Private Life insurers go on to book profit

The controversy over rule of unit-linked insurance plans (Ulips) has had modest impact on the private life insurance industry. Most companies reported profit throughout the first quarter of the financial year on the back of marginal growth or drop in new sales and decrease in expenses.
Birla Sun Life Insurance reported its maiden profit since it started operations in 2001. It registered a net profit of Rs 9 crore during April-June 2010 as against a loss of Rs 111 crore in the parallel quarter last year. The income from new business grew around 8(%) per cent. Private players recorded a 21(%) per cent increase in income from sales of new policies during the quarter.
“The profit has risen mainly because of an increase in renewal premiums by 27(%) per cent, a reduction in the operating expense ratio by two-threee bps (basis points) and an improvement in the product mix, which now includes a larger share of traditional products, reducing the strain of new business,” said Mayank Bhatwal, chief financial officer, Birla Sun Life Insurance.


UPWARD MARCH
Q1 profit/loss of life insurers (Rs cr)
Insurers 2010-11 2009-10
SBI Life 114 39
ICICI Prudential Life# -116 -27
Bajaj Allianz Life 169 68
Birla Sun Life 9 -111
Source: Companies, BSE
# Q1 2010-11 -Before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds
SBI Life, which was at the number one position in new business income throughout the quarter, reported a net profit of Rs 114 crore as against Rs 39 crore in the related quarter last year. Its new business income fell 9(%) per cent. It was renewal premium that helped the insurer show good result.
“Our new income dropped due to group business. There was an overall increase in assets under management under the Ulip portfolio as well as non-Ulip and shareholders portfolios,” said M N Rao managing director and CEO, SBI Life.
Bajaj Allianz Life Insurance registered a net profit of Rs 169 crore compared to Rs 68 crore in the same quarter previous year. Its new business income grew marginally by 4(%) per cent to Rs 603 crore from Rs 578 crore as the company focused on profitability.
ICICI Prudential, the largest private sector player in terms of new business, reported a loss after tax of Rs 116 crore during the quarter, which will be shown as a profit of Rs 119 crore at the end of the year.
The insurer posted a profit of Rs 258 crore previous financial years. ICICI Prudential Life Insurance reported a loss after tax of Rs 116 crore, before accounting for a surplus of Rs 235 crore in the non-participating policyholders’ funds, which would be transferred at the end of the financial year based on the selected actuary’s recommendation, the bank said.
Though insurance companies have turned profitable, the shareholders of these companies, except SBI Life, will have to wait for a few more quarters for dividends as insurers are yet to wipe out their accumulated losses.