Reports 28% rise in the first 2 months of FY10.
At a time when the life insurance market is contracting, Life Insurance Corporation of India (LIC), the country’s largest insurer, is expecting a 25 per cent increase in new premium income this financial year.
Overall, the company expects its premium income, including those from renewal, to rise by 20 per cent over the last year’s level of Rs 155,000 crore to around Rs 186,000 crore. Of this, around Rs 65,000 crore is likely to come from new policies.
During the last financial year, when unit-linked insurance plans (Ulips) went out of vogue, LIC’s sales had dropped by around 10 per cent. But during the first two months of the current financial year, the public sector player’s new premium income has increased by over 28 per cent to Rs 4,171 crore.
| LEADING FROM THE FRONT Data on first premium income | |||
| Company | Apr-May 2008 | Apr-May 2009 | % change |
| LIC | 4,170.87 | 5,354.92 | 28.39 |
| SBI Life | 546.33 | 783.94 | 43.49 |
| ICICI Prudential | 951.75 | 483.54 | -49.20 |
| Bajaj Allianz | 485.81 | 340.85 | 29.84 |
| Max New York Life | 311.65 | 277.87 | -10.84 |
| PVT PLAYERS | 3,948.41 | 3,299.14 | -16.44 |
| Total life | 8,119.28 | 8,654.06 | 6.59 |
| Amount in Rs crore | |||
According to the latest data released by the Insurance Regulatory and Development Authority (Irda) today, during May, when the life insurance market, measured in terms of first premium income, contracted by 5.4 per cent to Rs 5,052 crore, LIC bucked the trend with its premium from new policies rising 10.9 per cent to Rs 3,242 crore. The 21 private life insurance companies together saw a 25.1 per cent decrease in their first-year premium income at Rs 1,811 crore during the same month.
“We expect about 20 per cent increase in premium income and 25 per cent rise in new premium income this financial this year. The months of April and May had been very good in terms of growth, with our premium income rising by about 25-30 per cent,” LIC Chairman T S Vijayan said on the sidelines of a conference.
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Though Ulips had taken a hit in recent months, LIC would balance its portfolio with a mix of traditional covers, he added.
Of the total premium income, around Rs 40,000 crore is expected to be invested in equities during the current financial year. “Last year, our total equity purchase was close to Rs 40,000 crore. If the going is good, this year also it will be like that, or slightly more,” said Vijayan.
LIC expects to improve its solvency margin, which is 152 per cent at present, by March 2010 on the back of relaxed norms.
LIC to divest stake in UTI AMC
LIC along with other shareholders will divest its stake in UTI Asset Management Company (UTI AMC)
Apart from LIC, there are three other shareholders in UTI AMC — State Bank of India, Bank of Baroda and Punjab National Bank
All the four shareholders hold 25 per cent each in UTI mutual fund and are likely to divest 6.5 per cent each
“UTI AMC has decided to rope in a strategic partner. The deal is yet to be frozen and has not come to a critical stage. But all the four partners will take the same decision. We will be acting in unison. We will offload stake in equal proportion,” said Vijayan.