22,971) (19,763) (d) Transfer/Gain on revaluation / change in fair value - - OTHER INCOME - - TOTAL(A) 795, ,123 Expenses other than those directly related to the insurance business (Refer Schedule 16 Note 11) Others 14,740 53,077 Provisions (Other than Taxation) - - Contribution to the Policyholder s Fund (Refer Schedule 16 Note 15) Participating Individual Assurance - - Individual Pension - - Non Participating Individual Assurance - - Individual Health - - Individual Annuity - - Group Assurance 11,257 - Linked Individual Assurance 2,539, ,308 Individual Pension 365, ,265 Group Superannuation 4,391 1,007 Group Gratuity 31,666 2,951,827 6, ,355 TOTAL(B) 2,966,567 1,025,432 PROFIT / (LOSS) before Tax (2,138,825) (717,006) Provision for Taxation including Wealth Tax PROFIT / (LOSS) after Tax (2,138,905) (717,033) Balance at the beginning of the year (2,760,129) (2,043,096) PROFIT/(LOSS) CARRIED FORWARD TO BALANCE SHEET (4,899,034) (2,760,129) Earning Per Share (Basic & Diluted) (Refer Schedule 16 Note 18) (14.22) (4.77) Notes to Financial statements 16 The accompanying notes and schedules form an integral part of the financial statements. As per our report of even date attached For Kirtane & Pandit For S R Batliboi & Co. For Bajaj Allianz Life Insurance Company Limited Chartered Accountants Chartered Accountants Suhas Deshpande Hemal Shah Rahul Bajaj Kamesh Goyal Ranjit Gupta Partner Partner Chairman Alternate Director and Director Membership No Membership No Chief Executive Officer Rajesh Viswanathan Anil Singh Sameer Bakshi Chief Financial Officer Appointed Actuary Company Secretary Place : Pune Place : Mumbai Place : Pune Date : 12 th May 2008 Date : 12 th May 2008 Date : 12 th May

16 IRDA Registration No. 116 dated 3 rd August, 2001 Form A- BS Balance sheet as at 31 st March 2008 Particulars Schedule Current Current Previous Previous Year Year Year Year SOURCES OF FUNDS SHAREHOLDERS FUNDS Share Capital 5 1,507,090 1,503,680 Reserves and Surplus 6 10,599,550 5,501,600 Credit/(Debit) Fair Value Change Account SUB TOTAL 12,106,742 7,005,365 BORROWINGS POLICYHOLDERS FUNDS Credit/(Debit) Fair Value Change Account 99,460 15,443 Policy Liabilities (Refer Schedule 16 Note 8) Participating Individual Assurance 7,956,912 5,493,958 Individual Pension 283, ,463 Non Participating Individual Assurance 169, ,693 Individual Health 33,645 8,343 Individual Annuity 62,357 43,243 Group Assurance 314, ,175 Linked Individual Assurance 1,728, ,016 Individual Pension 74,888 21,015 Group Superannuation - - Group Gratuity 4,100 10,629,046-6,712,906 Insurance Reserves - - Provision For Linked Liabilities Linked Liabilites 109,527,505 48,845,768 Fair Value Change 14, ,541,697 3,022,633 51,868,401 SUB TOTAL 120,270,203 58,596,750 FUNDS FOR FUTURE APPROPRIATIONS Participating Individual Assurance 877, ,104 Individual Pension 2,392 4,383 Non Participating Individual Assurance 35,173 39,757 Individual Health 30,612 11,204 Individual Annuity 3,809 7,019 Group Assurance - 23,456 Linked Individual Assurance - - Individual Pension - - Group Superannuation - - Group Gratuity , ,923 Reserve for Lapsed unit linked policies 2,960,433 3,909,841 1,358,813 2,029,736 unlikely to be revived TOTAL 136,286,786 67,631,851 14

