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| Life insurers post Rs 20,143-crore loss in 2009-10 |
| BS Reporter / Hyderabad Dec 15, 2010, 00:31 IST |
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Life insurance companies suffered a cumulative loss of Rs 20,143 crore in 2009-10, according to the Insurance Regulatory and Development Authority (Irda).
In its annual report 2009-10, the regulator said only eight of the 23 life insurers made profit during the year. The life insurers were LIC, ICICI Prudential, Kotak Mahindra, SBI, MetLife, Bajaj Allianz, Sahara India and Aegon Religare.
Even in the non-life insurance sector, of the 13 private companies, only seven — including ICICI Lombard and Bajaj Allianz — posted profit after tax. The six companies which incurred loss were Reliance, HDFC Ergo, Future Generali, Universal Sompo, Bharti AXA and Raheja QBE.
All the four public sector non-life insurers — Oriental, United India, National and New India — expanded business with an increase in premium collection. While three of the PSUs made sizeable profits, the fourth one recovered considerably from the downfall experienced (losses reported) in 2008-09.
Last year, most private life insurance companies resorted to restructuring to bring down costs. While public sector LIC opened 220 new offices, the number of offices of private insurers decreased to 8,768 from 8,785 in 2008-09.
“Since the opening of the sector in 2000, this is the first time that a negative growth has been observed in the number of branch offices of private sector life insurance companies,” Irda said in its report. Nevertheless, Irda said the prospects for life insurance companies in 2010 were promising, as growth resumed in this sector. A further recovery in financial markets is likely to stimulate the overall growth of unit-linked products and allow insurers to continue strengthening their balance sheets.
Amalgamation
Irda is expected to come out with guidelines for amalgamation of non-life insurance companies by next month. The regulator has embarked on this exercise after non-life insurers approached it to amalgamate their existing ventures to create the second-largest private sector general insurance company in the sector.
“The authority is considering the proposal and would likely put in place systems whereby any amalgamation in the insurance space fully ensures protection of the interests of the policyholders, while contributing to a more vibrant market in the country,” Irda said. So far, there has been only one instance when the promoters of a life insurance company expressed inability to continue operations.
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