ULIP investors still have hots for equity

Despite the recent volatility in markets and sharp fall in the Sensex, equity remains the preferred choice for unit linked investment plan (ULIP) investors.

ICICI Prudential Life Insurance Company collected Rs 113 crore new business premium for ULIPs between May 10 and 30 and 85 per cent of this went towards the company's Maximiser series (equity funds) and 12 per cent towards the Balancer series (balanced funds).

Among the rest, 2 per cent flowed to the Protector series (debt funds) and only 1 per cent towards the Preserver series (money markets & cash funds)

This signifies that retail customers are still keen to put long-term funds in equities. Between May 10 and May 30, the Sensex lost 1825.75 points or about 15 per cent.

During the same period, Bajaj Allianz Life Insurance Company mopped up new business premium worth Rs 138 crore. Of this, 67 per cent went towards equity funds, 49 per cent towards cash funds and 6 per cent towards debt funds.

"Customers are keen to leverage the lower NAVs to their advantage and enter equity funds at this juncture," said an industry source.

A similar investment pattern is seen in LIC too. "There was no change in ULIP policy holders investment preference in May. They continue to prefer equity investments since over the medium and long term this asset class would give returns ahead of inflation rate," said an LIC official.

Commenting on the impact of the volatility on its customer base, Shikha Sharma, managing director and CEO, ICICI Prudential Life Insurance, said: "We believe the market shifts are more owing to technical, rather than fundamental factors. It's heartening to know that retail customers have become more aware and more understanding of such movements. and are investing for the long term keeping in mind their asset allocation requirements."

ICICI Pru's funds under management stand at Rs 8,800 crore as of May 30, 2006, which is the largest fund base among all private life insurers.