Birla Sun To Invest In Equities, Bonds

Birla Sun Life Insurance Company will invest in listed equity and corporate bond instruments this month, once it "gets adequate funds to meet the minimum size tickets."

Birla Sun Life having defined its investment policy for the various plans and outlined annualised minimum guarantees, is looking at high quality, liquid investment to match its liabilities.

"As we get more adequate funds, we will accordingly diversify our investment portfolio and invest in high quality, liquid assets. The real challenge is to get assets of long-term duration to match our liabilities, as we have to look at a 20 to 30-year horizon," said the company's CEO, Vijay Singh.

 

The composition of the assets of under each of the three funds -- protector investment option, builder investment option and enhancer investment option -- have been defined and yield on these assets will determine the benefits that customers receive.

Birla Sun Life has identified minimum annualised guarantees ranging between 3 per cent and 6 per cent.

However, as the inflow of money into each funds has been small, Birla Sun Life has not been able to achieve the asset mix.

Investment in funds amounting to Rs 16.3 lakh, has been solely in 11.15 per cent government's 2002 paper.

New life players have till now invested solely in gilts and most have voiced their reluctance to invest in the current state of the capital market.

For the 12-days of operation in the fiscal year ended March 31, 2001, having commenced sales only on March 19, Birla Sun Life Insurance sold 286 policies, and mopped up a premium income of Rs 32.35 lakh. It posted a net loss of Rs 8.3 crore for the year.

"We are targeting 25,000 to 50,000 policies in the current fiscal. The 12 days of sales helped us test the market and identified how the market accepted our policies," said Singh.

Birla Sun Life will shortly improve its product range with the addition of term assurance and single premium covers. It has started with traditional products -- money back and endowment policies.