See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/282319928

On the Determinants of Profitability of Indian Life Insurers - An Empirical

Study

Article · July 2012

CITATIONS READS

110 4,648

1 author:

B. Charumathi
Pondicherry University
51 PUBLICATIONS 379 CITATIONS

SEE PROFILE

All content following this page was uploaded by B. Charumathi on 30 September 2015.

The user has requested enhancement of the downloaded file.

Proceedings of the World Congress on Engineering 2012 Vol I
WCE 2012, July 4 - 6, 2012, London, U.K.

On the Determinants of Profitability of Indian

Life Insurers – An Empirical Study
B. Charumathi*
the economic growth of an economy. A well-developed
Abstract - The Indian life insurance industry is the least insurance market paves way for efficient resource allocation
profitable market for its shareholders among all Asian through transfer of risk and mobilization of savings.
countries due to fall in new business premium in 2010-11 in Insurance industry is well developed in economies such as
spite of the fact that it has reported net profit of Rs. 26.57 billion the US, Europe, Japan, and South Korea. Emerging markets
in 2010-11 as against net loss of Rs. 9.89 billion in 2009-10.
However, the life insures’ characteristics that are related to
are found throughout Asia, specifically in India and China,
profitability have not been studied in the Indian conditions. In and are also in Latin America. In 2012, the global insurance
this context, the present study tried to model the factors market is forecast to have a value of $4,608.5 billion, an
determining the profitability of life insurers operating in India increase of 24.9% since 2007. Life insurance dominates the
taking return on asset as dependent variable. This is an global insurance market, accounting for 59.7% of the
empirical study. The sample for this study include all the 23 market′s value.
Indian life insurers (including 1 public and 22 private) and it
used the data pertaining to 3 financial years, viz., 2008-09, The insurance market in India has witnessed dynamic
2009-10 and 2010-11. For this purpose, firm specific
changes including entry of a number of global insurers in
characteristics such as leverage, size, premium growth,
liquidity, underwriting risk and equity capital are regressed
both life and general segment. Life Insurance industry in
against Return on Assets. This study led to the conclusion that India is ranked 9th among the 156 countries, during 2010-11
profitability of life insurers is positively and significantly and the Indian non-life insurance industry improved in its
influenced by the size (as explained by logarithm of net global ranking to 19th in comparison to 26th in last year. The
premium) and liquidity. The leverage, premium growth and Indian insurance sector was dominated by the state owned
logarithm of equity capital have negatively and significantly Life Insurance Corporation of India and the General
influenced the profitability of Indian life insurers. This study Insurance Corporation of India (earlier general insurer, now
does not find any evidence for the relationship between reinsurer) along with its four subsidiaries. The process of
underwriting risk and profitability. re-opening the sector had begun in the early 1990s and
Index Terms— Profitability, Indian Life Insurers, Financial
following the recommendations of the Malhotra Committee
Performance. report, in 1999, the Insurance Regulatory and Development
Authority (IRDA) was constituted as an autonomous body to
I. INTRODUCTION regulate and develop the insurance industry. The key
A well-developed and evolved insurance sector is a objectives of the IRDA include promotion of competition so
boon for economic development as it provides long- term as to enhance customer satisfaction through increased
funds for infrastructure development at the same time consumer choice and lower premiums, while ensuring the
strengthening the risk taking ability of the country. Life financial security of the insurance market. At present, the
insurers are custodians and managers of substantial Indian insurance sector is a colossal one and is growing at a
investments of individuals; and policyholders need to be speedy rate of 15-20%. In exercise of the powers laid down in
confident that their insurer will be able to meet its promised Section 14 (2) of the IRDA Act 1999, IRDA regulates,
liabilities in the event that claims are made under a policy. promotes and ensures an orderly growth of the insurance
Regulatory authorities therefore seek to ensure that the business for the benefit of all the stakeholders and to provide
financial performance of life insurance companies is in sound long term funds for accelerating the growth of the economy.
condition. Insurance is a big opportunity in a country like Insurance density of life insurance sector had gone up from
India with a large population and untapped potential. In this USD 9.1 in 2001 to USD 55.7 in 2010. Insurance penetration
current scenario of growing customer base, one of the had gone up from 2.15% in 2001 to 4.40% in 2010. Market
principal concerns underlying the regulation of the insurance share of LIC declined from 70.10% in 2009-10 to 69.78% in
companies is the need to protect the interest of and secure fair 2010-11. The market share of private insurers has gone up
treatment to policyholders. from 29.90% in 2009-10 to 30.22% in 2010-11
(http://www.irda.gov.in). The number of insurance
II. INSURANCE MARKET – companies stood at 48 at the end of 2010-11, consisting of 23
GLOBAL AND INDIAN SCENARIO life insurers, 24 non-life insurers and a reinsurer. Edelweiss
Tokio Life Insurance Company was granted registration in
Insurance industry, the world over forms an integral the year 2011-12, leading to total number of insurance
part of the financial services sector and plays a pivotal role in companies increasing to 49 as at end-September 2011.