17 Annual Report Form A- BS Balance sheet as at 31 st March 2008 Particulars Schedule Current Current Previous Previous Year Year Year Year APPLICATION OF FUNDS INVESTMENTS Shareholders 8 11,458,855 6,536,500 Policyholders 8A Participating Individual Assurance 8,974,379 6,162,724 Individual Pension 287, ,101 Non Participating Individual Assurance 205, ,525 Individual Health 64,511 19,658 Individual Annuity 66,586 50,900 Group Assurance 314, ,297 Linked Individual Assurance 4,690,975 2,152,260 Individual Pension 75,066 21,112 Group Superannuation 2,244 2,610 Group Gratuity 4,880 1,571 14,686,968 9,050,758 ASSETS HELD TO COVER LINKED LIABILITIES 8B 109,541,697 51,868,401 (Refer Schedule 16 Note 24) LOANS 9 30,937 18,630 FIXED ASSETS 10 Gross Block 1,644,267 1,043,272 Less : Accumulated Depreciation 734, ,127 Net Block , ,145 Capital work in progress 181,056 2,549 1,090, ,694 CURRENT ASSETS Cash and bank balances 11 3,785,262 4,198,042 Advances and other Assets 12 1,310, ,477 Sub-Total(A) 5,095,331 5,052,519 LESS: CURRENT LIABILITES AND PROVISIONS Current liabilities 13 10,298,224 8,093,047 Provisions ,490 97,733 Sub-Total(B) 10,516,714 8,190,780 NET CURRENT ASSETS (C) = (A-B) (5,421,383) (3,138,261) MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted ) DEBIT BALANCE IN PROFIT & LOSS ACCOUNT 4,899,034 2,760,129 (Shareholders account ) Total 136,286,786 67,631,851 Notes to Financial statements 16 The accompanying notes and schedules form an integral part of the financial statements. As per our report of even date attached For Kirtane & Pandit For S R Batliboi & Co. For Bajaj Allianz Life Insurance Company Limited Chartered Accountants Chartered Accountants Suhas Deshpande Hemal Shah Rahul Bajaj Kamesh Goyal Ranjit Gupta Partner Partner Chairman Alternate Director and Director Membership No Membership No Chief Executive Officer Rajesh Viswanathan Anil Singh Sameer Bakshi Chief Financial Officer Appointed Actuary Company Secretary Place : Pune Place : Mumbai Place : Pune Date : 12 th May 2008 Date : 12 th May 2008 Date : 12 th May

18 IRDA Registration No. 116 dated 3 rd August, 2001 Schedules forming part of financial statements for the year ended 31 st March 2008 Schedule - 1 : Premium (Net of Service Tax) Particulars Current Year Participating Non Participating Linked (Amount in Rs. 000 ) Individual Individual Individual Individual Individual Group Individual Individual Group Super- Group Assurance Pension Assurance Health Annuity Assurance Assurance Pension annuation Gratuity First Year Premium 59,198, ,699 1,684 11, , ,422 55,015,353 1,780, ,891 1,378,298 Renewal Premium 30,508,296 2,948,086 63,891 10,924 4, ,909 26,551, ,241-15,133 Single Premium 7,546, ,108-16,729 85,245 6,650, , Total Premium 97,253,110 3,431,785 65,575 36, ,838 16, ,576 88,217,832 3,262, ,891 1,393,431 Premium Income from Business written: In India 97,253,110 3,431,785 65,575 36, ,838 16, ,576 88,217,832 3,262, ,891 1,393,431 Outside India Total Premium 97,253,110 3,431,785 65,575 36, ,838 16, ,576 88,217,832 3,262, ,891 1,393,431 Particulars Previous Year Participating Non Participating Linked Individual Individual Individual Individual Individual Group Individual Individual Group Super- Group Assurance Pension Assurance Health Annuity Assurance Assurance Pension annuation Gratuity First Year Premium 31,141, ,138 3,379 9,882 20, ,523 28,933, ,781 68, ,633 Renewal Premium 10,425,065 2,591,424 64,301 8,738 11,314-70,696 7,399, ,263-5,019 Single Premium 11,886, ,659-19,497 57,879 10,923, ,652-1,000 Total Premium 53,452,422 3,535,562 67,680 68,279 32,174 19, ,098 47,256,650 1,770,696 68, ,652 Premium Income from Business written: In India 53,452,422 3,535,562 67,680 68,279 32,174 19, ,098 47,256,650 1,770,696 68, ,652 Outside India Total Premium 53,452,422 3,535,562 67,680 68,279 32,174 19, ,098 47,256,650 1,770,696 68, ,652 16

