Life insurers' assets rise 23% in 2 years; fixed income beats equity growth
While life insurance is considered to be a capital-intensive sector, the capital deployed has in fact come down as of December 2016 to Rs 35,127 crore compared to 2014.
Over the last two years, the life insurance industry has witnessed a 23 percent increase in its assets.
Companies in the sector had total assets of Rs 28.2 lakh crore as of December 31 last year compared to Rs 22.9 lakh crore at the end of 2014, as per data from the Life Insurance Council.
The data from the umbrella body also shows a 28 percent jump in fixed income assets to Rs 20.9 lakh crore at the end of 2016, compared to Rs 16.3 lakh crore at the end of 2014. On the other hand, equity assets witnessed a growth of only 5 percent, rising to Rs 6.7 lakh crore in the same period.
Life Insurance Corporation of India (LIC), the country’s largest insurer, also reduced its equity exposure in the current financial year. The insurer invested Rs 39,705 crore in the nine months ending December compared to Rs 64,000 crore invested in same period last year. LIC Chairman VK Sharma said the reduced exposure was a deliberate decision given the performance of the markets.
For the period from April 2016 to February 2017, the first year premium collections of life insurers stood at Rs 1.40 lakh crore as compared to Rs 1.07 lakh crore collected a year ago. Of this, LIC contributed Rs 99,096.57 crore of new premiums. Overall, traditional policies accounted for a higher share of the total product portfolio of the industry, of which Ulips contribute less than 30 percent on an average.
An interesting aspect is that while life insurance is considered to be a capital-intensive sector, the capital deployed has in fact come down as of December 2016 to Rs 35,127 crore compared to 2014.
Industry officials said that with the reduction in branches and companies going digital, capital requirements have also reduced.
In comparison to 2014, there are now fewer branches and agents. Attrition has plagued the agency channel owing to a lack of career development opportunities and low incentives.
The regulator’s efforts to push investments in infrastructure has proved successful. Infrastructure investments by life insurers grew to Rs 3.3 lakh crore in 2016 compared to Rs 2.7 lakh crore in 2014.+