Life insurance industry saw 17.78 per cent increase in asset under management during the financial year 2016-17, aided the good growth in the equity market and inflows post demonetisation.

During the year, total asset under management grew to Rs 29.80 lakh crore from Rs 25.3 lakh crore in the previous year, according to the data collated by the Life Insurance Council.

The trend of private sector companies being net sellers continued in 2016-17. Private sector insurers were net sellers of Rs 438 crore. While the country’s largest insurer Life Insurance Corporation was a net buyer of Rs 16,400 crore.

Equity at market value was Rs 7.56 lakh crore as on March 31, 2017 up from Rs 5.95 lakh crore in March 31, 2016. Mostly, insurance companies invest in line with the index.

Insurance companies saw fresh inflow coming into Ulips this year as investor sentiment turned positive on equities.

“Broadly inflows have been large last year,” said Mihir Vora CIO Max Life Insurance.

While the total business premium income grew 14.2 per cent to Rs 4.18 lakh crore, renewal premium grew by 6.6 per cent to Rs 2..42 lakh crore from Rs 2.27 lakh crore.

The equity markets have rallied since last year based on macroeconomic indicators and easy liquidity. Profit booking, inflow in non-linked insurance and redemptions in Ulips also contributed to insurance companies turning net sellers.

Insurance companies invest a large chunk of premium in government securities, which grew 15.2 per cent to Rs 21.67 lakh crore from Rs 18.81 lakh crore. Irda norms, require insurance companies to invest 50 per cent of premium under traditional policies into government securities. LIC, which sells mostly traditional invests in government securities in a big way.

Assets under non-licked portfolio grew 18.98 per cent to Rs 25.70 lakh crore while linked grew 10.8 per cent to Rs 4.09 lakh crore.

• The Economic Times
• 06/06/2017