19 Annual Report Schedules forming part of financial statements for the year ended 31 st March 2008 Schedule - 2 : Commissions Particulars Current Year Participating Non Participating Linked (Amount in Rs. 000 ) Individual Individual Individual Individual Individual Group Individual Individual Group Super- Group Assurance Pension Assurance Health Annuity Assurance Assurance Pension annuation Gratuity Commission Paid Direct - First year premium 13,719, , ,234 29,870-13,431 13,379, , Renewal Premium 1,179, ,559 1, ,014,481 16, Single Premium 88, ,386 3, Add: Commission on Reinsurance Accepted Less: Commission on Reinsurance Ceded (20,020) (726) (2) (245) (4,244) - - (14,803) (Refer Schedule 16 Note 16) Net Commission 14,968, ,591 1,280 2,520 25, ,431 14,464, , Breakup of commission expenses ( Gross) incurred to procure business is furnished below (*) Agents 7,108,957 Brokers 33,228 Corporate Agency 6,934,091 Referral 912,366 Total 14,988,642 Note : Commission on First Year premium includes referral fees amounting to Rs. 912,366 (Previous year 622,502). * Information across line of business has not been disclosed as informations is not readily available. Particulars Previous Year Participating Non Participating Linked Individual Individual Individual Individual Individual Group Individual Individual Group Super- Group Assurance Pension Assurance Health Annuity Assurance Assurance Pension annuation Gratuity Commission Paid Direct - First year premium 8,952, , ,698 6,023-14,733 8,580,403 57, Renewal Premium 395, ,759 1, ,239 4, Single Premium 128, ,696 7, Add: Commission on Reinsurance Accepted Less: Commission on Reinsurance Ceded (8,854) (752) (2) (184) (1) - - (7,914) (1) - - (Refer Schedule 16 Note 16) Net Commission 9,466, ,943 1,472 4,896 6, ,733 8,944,424 69, Breakup of commission expenses ( Gross) incurred to procure business is furnished below (*) Agents 5,876,357 Brokers - Corporate Agency 2,976,808 Referral 622,502 Total 9,475,667 Note : Commission on First Year premium includes referral fees amounting to Rs. 622,502 (Previous year 156,666). * Information across line of business has not been disclosed as informations is not readily available. 17

20 IRDA Registration No. 116 dated 3 rd August, 2001 Schedules forming part of financial statements for the year ended 31 st March 2008 Schedule - 3 : Operating Expenses Related To Insurance Business (Refer Schedule 16 Note 10) Particulars Current Year Participating Non Participating Linked (Amount in Rs. 000 ) Individual Individual Individual Individual Individual Group Individual Individual Group Super- Group Assurance Pension Assurance Health Annuity Assurance Assurance Pension annuation Gratuity Employees remuneration, welfare benefits and other manpower costs (*) 6,898, ,776 3,295 2,798 4, ,586 6,433, ,177 2,061 13,565 Travel, conveyance and vehicle running expenses 421,873 13, ,452 12, Training expenses 511,314 16, ,866 15, ,005 Rents, rates and taxes 2,241,988 74,031 1, , ,491 2,090,940 67, ,409 Repairs 132,613 4, ,678 3, Printing and stationery 345,943 11, ,637 10, Communication expenses 3,872, ,880 1,857 1,569 2, ,587 3,612, ,763 1,157 7,628 Legal and professional charges 38, , , Medical fees 73,850 2, ,875 2, Auditors fees, expenses,etc. a) as auditor 2, , b) as adviser or in any other capacity, in respect of i) Taxation Matters ii) Insurance Matters iii) Management Services; and c) in any other capacity d) out of pocket expenses Advertisement and publicity 368,309 12, ,496 11, Interest and bank charges 199,879 6, ,413 5, Others a) Information technology expenses 532,772 17, ,879 15, ,048 b) Insurance, water and electricity charges 161,336 5, ,468 4, c) Policy stamps 146,830 4, ,937 4, d) Security and housekeeping 148,006 4, ,035 4, e) Marketing expenses 3,298, ,896 1,587 1,335 2, ,212 3,075,957 98, ,504 f) Miscellaneous expenses 421,382 13, ,521 12, Depreciation (Refer Schedule 10) 226,450 7, ,194 6, Total 20,043, ,996 9,559 8,118 21, ,310 18,684, ,873 5,982 39,379 * includes outsourced personal cost of Rs. 5,56,534 18