 "Insurance industry sees rise in profitability")
Life insurance industry, in particular, which has seen a slowdown in new business premium collection, has also fared better in terms of profitability.
The largest player in the private life insurance industry ICICI Prudential Life Insurance, the life insurance arm of ICICI Bank posted a 8.09% rise in profit after tax for the full year ended March 2013. The private life insurer posted net profit of Rs 1,496 crore compared to Rs 1,384 crore for full year ended March 2012.
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In terms of premiums, ICICI Life’s annualised premium equivalent (APE) increased by 13% to Rs 3,532 crore in FY2013 from Rs 3,118 crore in FY2012. The assets under management at March 31, 2013 were Rs 74,164 crore (US$ 13.7 billion).
The general insurance arm of ICICI Bank has also performed better than financial year 2011-12.
The gross premium income of ICICI Lombard increased by 19.8% to Rs 6,420 crore in FY13 from Rs 5,358 crore in FY12. ICICI Lombard General Insurance posted a net profit of Rs 306 crore for year ended March 2013 compared to a loss of Rs 416 crore for FY2012.
The commercial third party motor pool was dismantled from April 2012 and a declined risk pool was put in place. This has led to reduction in losses for general insurers, who had made high provisioning for this segment. With an increase in premiums, it is expected that this loss will be brought down further.
SBI Life Insurance posted profit of Rs 622 crore for financial year 2012-13, an increase of 12% over the previous fiscal. Atanu Sen, MD & CEO, SBI Life Insurance had said that despite the continued tough environment, they were able to change the business mix and sustain a profitable growth primarily due to their brand strength, multi distribution model and high productivity of our retail channels.
Bancassurance has been a major driver of growth for the insurance companies. Insurers, backed by bank partners have seen not just higher premiums, but also an increase in profit margins. IDBI Federal Life Insurance, which achieved break-even in its fifth year operation in FY2012-13 has about 74% of its premium coming from its bank channel.
Another leading life insurer HDFC Life has seen a 66.5% growth in net profit and posted net profit of Rs 451 crore in financial year 2012-13. The company recorded 16% positive growth in new business premium income (Individual business) and 11% growth in total premium income.
However, profitability has not just been restricted to insurers with bank partners. Bajaj Allianz General Insurance, for example, saw a 138.6% growth in net profit in FY13 over previous fiscal. Further, Max Life Insurance reported a net profit of Rs 423.4 crore for the financial year 2012-13.
Rajesh Sud, CEO & Managing Director, Max Life Insurance had said, "Our continued focus on fundamentals and efforts to differentiate in the market place based on our advice based sales, diversified distribution architecture and comprehensive product portfolio helped us achieve a profitable growth in a tough year for the industry."
Public general insurers have also seen a significant rise in profitability, apart from a double digit increase in annual premium growth. New India Assurance posted profit after tax (PAT) of Rs 843.6 crore for financial year 2012-13, compared to net profit of Rs 179.3 crore posted in FY12. The company collected total premiums of Rs 10,038 crore in India, recording a growth rate of 18%.
Similarly, private general insurer HDFC ERGO General Insurance posted net profit of Rs 154.49 crore for the year ended March 31, 2013 as compared to a net loss of Rs 39.69 crore posted in the previous fiscal.
While the general insurance industry expects the growth momentum to continue, life insurers expect some challenges in this fiscal too. Max Life's Sud explained that while they would see growth in the first half of the current financial year, in the second half insurers including them would have to manage the regulatory changes.
Adding to this view, Amitabh Chaudhry, MD & CEO, HDFC Life had said, “This year will continue to be a tough year for the industry. We have delivered against the set targets, but we would not look to build the top-line at any cost."
As per the monthly data from Insurance Regulatory and Development Authority (Irda), life insurers collected total premiums of Rs 4965.37 crore for April, seeing a 0.57% rise over same period last year. General insurers, on the other hand, saw a 22.01% rise in premium collection for April 2013. General insurance companies collected premiums of Rs 7890.40 crore for the period, as against Rs 6467 crore in April 2013.