A

PROJECT REPORT
ON
“FINANCIAL PERFORMANCE OF SBI LIFE INSURANCE
AND ICICI PREDENTIAL LIFE INSURANCE ”

Project submitted to OSMANIA UNIVERSITY

In the partial fulfillment of the requirement of the

BACHELOR OF COMMERCE
B.COM (COMPUTER APPLICATION)
During The Academic Year 2022-2023

Submitted by

TEAM MEMBERS

1.RAMAVATH LAVANYA ( 6021-20-405-020)

2.SAMALA PRASHANTH ( 6021-20-405-021 )
3.SAMALA PRIYANKA ( 6021-20-405-022 )
4.THIRUNAHARI AKSHAY ( 6021-20-405-023 )
5.THUNIKI RISHITHA ( 6021-20-405-024 )

Department of Commerce
GOVERNMENT DEGREE COLLEGE NARSAPUR
(Affiliated to Osmania University)

1
 DECLARATION

hereby declare that the project report entitled “FINANCIAL

PERFORMANCE OF SBI LIFE INSURANCE AND ICICI
PRUDENTIAL LIFE INSURANCE” Submitted byme in partial
fulfillment of Bachelor of Commerce Osmania University,
Hyderabad, is a bonafide work undertaken by me and it is not
submitted to any other University or institution for award of any
degree diploma certificate or published any time before.

TEAM MEMBERS

1.RAMAVATH LAVANYA ( 6021-20-405-020)

2.SAMALA PRASHANTH ( 6021-20-405-021 )
3.SAMALA PRIYANKA ( 6021-20-405-022 )
4.THIRUNAHARI AKSHAY ( 6021-20-405-023 )
5.THUNIKI RISHITHA ( 6021-20-405-024 )

2
 GOVT. DEGREE COLLEGE NARSAPUR

CERTIFICATE BY THE PRINCIPAL

This is to certify that B. COM student of this college

with worked on the project titled “FINANCIAL
PERFORMANCE OF SBI LIFE INSURANCE AND ICICI
PRUDENTIAL LIFE INSURANCE ” under supervision ofthe
principal Mr.Dr.P. DAMODAR of this college during
the year 2022-2023

S.Raju Dr.P.Damodar

Project Supervisor Principal

External

3
 ACKNOWLEDGEMENTS

I wish to express my sincere thanks to almighty for showing his blessing onme to
develop this project

I would like to acknowledge my sincere thanks to Mr. S.RAJU, Faculty of

COMMERCE,GOVT DEGREE COLLEGE NARSAPUR for his excellent
guidance and supervision for the completion of this project successfully

I wish to the thank to all my faculty members of GOVT DEGREE College of

Department of Commerce& well wishers who has supported me all along in carrying out this
project

I am thank full to the management of “FINANCIAL PERFORMANCE OF SBI

LIFE INSURANCE AND ICICI PRUDENTIAL LIFE INSURANCE’’ for their kind
allowing me to undertake this project and its various employees who helping towards the
completion of the project successfully in the esteemed organization

4
 INDEX

CHAPTER TOPIC PAGE NO

INTRODUCTION
Rationale of the Study
Introduction to the Industry
CHAPTER 1 Introduction to the Company
Justification of the Topic
2-6
the Study Introduction to the
Industry Introduction to the
Company Justification of the
Topic

CHAPTER 2: National Reviews 7-12

REVIEW OF LITERATURE International Reviews

CHAPTER 3: Objectives of the Study 13-15

RESEARCHMETHODOLOGY Research Hypothesis Scope
of the Study Research
Design Limitation of the
study

CHAPTER 4: DATA REPRESENTATION Data Representation & 16-30

AND ANALYSIS InterpretationHypothesis
Testing

CHAPTER 5: RESULTS AND Major Findings 31-34

DISCUSSIONS Discussions & Suggestions
Conclusion

QUESTIONNAIRE&BIBILOGRAPHY 35-38

1
 INTRODUCTION

RATIONALE OF THE STUDY:

Why the need for the study?

• To compare the companies to identify which company is the market leader.

• To understand their financial performance.

What information will the study add?

• This research will help in analysis of companies.

• This research will make us understand the companies’ market share, financial strength
and quality of their business.

INTRODUCTION OF THE INDUSTRY:

Insurance is the backbone in managing the risk of the country. The insurance providers
offer diversity of products to business, thus ensuring protection from risk thereby
guaranteeing financial stability .It helps individual and organization to minimize the
consequences of risk which impart significant cause on the growth and development of
insurance industry. Insurance plays a key role in stabilizing the economy, trade and
commerce.

