The private life insurance industry in India recorded losses of Rs 4,879 crore in 2008-09, an increase of 43% over Rs 3,413 crore recorded in the previous year. To make up for this record loss, promoters of life insurance companies had pumped in Rs 5,956 crore in 2008-09, which is equivalent to the amount invested by the promoters of life companies in the preceding 10 years.
Following the losses reported in 2008-09, accumulated losses of the life insurance industry have risen to Rs 8,585 crore. In its annual report released this week, the Insurance Regulatory and Development Authority (Irda) said the outlook for the insurance industry was uncertain due to many challenges. The regulator added that reduced demand, low interest rates and the need for additional capital by many companies are some of the major challenges facing the insurance industry in the current fiscal.
The insurance regulator has said it expects new private life insurance companies to record losses for the first seven to 10 years of operations.
“Life insurance industry is capital intensive, and insurers are required to inject capital at frequent intervals to achieve growth in premium income,” Irda said.
According to the annual report, out of 22 life insurers, only four have reported profits in 2008-09. This includes LIC, Kotak Mahindra, Met Life and Shriram. LIC reported a higher profit of Rs 957.35 crore compared with the previous year’s profit of Rs 844.63 crore. Kotak Mahindra, for the first time, has reported a net profit of Rs 14.34 crore in 2008-09. During the previous year, the company had incurred a loss of Rs 71.87 crore. Met Life has reported a net profit of Rs 14.52 crore and Shriram reported a net profit of Rs 8.11 crore.
SBI Life, which was the first private life insurer to report profit and has been making profits for the past three years, has reported a net loss of Rs 26.31 crore during 2008-09 due to some mark-to-market losses on the shareholder account. ICICI Prudential, the largest private sector life insurer, reported losses for the eighth consecutive year. The company, which reported a loss of Rs 1,395.06 crore in 2007-08, has recorded a loss of Rs 779.70 crore during 2008-09.
During the year under review, net losses of 12 companies have gone up compared to the previous year. Four new life insurance companies came into existence during 2008-09. Among them, except Aegon Religare, other companies namely, Canara HSBC, DLF Pramerica and Star Union Daiichi have reported losses.
Pvt insurers take a hit again; losses up 43% in 2008-09
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Originally Posted by Manish_Kumar