III. REVIEW OF LITERATURE

Manuscript received March 23, 2012. This work was supported by the grant
from All India Council for Technical Education, New Delhi, India. The
Author is with the Department of Management Studies, School of Relevant earlier studies relating to the determinants of
Management, Pondicherry University (A Central University of Government profitability/financial performance of insurance firms are as
of India), Kalapet, Pondicherry 605 014, India (Mobile:+91 94432 31337; follows. Adams., M and Buckle., M (2003) found that highly
Fax: +91 413 2655253; email:[email protected]) levered, low liquid Bermuda insurers have comparatively

ISBN: 978-988-19251-3-8 WCE 2012

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2012 Vol I
WCE 2012, July 4 - 6, 2012, London, U.K.

better operational performance and performance was premium collection during 2010-11, is the least profitable
positively related to underwriting risk but size and scope of market for its shareholders among all Asian countries,
activities were not. After accounting for differences across according to a McKinsey report (2011). However, the life
insurers, taking market and economic factors, Mark J. insurance industry reported net profit of Rs 26.57 billion in
Browne, et.al (2003) found that portfolio returns on bond and 2010-11 as against net loss of Rs 9.89 billion in 2009-10,
disposable personal income per capita were positively related according to IRDA data. (www.irda.gov.in). Further, there is
and unanticipated inflation was negatively related to dearth of empirical studies on the factors determining the
performance of US life insurers. profitability of Indian life insurers. In this context, the
present study tried to close this gap and analysed empirically
In the fragmented regulatory US life insurance the determinants of profitability of life insurers operating in
industry, Michael K. Mc Shane et.al (2010) found that the India.
profitability measure, viz., operating return on equity is
positively related to regulatory competition. Employing IV. OBJECTIVE OF THE STUDY
survey method, Paul J.M. Klumpes (2005) found that the This study aims to model the factors that determine the
senior management of UK life insurance companies used profitability of Indian life insurers taking the Return on
embedded value for strategic management planning and Assets (ROA) as the dependent variable.
control purposes. Taking both stock and mutual life insurers
in New York State during 1952-1966, Richard Spiller (1972)
V. RESEARCH METHODOLOGY
found that there is a difference in size and product mix due to
ownership structure. This is an empirical study. It has taken all the 23 India life
insurers (1 public and 22 private) as sample (Refer
Mike Adams (1996) found that the organisational Appendix). The study period includes 3 financial years, viz.,
characteristics such as size, leverage and underwriting risk 2008-09, 2009-10 and 2010-11. The data required were
were significantly and positively related to the investment drawn from IRDA data base and the public disclosures and
earnings of New Zealand stock life insurers. Taking board annual reports of the respective companies. This study uses
characteristics of Thailand life insurers, Thomas Connelly, J., linear multiple regression model. For this purpose, the firm
and Piman Limpaphayom (2004) found that the board specific characteristics such as leverage, size, premium
composition was positively related to profitability; but growth, liquidity, underwriting risk and equity capital are
negatively related to underwriting risk; and board size was regressed against Return on Assets. Table I shows the
not related to firm performance. Ho-Li Yang, (2007) variables used and the formulae.
measured the financial performance using Financial Rate Table – I Variables chosen for the study
Analysis and measured the non-financial performance of Variables Formulae
