Private risk firms brace for Rs 1,500 cr infusion

Private sector life insurance companies will see an additional capital infusion of over Rs 1,500 crore in 2006-07. The 14 private players had a capital base of Rs 6,642 crore at the end of March 2006.

While the largest private life insurer ICICI Prudential is expected to infuse a capital of around Rs 300 crore this year, HDFC Standard Life is expected to receive Rs 200 crore.

SBI Life Insurance, the first private sector life insurer to have reported net profit since the sector was opened up six year ago, and Metlife are likely to witness Rs 125 crore each being injected to support growth.

The new premium income of life insurance firms in 2005-06 jumped 41 per cent.

An additional capital of Rs 44 crore has been infused this year in Kotak Mahindra Old Mutual Life Insurance, while Birla Sun Life has announced Rs 30 crore capital infusion. Metlife plans to infuse Rs 125 crore by September 2006.

While Bajaj Allianz Life Insurance said it would wait till September to decide whether it needs capital infusion in 2006-07, Shriram Life Insurance started its operations a few months ago and does not see the need for more capital infusion this year.

ICICI Prudential will be infusing capital twice this year. Considering the capital infusion of Rs 250 crore in 2005-06, its officials assumed an additional capital injection of at least Rs 300 crore this year.

Capital infusion plans of Bajaj Allianz and Tata AIG were not available. Taking these two companies into account, the total capital infusion in the life insurance sector in 2006-07 could be around Rs 2,000 crore.

Life insurance companies need more capital to maintain 150 per cent solvency margin, as they continue to grow at a higher rate in an under-penetrated domestic market.

"Birla Sun Life is aiming to continuously strengthen its operations nationally, thereby increasing penetration into smaller towns and also ensuring higher market share," said CFO Anil Jhala.