Mumbai:
The life insurance industry, consisting of 24 players, saw its net profit declining by 8 per cent year on year(y-o-y) to Rs 7,728 crore as against Rs 8,436 crore in 2018-19, according to the annual report(2019-20) of the IRDAI.
Out of the 24 life insurers in operation during 2019- 20, 17 companies reported net profits in 2019-20.
The total profit reported by state owned Life Insurance Corporation (LIC), that is likely hit the capital market for a massive IPO (Initial Public Offering) in the next fiscal, during 2019-20, has risen marginally from Rs 2,689 crore in 2018-29 to Rs 2,713 crore in 2019-20..
The net profit of the private sector fell by 13 per cent y-o-y to R 5,016 crore in 2019-20 to Rs 5,747 crore in 2018-19.
A profitability analysis of the Indian life insurance industry, by Asia Insurance Post, has shown SBI Life has recorded the largest net profit in the private sector life insurance industry in FY 2019-20. The life insurance arm of the State Bank of India(SBI), the country's largest bank, has seen its profit surging by 10 per cent y-o-y to Rs 1306.79 crore in the year followed by HDFC Life whose net profit at Rs 1295.96 crore has remained almost flat in 2019-20 and ICICI Pru Life Insurance, whose net profit has fallen from Rs 1139 crore in 2018-19 to 1067 crore in 2019-20.
Edelweiss Life has recorded the largest losses in the life insurance industry followed by Bharti Axa Life Insuranace. The former's net loss has gone up to Rs 285 crore in 2019-20 from Rs 270 crore in 2018-19 while later's net losses have balooned from Rs 39 crore in 2018-29 to Rs 215 crore in 2019-20.
The third largest loss making life insurer is Future Generali whose losses have fallen from Rs 195 crore in 2018-19 to Rs 155.52 crore in 2019-20.
Kotak Mahindra Life's net profit has grown by 20 per cent y-o-y to Rs 608.18 crore while Max Life's net profit has fallen marginally to Rs 539.37 crore crore in 2019-20 from Rs 556.42 crore in 2018-19. Similarly, the net profit of Bajaj Allianz Life Insurance has gone down 10 per cent y-o-y to Rs 449.59 crore in 2019-20 from Rs 501.86 crore in 2018-20.
The profitability of some of the well known brands in the liberalised life insurance sector like Tata AIA(Rs 44 .07 crore), PNB MetLife(Rs 92 crore), Reliance Nippon(Rs 35 criore), Star Union Dai-Ichi (Rs 59 core),Aviva Life(net loss of Rs 49 crore) have remained weak and have remained below Rs 100 crore in 2019-20 even after a decade-long operations.
Aditya Birla Life Insurance has seen a fall in the net profit from Rs 125 crore in 2018-19 to to Rs 104 crore in 2019-20 to .
India First Life Insurance has plunged into losses of Rs 97.42 crore in 2019-20 after recording a profit of Rs 61.57 crore in 2018-19,Similarly, DHFL Pramerica Life Insurance, belonging to now financially insolvent Kapil Wadhawan's DHFL group, has also slipped into losses of Rs 134.44 crore in 2019-20 from a profit of Rs 85 crore in 2018-19.
IDBI Life's profit has improved marginally to Rs 147 crore(Rs 132 crore) in 2019-20.
Returns to Shareholders of Life Insurers
For the year 2019-20, LIC proposed Rs 2,698 crore (Rs 2,661 crore in 2018-19) as dividend to shareholder i.e. Government of India.
Six private life insurers paid/proposed dividends during the financial year 2019-20.
ICICI Prudential paid Rs 337.42 crore (Rs 114.87 crore interim dividend for 2019-20 and Rs 222.55 crore final dividend for 2018-19) as against Rs 703.43 crore in 2018-19;
Max Life paid Rs 642.80 crore (Rs 378 crore interim dividend for 2019-20 and Rs 264.80 crore final dividend for 2018-19) as against Rs397.19 crore in 2018-19.
Shriram Life paid Rs 9.33 crore interim dividend for 2019-20 (Rs17.94 crore in 2018-19); Bajaj Allianz paid Rs 105.50 crore final dividend for 2018-19 (Rs105.50 crores for 2017-18); Star Union Dai-ichi Life paid Rs 3.24 crore final dividend for 2018-19 (Rs 5.18 crore interim dividend paid in 2018-19) and IDBI Federal Life paid Rs 117.20 crore (Rs 37.20 crore interim dividend for the FY 2019-20 and Rs 80 crore final dividend for the FY 2018-19).
Investment Income of life insurers
In case of LIC, the investment income (Policyholder’s and Shareholder’s) including capital gains and other income was Rs 2.37 lakh crore in
2019-20 (Rs 2.24 lakh crore in 2018-19).
In case of private insurers, the negative investment income (loss) including capital gains was at Rs 3,106 crore in 2019-20 (Investment income Rs 61,158 crore in 2018-19).
Number of life insurance offices
Number of life insurance offices in the country increased to 11,310 as on March 31, 2020 compared to 11,279 as on March 31, 2019. It is observed that majority of offices of life insurers are located in Tier I location. Around 60 per cent (6750 offices) of life insurance offices are located in these areas
After the Tier I location, Tier III locations with a population of 20,000 to 49,999 are having 16 per cent of life insurance offices (1846 offices). Only about 0.73 per cent of life insurance offices are in Tier VI locations (83 offices) with a population of less than 5,000.
As at March 31, 2020, lif insurance behemoth LIC has its offices in 669 districts out of 735 districts in the country.
As such, it covered 91 per cent of all districts in the country, whereas the private sector insurers have offices in 592 districts covering 81 per cent of all districts in the country.
In total, both LIC and private insurers together covered 92 per cent of all districts in the country.
The number of districts with no presence of life insurance offices stood at 47 in the country.
Out of these, 39 districts belong to the north eastern states namely Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and
Sikkim. In 24 states (out of a total of 28 states and 8 union territories in the country), all the districts were covered through life insurance offices.