Taiwan life insurers, using Data Envelopment Analysis. Net Income before Taxes /
Return on Assets (ROA)
Total Assets
Dragana Ikonić, et.al (2011) analysed the performance Mathematical
of insurance companies in Serbia by applying the CARMEL Insurance Leverage (LEV)
Reserves/(Capital+Surplus)
method and found that the level of capital is the determinant
Log of Net Premium
of profitability. Born H. P., (2001) found that the insurance
Size (LnNP) (Total Premium earned -
company performance is significantly related to size and
Reinsurance ceded)
effective number of competitors and weakly related to
Change in New Premium
insurers’ legal and regulatory environments in Nigeria.
Premium Growth (PG) (First year Prem.+ Single
Naveed Ahmed et al. (2011) found that performance of
Prem.)
Pakistan life insurance companies is determined by size, risk
Current Assets/Current
and leverage. Hifza Malik (2011) found that the profitability Liquidity (LIQ)
Liabilities
of Pakistan insurance companies is significantly and
positively influenced by volume of capital; significantly and Underwriting Risk (UWR) Benefits paid/Net Premium
negatively influenced by loss ratio and leverage; and not
related to age of the insurer. Equity Capital (LnEC) Log of Equity Capital
Note: Compiled by the researcher based on earlier studies.
There have been numerous studies focusing on the
determinants of insolvency of insurance companies operating The linear multiple regression model developed for this study
in the developed and developing economies of the world. is as follows:
However, the insurer characteristics that are related to
profitability have not received much attention sparing a few ROA = β0 + β1 LEV + β2 LnNP + β3 PG +
studies. Profitability in general is defined as the ability of the β4 LIQ + β5 UWR + β6 LnEC + εi
business to utilise its assets in order to generate revenues in
an efficient manner. Berger et al. (1997) contend that the In this study, the dependent variable is Return on
factors underpinning the financial performance of financial Assets (ROA), which is proxy for profitability. ROA is a ratio
services firms are often difficult to discern because of the of Net income before tax to Total Assets. Six Independent
intangible nature of outputs and the lack of transparency over variables considered, for this study, include LEV, LnNP, PG,
resource allocation decisions. LIQ, UWR and LnEC. This study also tested the assumptions
of the linear multiple regression model, viz., multicollinearity
The Indian life insurance industry, which has been and homoscedasticity.
reeling under a slowdown due to a fall in new business

ISBN: 978-988-19251-3-8 WCE 2012

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2012 Vol I
WCE 2012, July 4 - 6, 2012, London, U.K.

VI. HYPOTHESES Table III shows the model summary of the regression for the
To achieve the objectives, the study tested the sample life insurance firms. The value of R is equal to 63.5%
following null hypotheses: and R-Square of the model equal to 40.3%. This means that
40% of the change in the dependent variable, viz., Return on
H01: There is no significant relationship between leverage Assets (ROA) is due to the variations in the independent
and return on assets. variables used in this model.
H02: There is no significant relationship between size (Log
of Net Premium) and return on assets. Table IV – Analysis of Variance
H03: There is no significant relationship between premium Sum of Mean
Model df F Sig.
growth and return on assets. Squares Square
H04: There is no significant relationship between liquidity 1 Regression .828 6 .138 6.875 .000a
and return on assets. Residual 1.225 61 .020
H05: There is no significant relationship between Total 2.053 67
underwriting risk and return on assets. a. Predictors:(Constant), LnEC, PG, UWR, LIQ, LnNP, LEV
H06: There is no significant relationship between equity b. Dependent Variable: ROA
capital and return on assets. Results obtained by using SPSS 17.0.