What is Life Insurance?

(Life Insurance) is defined as a contract between the policy holder and the insurance
company, where the life insurance company pays a specific sum to the insured individual's
family upon his death. The life insurance sum is paid in exchange for a specific amount of
premium.
The Indian Insurance Industry is divided into 2 basic sectors – Life Insurance and Non-
life Insurance (also called General Insurance ) Both these sectors are regulated by Insurance
Regulatory and Development Authority (IRDA) of India which is a government body
which frames the rules for the entire industry and all insurance companies have to abide by
them. IRDA is the policy maker for the entire insurance industry in India and also serves as
the custodian of consumers rights.

2
Growth of Life Insurance Industry

As an industry, insurance is regarded as a slow-growing, safe sector for investors. This

perception is not as strong as it was in the 1970s and 1980s. (A Brief Overview of the
Insurance Sector) . The Indian Insurance has been growing rapidly since 2000, as it was
liberalised after more than 50 years of monopoly of LIC, where private life insurers have
entered the insurance sector with innovative practices leading to more business. Indian
consumers, who have always seen life insurance as a tax saving system, are now suddenly
turning to the private sector and snapping up the new innovative products on offer. The
Private players have taken some market share from LIC, and major growth has happened
because of market expansions. The Indian Insurance Industry is getting ready for new era,
where it is building world-class risk Management capability. The insurance industry has
come a long way from being an open competitive market to nationalized then back to a
liberalized market in India.

Current market Scenario

According to (Indian Insurance Industry Report , 2021) the insurance industry of India has 57
insurance companies 24 are in the life insurance business, while 33 are non-life insurers.
Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company.
According to (McKinsey, 2007) it was estimated that India is likely to emerge as the fifth
largest market in the world by 2025.
In India, most private companies have entered into business with collaboration with
established Insurance Companies in the world, both in the life and non-life Insurance Sectors.
These global players' skills contribute to the performance of the Indian insurance sector, as it
replicates the learning acquired from other industries over a long span of time. The
international partner of any insurance firm in India is not allowed to own more than 26% of
the shares in Indian insurance company as per IRDA regulations. We have seen big financial
groups in India like SBI, ICICI and HDFC enter this pace and become aggressive players. .
Other famous corporate groups like the Tata’s, Birla’s and the Ambani’s have also formed
insurance companies.

3
 INTRODUCTION TO THE COMPANY:
For the purpose of the present study, two renowned private life insurance companies
namely, ICICI Prudential Life Insurance and SBI Life Insurance were selected. Brief profiles
of the selected insurers are as follows:
SBI Life Insurance Company Ltd.
It is a joint venture life insurance company between State Bank of India (SBI),
the largest state-owned banking and financial services company in India, and BNP
Paribas Cardif. It incorporated October 11, 2000, and received permission from IRDA on
March 29, 2001, to carry on the life insurance business .SBI has a 62.1% stake in the
company and BNP Paribas Cardif owns a 22% stake. Other investors are Value Line Pte.
Ltd.and MacRitchie Investments Pte. Ltd., holding a 1.95% stake each while the remaining
12%is free float stake with public investors.
SBI Life incorporated with an authorized capital of Rs. 2000 crore, while it is paid up
capital is Rs.1000 crore. SBI Life, which started its operations with the vision “To be the
most trusted and preferred life insurance provider,” initially depended upon the
Bancassurance and now is developing its own agency team for selling insurance products.
SBI Life’s insurance products include various policies meant to address different needs of
different sections of the society. It offers unit-linked, child plans, protection plans, saving
plans, retirement, group plans, etc. With customer service excellence and product
innovations, the company has been growing year after year. SBI Life Insurance has received
many awards and accolades for the work in the field. Following are some of them:
• SBI Life Insurance has won ‘Brand of the Year 2016-17’ award in the insurance
category
• SBI Life Insurance has won ‘Private Sector Life Insurance Company of the Year’
award at Fintelekt Insurance Awards
• SBI Life Insurance has won ‘Bancassurance Leader, Life Insurance’ in large
companies category.

4
ICICI Prudential Life Insurance Company Limited

It is a life insurance company in India. Established as a joint venture between ICICI

Bank and Prudential plc, ICICI Prudential is engaged in life insurance and asset management
business. The firm offers long term life insurance plans and is headquartered in Mumbai. In
2016, the firm became the first insurance company in India to be listed in the domestic stock
exchanges.

