AUM of life insurers grew by 10 percent in FY 2012-13

In FY 2012-13, even though the collection of new business premium declined by 6%, the industry witnessed a 10% growth in its AUM.

The AUM of insurance industry went up by 10% in FY 2012-13 from Rs 15.8 lakh crore in FY 2011-12 to Rs 17.4 lakh crore in FY 2012-13, shows an annual report published by IRDA. The growth was primarily driven by traditional policies and pension products.

In terms of AUM, LIC maintained its dominance by capturing 80% of market share in life insurance industry. The AUM of state owned life insurance company recorded a growth of 11% or from Rs 12.6 lakh crore in FY 2011-12 to Rs 14 lakh crore in FY 2012-13 while the AUM of private life insurers grew by 10% i.e. from Rs 3.12 lakh crore to Rs 3.41 lakh crore.

Among the top ten private players in terms of AUM, HDFC and Max Life Insurance recorded the highest growth of 24% and 19% respectively in their AUM. Both these companies moved to third and sixth position respectively. ICICI Prudential retained its top position with AUM of Rs 73,771 crore, a growth of 5% whereas SBI Life stood at second position with AUM of Rs 51,819 crore (11% growth).

Bajaj Allianz and Reliance Life saw a marginal decline of 4% and 3% respectively in their AUM.

The report showed that the AUM of life fund (like traditional policies) and pension & general annuity witnessed a growth of 15% and 19% respectively in FY 2012-13. The AUM of life fund went up from Rs 9.7 lakh crore FY 2011-12 to Rs 11.2 lakh crore in FY 2012-12 whereas AUM of pension & general annuity & group fund grew from 2.4 lakh crore in FY 2011-12 to 2.8 lakh crore in FY 2012-13.

Life fund accounts for 65% of total industry AUM.  Pankaj Mathpal of Optima Money pointed out that many insurance companies had floated traditional policies in FY 2012-13 to attract investments.

In contrary, the AUM of ULIPs saw a decline of 7% as its AUM slipped from 3.6 lakh crore in FY 2011-12 to 3.4 lakh crore FY 2012-13. Mathpal attributed this to underperformance, rampant mis-selling of ULIPs in past and negative publicity in media about it. As a result, many investors redeemed their investments from ULIPs and sought other avenues to park their money like traditional policies, annuity etc., he said.

However, some advisors have a different view. Kapil Narang , COO, Ameriprise Financial India said, “The growth can be attributed to better efficiencies and improved persistency rather than a particular segment.”

In FY 2012-13, even though the collection of new business premium declined by 6%, the industry witnessed a growth in its AUM. Explaining the phenomenon, Kapil Narang of Ameriprise India Advisory Services said, “AUM is not only driven by new business premiums but also renewals – actually renewals plays a larger role in AUM growth. Renewal premiums accounted for about 63% of total premium in 2012-13 which was higher than the previous year and would have contributed to this growth.”

AUM of Life Insurance Industry

Source IRDA