Table IV shows the result of ANOVA. By using the analysis

VII. RESULTS AND DISCUSSION of variance, it is found that F test of the model is equal to
6.875 and is significant.

Table – II Descriptive Statistics – Variables of Analysis

Table V(a) Regression Summary
Variables N Min Max Mean SD
Stand-
ROA 68 -.859 .04255 -.084 .1750 Unstan-
ardised
LEV 68 .000 974.486 48.186 188.740 dardised Co-
Co-effici
UWR 68 -.006 .59444 .1400 .1552 efficients
Model ents t Sig.
PG 68 -.334 59.2367 1.776 7.8922
B Std. Beta
LIQ 68 .217 3.72289 .9343 .5286
Error
LnEC 68 6.214 12.2085 10.927 1.3559
(Constant) -.315 .255 -1.239 .220
LnNP 68 5.820 16.8278 12.030 1.9717
LEV .000 .000 -.857 -2.903 .005
Valid N 68
UWR .183 .151 .163 1.216 .229
Note: Results obtained using SPSS 17.0.
PG -.007 .002 -.294 -2.855 .006
Table II portrays the descriptive statistics for the variables LIQ .107 .058 .324 1.845 .070
used in this study. The Return on Assets averaged – 8.4 and LnNP .058 .017 .653 3.433 .001
ranged from -85.9% (BHARTI - Private Life Insurer) to LnEC -.050 .025 -.384 -1.956 .055
4.25% (SAHARA – Private Life Insurer). The ratio of
leverage had an average of 48.18 and ranged from 0 (IDBI - Table V(b) – Residual Statistics
Private Life Insurer) to 974.49 (LICI - Life Insurance
Corporation of India - Public Life Insurer). The ratio of Min Max Mean SD N
underwriting risk averaged 0.14 and ranged between -0.006 Predicted
-.592 .1563 -.0844 .1111 68
(DLF - Private Life Insurers) and 0.59 (ICICI - Private Life Value
Insurer). The premium growth averaged 177% and ranged Std. Pred
-.681 .2585 .00000 .1352 68
from -33.49% (METLIFE - Private Life Insurer) to 5923% Value
(FUTURE - Private Life Insurer). The ratio of liquidity had Residual -4.57 2.165 .000 1.000 68
an average of 0.93 and ranges from 0.217 (INDFIR - Private Std.
Life Insurer) to 3.72 (LICI – Public Life Insurer). The natural -4.80 1.825 .000 .954 68
Residual
log of equity capital averaged to 10.92 with a minimum of
6.21 (LICI) and a maximum of 12.21 (AVIVA – Private Life Dependent Variable: ROA;
Insurer). The size of the insurer (as explained by log of net Note: Results computed by using SPSS 17.0
premium) averaged 12.03 with a minium of 5.82 (DLF) and a
maximum of 16.83 (LICI). Insurance Leverage: The degree of financial leverage
reflects insurance companies' ability to manage their
Table III – Model Summary b economic exposure to unexpected losses. This ratio
Model R R Adjusted Std. Error of the represents the potential impact on capital and surplus of
Square R Square Estimate deficiencies in reserves due to financial claims. (Adams and
1 .635a .403 .345 .14169 Buckle 2003). This study used the ratio of Mathematical
a. Predictors:(Constant), LnEC, PG, UWR, LIQ, LnNP, LEV Reserves to Capital and Surplus as a measure of insurance
b. Dependent Variable: ROA leverage. The regression result in Table V (a) clearly shows
Results obtained by using SPSS 17.0. that there is a negative relationship between the return on
assets and the insurance leverage (Mathematical
Reserves/Capital and Surplus). The Beta coefficient for this

ISBN: 978-988-19251-3-8 WCE 2012

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2012 Vol I
WCE 2012, July 4 - 6, 2012, London, U.K.

