The top ten life insurers witnessed a marginal growth of 4% in profit after tax (PAT) in FY 2016-17. The combined net profit of these insurers stood at Rs. 7,732 crore in FY 2016-17 as against Rs. 7,423 crore in the corresponding period last year.
Among the top ten players in terms of AAUM, six life insurers saw an increase in profits. Typically, profitability is a function of underwriting efficiencies and building good renewals. Higher persistency and more efficient underwriting can lead to higher profitability.
The country’s largest life insurer, LIC emerged to be the most profitable insurer even after witnessing a 11% decline in its profits in FY 2016-17. LIC’s net profit stood at Rs. 2,231 crore as against Rs. 2,517 crore in the previous financial year. VK Sharma, Chairman, LIC said, “Even though the accounting figures shows that our profit is declined, we have incurred a substantial profit this fiscal. The decline is profitability was mainly because of the one-time bonus distributed to over 29 crore policyholders on our diamond jubilee year. Also, we have deployed money in equity instruments and paid around Rs. 2,500 crore to the government towards our share of surplus business within the country.”
ICICI Prudential, who got listed last year, recorded a bare 2% rise in its net profit. It posted a PAT of Rs. 1,681 crore in FY 2016-17 as against Rs. 1,650 crore a year ago. Experts attributed its marginal growth in profit to the rising management expenses.
SBI Life Insurance recorded a growth of 11% by clocking a net profit of Rs. 955 crore as against a net profit of Rs. 861 crore in FY 2015-16. Similarly, HDFC Standard posted a growth of 9% in PAT at Rs. 892 crore against Rs. 818 crore in its preceding fiscal year.
Other life insurers like Bajaj Allianz and Birla Sun Life witnessed a decline in profitability. Bajaj Allianz’s profit declined from Rs. 879 crore in FY 2015-16 to Rs. 836 crore in FY 2016-17. Birla Sun Life’s PAT too declined from Rs. 140 crore in FY 2015-16 to Rs. 122 crore in FY-2016-17. Reliance Life recorded a net loss of Rs. 61 crore in FY 2016-17, as against a previous net loss of Rs. 197 crore in FY 2015-16.
Profit of top ten life insurers
|
Life insurer |
PAT 2017 |
PAT 2016 |
Change in % |
|
LIC |
2231 |
2517 |
-11% |
|
ICICI Prudential |
1681 |
1650 |
2% |
|
Bajaj Allianz |
836 |
879 |
-5% |
|
SBI Life |
955 |
861 |
11% |
|
Birla Sun Life |
122 |
140 |
-13% |
|
HDFC Life |
892 |
818 |
9% |
|
Max Life |
660 |
439 |
50% |
|
Reliance |
-61 |
-197 |
-69% |
|
Tata AIA |
113 |
64 |
77% |
|
Kotak |
303 |
251 |
21% |
|
Total |
7732 |
7423 |
4% |
Source: Company disclosure