Equity Investments

Life insurers’ fixed income assets rise 46% in 3 fiscal years, equity assets up 29%

From FY15 to FY18, fixed income assets and equity assets of life insurance companies rose 46 percent and 29 percent, respectively, according to data sourced from the Life Insurance Council.

The data showed that at the end of FY18, life insurers had equity assets worth Rs 8.12 lakh crore (at market value), and fixed income assets worth Rs 24.5 lakh crore.

The total investment assets of life insurers at the end of FY18 stood at Rs 33.13 lakh crore, around 11 percent higher than at the end of the previous fiscal year.

Infrastructure assets held by life insurers stood at Rs 3.76 lakh crore, 8.5 percent higher than at the end of the previous year. In comparison, the capital that they deployed in the life insurance sector rose merely 3.5 percent to Rs 36,582 crore, as on March 31 this year.

The growth in these insurers’ equity portfolio is a reflection of the growth witnessed by the domestic stock market. The benchmark Sensex index rose to 32,968.68 at the end of FY18, from 27957.49 at the end of FY15.

The distribution architecture, comprising of agents and new branches, remained largely unchanged. In FY18, only 156 new branches were added by life insurance companies.

One good news is that attrition of individual agents was kept under check. The number of individual agents stood at 2.08 million at the end of FY18, only 5,851 agents less than at the end of the previous year.

On an average, the life insurance industry loses 20,000-25,000 agents every year, primarily due to low commissions.

A reason for the lower reduction in the number of agents could be better commission rates. Overall, commission-related expenses grew 14.5 percent year on year to Rs 25,309 crore in FY18.

The data also showed that the renewals of linked products (Ulips) were higher than that of traditional products. Renewal premium for linked products rose 22.3 percent in FY18 to Rs 38,706 crore, while that of non-linked products increased 6.7 percent to Rs 2.25 lakh crore.

In all, the life insurance industry employed 265,727 direct employees, as at the end of FY18, compared to 249,794 people at the end of March 2017. Over and above this are individual agents and other distribution partners.

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