variable is negative and significant at 1% with a P-Value of current liabilities. (Adams and Buckle 2003). The regression
0.005. Its t-test value is – 2.903, which is greater than the result in Table V(a) clearly shows that there is a positive
critical value and the null hypothesis H01 is rejected. Hence, relationship between the return on assets and liquidity. The
there is a significant negative relationship between return on Beta coefficient for this variable is positive and significant at
assets and insurance leverage. The standardised coefficient 10% level with a P-Value of 0.070. Its t-test value is 1.845,
Beta value is -0.857. Using the standardised coefficient and which is greater than the critical value and the null hypothesis
keeping all the other variables constant, if the insurance H04 is rejected. Hence, there is a significant positive
leverage increases by 100, return on assets will decrease by relationship between return on assets and liquidity. The
85.7. Thus, it can be concluded that insurers with high unstandardised coefficient of liquidity equals to 0.107 and its
leverage (using leverage beyond a level) will have adverse standardised coefficient Beta value is 0.324. Using the
impact on the profitability. standardised coefficient and keeping all the other variables
constant, if the liquidity increases by 100, the return on assets
Net Premium: It is the premium earned by a life insurance will increase by 32.4. Thus, it can be concluded that the more
company after deducting the reinsurance ceded. The liquid firms will have more return on assets compared to less
premium base of life insurers decides the quantum of policy liquid firms.
liabilities to be borne by them. The formula used is Net
Premium = Total Premium earned - Reinsurance ceded. The Underwriting Risk: Underwriting Risk reflects the
regression result in Table V(a) clearly shows that there is a adequacy, or otherwise, of insurers' underwriting
positive relationship between the return on assets and the net performance (Adams and Buckle 2003). Sound underwriting
premium. The Beta coefficient for this variable is positive guidelines are pivotal to an insurer's financial performance.
and significant at 1% with a P-Value of 0.001. Its t-test value The underwriting risk depends on the risk appetite of the life
is 3.433, which is greater than the critical value and the null insurers. This study has taken the ratio of Benefits Paid to Net
hypothesis H02 is rejected. Hence, there is a significant Premium as a measure of underwriting risk. The regression
positive relationship between return on assets and the net result in Table V(a) clearly shows that there is positive
premium. The standardised coefficient Beta value is 0.653. relationship between the return on assets and the
Using the standardised coefficient and keeping all the other underwriting risk. The Beta coefficient for this variable is
variables constant, if the net premium increases by 100, positive but not significant. Its t-test value is 1.216 which is
return on assets will increase by 65.3. A subdued equity less than the critical value and the null hypothesis H05 is
market and declining policy sales will affect small insurers accepted. Hence, there is no significant relationship between
more than the large private players who have a bigger share in return on assets and underwriting risk.
renewal premium income in the Indian context. Thus, it can
be concluded that large insurers have comparative advantage Equity Capital: After the opening up of the Indian insurance
over small insurers in being more profitable and having more industry, following the Malhotra Committee
return on assets. recommendations in the year 1999, many private players
have entered the Indian insurance arena either as fully owned
Premium Growth: The Premium growth of life insurers is domestic insurers or in collaboration with foreign partners.
measured as a year to year change in the new premium of life This has made the Indian insurance industry to be rich in
insurance companies. The new premium comprises of first terms of the quantum of equity capital infusion made by these
year premium and single premium policies procured in a firms. From the Table V(a), it is clear that there is a negative
particular year in comparison with new premium of previous relationship between the return on assets and equity capital.
year. From the Table V(a), it is clear that there is a negative The coefficient for the natural logarithm of equity capital is
relationship between the return on assets and premium negative and significant at 10% level. Its t-test value is
growth. The Beta coefficient for premium growth is negative -1.956 which is greater than the table value. Hence, the null
and significant at 1% level with a P-Value of 0.006. Its t-test hypothesis H06 is rejected. Thus, there is a significant
value is -2.855 which is greater than the table value. Hence, negative relationship between the equity capital and return
the null hypothesis H03 is rejected. Thus, there is a significant on assets. The unstandardised coefficient of equity capital
negative relationship between the premium growth and equals to - 0.050 and its standardised coefficient Beta value is
return on assets. The unstandardised coefficient of premium -0.384. Using the standardised coefficient and keeping all the
growth equals to -0.007 and its standardised coefficient Beta other variables constant, if the value of equity increases by
value is -0.294. Using the standardised coefficient and 100, return on assets will decrease by 38.4. The regulatory
keeping all the other variables constant, if the premium grows requirement demands a minimum level of capital to be
by 100, return on assets will decrease by 29.4. Thus, it can be maintained by every insurer and during 2010-11, 50% of the
concluded that the insurers with more premium growth will total capital invested was used for funding accumulated
have low profitability due to increased underwriting risk and losses by many insurers. Further, more capital influx will
related provisioning for solvency margin. enable the players to expand and open new branches, which
in turn will incur more operating expenses. Thus, it can be
Liquidity: Liquidity is the ability of the insurers to fulfil their concluded that the insurers with more capital adequacy will
immediate commitments to policyholders without having to not have any comparative advantage to improve their return
increase profits on underwriting and investment activities on assets.
and/or liquidate financial assets. The cash and bank balances
are to be kept sufficient to meet the immediate liabilities From Table V(b), it is clear that the residuals are identically
towards "claims due for payment but not paid". This distributed with mean zero and equal variances and hence,
comfortably covers the incurred but not reported portion of the model does not face a problem of heteroscedasticty.
claims liability. This study used the ratio of current assets to

ISBN: 978-988-19251-3-8 WCE 2012

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2012 Vol I
WCE 2012, July 4 - 6, 2012, London, U.K.

REFERENCES
Table VI – Correlation Matrix
ROA LEV UWR PG LIQ LnNP LnEC [1] Adams, M., and Buckle, M., (2003), The determinants of corporate
ROA 1.000 .122 .393 -.427 .077 .447 -.004 financial performance in the Bermuda insurance market, Applied
LEV .122 1.000 .441 -.053 .768 .538 -.758 Financial Economics, Routledge, 13, 133-143.
UWR .393 .441 1.000 -.190 .210 .664 -.133 [2] Annual Report of Insurance Regulatory and Development Authority of
PG -.427 -.053 -.190 1.000 -.021 -.243 -.048 India (IRDA), Available: www.irdaindia.org.
LIQ .077 .768 .210 -.021 1.000 .163 -.687 [3] Annual Reports of various life insurers for various years, Available:
LnNP .447 .538 .664 -.243 .163 1.000 -.060 www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page
LnEC -.004 -.758 -.133 -.048 -.687 -.060 1.000 =PageNo764&mid=31.1.
[4] Berger. AN, Cummins, JD, and Weiss, MA, (1997), The Coexistence
Multicollinearity Test: From the table VI, it is clear that no of Multiple Distribution Systems for Financial Services: The Case of
Property-Casualty Insurance, Journal of Business, 70, 515-46.
two independent variables are highly correlated and there is
no multicollinearity problem. [5] Born H. P., (2001), “Insurer Profitability in Different Regulatory and
Legal Environments”, Journal of Regulatory Economics, Vol. 19,
Issue. 3, 211-237.
VIII. LIMITATIONS OF THE STUDY
[6] Dragana Ikonić, Nina Arsić and Snežana Milošević, (2011), Growth
Potential and Profitability Analysis of Insurance Companies in the
Following are the limitations of this study: Republic of Serbia, Chinese Business Review, 10 (11), 998-1008.

1. Variables such as industry dynamics, regulatory [7] Hifza Malik, (2011), Determinants Of Insurance Companies
Profitability: An Analysis Of Insurance Sector Of Pakistan, Academic
environment, company's franchise and competitive Research International, 1(3),315-321. Available:
market position could not be included. http://www.savap.org.pk/ journals/ARInt./Vol.1(3)/2011(1.3-32).pdf.
[8] Ho-Li Yang, (2007), The Effect of Financial Independence on the
2. Macro economic variables such as interest rate Performances of Life Companies: An Empirical Study, International
change, number of insurers, inflation could not be Journal of Management, 24 (3), 522-540.
included. [9] Mark J. Browne, James M. Carson, and Robert E. Hoyt, (2003),
Dynamic Financial Models of Life Insurers, North American
IX. SCOPE FOR FUTURE RESEARCH Actuarial Journal, 5 (2), 11-26.
[10] McKinsey Report (2011), Available: http://www.Thehindu
This study has considered only six independent businessline.com/industry-and-economy/banking/article2692453.ece.
variables relating to profitability of the life insurers in India. [11] Michael K. McShane, Larry A. Cox and Richard J. Butler, (2010),
Future research studies may consider more variables, both Regulatory competition and forbearance: Evidence from the life
industry specific, regulatory and macro-economic variables. insurance industry, Journal of Banking & Finance, 34, 522-532.
[12] Mike Adams, (1996), Investment Earnings and the Characteristics of
XI. CONCLUSION Life Insurance Firms: New Zealand Evidence, Australian Journal of
Management, 21 (1).
This study led to the conclusion that profitability of life [13] Naveed Ahmed, Zulfqar Ahmed,Ahmad Usman, (2011), Determinants
insurers is positively and significantly influenced by the size of Performance: A Case of Life Insurance Sector of Pakistan,
(as explained by logarithm of net premium) and liquidity. International Research Journal of Finance and Economics, Issue 61,
123-128.
The leverage, premium growth and logarithm of equity
capital negatively and significantly influence the profitability [14] Paul J. M. Klumpes, (2005), Managerial Use of Discounted Cash-
of Indian life insurers. This study does not find any evidence Flow or Accounting Performance Measures: Evidence from the U.K.
Life Insurance Industry, The Geneva Papers, 30, 171-186.
for the relationship between underwriting risk and
profitability. In view of the untapped huge insurance market; [15] Public Disclosures of Indian Life Insurers, Available:
unique regulatory environment comprising a hybrid model of http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_NoYearList.a
spx?DF=AR&mid=11.1.
regulation with competition; proposed approval to allow the
players to tap the capital market for public issues; proposal to [16] Richard Spiller, (1972), Ownership and Performance: Stock and
Mutual Life Insurance Companies, The Journal of Risk and Insurance,
tie up with banks; and the proposal to increase the foreign 39 (1), 17-25.
direct investment, life insurers would shift their focus
towards designing products providing long term savings and [17] Thomas Connelly, J., and Piman Limpaphayom, (2004), Board
Characteristics and Firm Performance: Evidence from the Life
protection for the economy, through sustainable business Insurance Industry in Thailand, Chulalongkorn Journal of Economics,
models. This will help them to improve their profitability 16(2), 101-124.
substantially in the core life insurance business than ever
before. __________
___________

ISBN: 978-988-19251-3-8 WCE 2012

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2012 Vol I
WCE 2012, July 4 - 6, 2012, London, U.K.

Appendix – List of Indian Life Insurance Companies

S.No. Abbreviation Name of the Company
Public Sector
1 LICI Life Insurance Corporation of India
Private Sector
2 AVIVA Aviva Life Insurance Company
3 BAJAJ Bajaj Allianz Life Insurance Company
4 BHARTI Bharti Axa Life Insurance Company
5 BSLI Birla Sun Life Insurance Company
6 CANARA Canara HSBC OBC Life Insurance Company
7 DLF DLF Pramerica Life Insurance Company
8 Edelweiss Tokio Life Insurance Company
EDEL
(started in 2011-2012 only and not taken for this study)
9 FUTURE Future Generali Life Insurance Company
10 HDFC HDFC Life Insurance Company
11 ICICI ICICI Prudential Life Insurance Company
12 IDBI IDBI Fortis Life Insurance Company
13 INDFIR India First Life Insurance Company
14 ING ING Vysya Life Insurance Company
15 KOTAK Kotak Mahindra Life Insurance Company
16 METLIFE Met Life Insurance Company
17 MNYL Max New York Life Insurance Company
18 RELIANCE Reliance Life Insurance Company
19 RELIGARE Aegon Religare Life Insurance Company
20 SAHARA Sahara Life Insurance Company
21 SBI SBI Life Insurance Company
22 SHRIRAM Sriram Life Insurance Company
23 STAR Star Union Dai-Chi Life Insurance Company
24 TATA TATA AIG Life Insurance Company

ISBN: 978-988-19251-3-8 WCE 2012

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
View publication stats