ICICI Prudential Life Insurance Company has been promoted jointly by ICICI Bank limited,a
leading private sector Indian bank, and Prudential Corporation Holdings Limited by
contributing 74% and 23% capital, respectively. It was incorporated on July 20, 2000, and
received a certificate of registration from IRDAI to carry out the life insurance business on
November 20, 2000. ICICI Life began its operations in financial year 2001 with the vision to
build an enduring institution that serves with sensitivity the protection and long-term saving
needs of customers. ICICI Prudential Life, known as ICICI Life, has become the first
insurance company in India to be listed on the NSE and the BSE in 2017. It offers health
insurance, term insurance, savings, and retirement plans for individuals and groups to meet
varied needs of the customers.

ICICI Prudential Life Insurance has received many awards and accolades for the work in the
field. Following are some of them:

• ICICI Prudential Life has received ‘Life Insurance Company of the Year’ award at
India Summit and Awards 2019
• ICICI Prudential Life has received ‘Life Insurance Provider of the Year’ by Outlook
Money Awards 2018
• ICICI Prudential Life has received ‘Best Term Insurance Provider of the Year’ award
by Money Today Financial Awards 2017-18
• ICICI Prudential Life is awarded as ‘Best Customer Orientation in Life Insurance’
award by Emerging Asia Awards 2018
• ICICI Prudential Life is awarded as ‘Best Growth in Life Insurance’ category by
Emerging Asia Awards 2018.

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 JUSTIFICATION OF THE TOPIC:

What is the potential utility of the findings (local, national, global)?

• This analysis will help the investors who want to invest in such companies.

• To identify their good points and points of improvement.

What are the implications of the study?

• Comparison of market share.

• Comparison of profitability.

• Ratio analysis to find out their financial strength.

• Measuring Quality of the Businesses.


CHAPTER 2:REVIEW OF LITERATURE

National Reviews
International Reviews


 NATIONAL REVIEWS:
1. (Naidu & Paramasivan, 2015) highlighted that the measurement of performance of
insurance firms become important, because they not only include the money saving and risk
transfer process, but also help to properly redirect funds in order to finance investment
activities in the economy.

2. (Joshi & Takodia, 2017) study suggests that all life insurers need to raise understanding
on the definition of life insurance and on different life insurance undertakings among
investors in order to increase market share and growth in a sector. When looking at Life
insurers, they must have adequate weightage for different factors such as the timeliness of pay-
out and the sum of their claims, ensure that investors are at the best possible convenience in
the settlement, provide integrity and retain strong financial position to draw the interest of
investors.

3. (Kumari, 2013) analysed efficiency assessment of India's post-liberalization life insurance

market by using different ratios. The study concluded that India has registered a rise in both
insurance penetration and density since Indian insurance market was opened to private firms.
India's life insurance spectrum is enormous. The total assets to earned premium ratio,
investment income to earned premium ratio and investment income to total investment ratio
represent an insurer's economic solidity and reveal the performance with respect to
investment decisions.

4. (Dr.Parmasivan, 2015) has carried out a comparative analysis of insurance providers in

India in the public and private Life Insurance Companies. Current ratio and debt equity ratio
is estimated to measure the solvency ratio for financial efficiency. The analysis shows that
LIC already dominates the market. The new commercial channels of promotion are used by
private sector insurance providers in comparison to LIC. The sale of more plan-linked units
allows private insurers to capture LIC market share. Private insurers are also better than LIC's
solvency and lapse ratios. In comparison with private life insurance the service of death
lawsuits was higher for LIC.

5. ( Mishra, 2015) suggest that the current public insurers with ensuring cost-effectiveness
should stay competitive also. These public sector firms have taken a range of steps with
regard to competition with private sector businesses. But, despite changing their strategy and


ideology in the post-Reform era, the government sector companies do need to reassess their
current status. Insurance firms must ensure that premium goods are guaranteed at a fair price
and companies can reduce the price of the commodity by reducing costs. Success depends on
their sustainability, competitiveness, reliability and quality of service performance.

6. (Bodla, Bodla, & Tondon, 2017 ) analysed and compared the profits of life insurance
firms in India (Public and Private). The 10-year comparison frame for the analysis varied
from 2007 and 2016. Seven factors, including Net Premium, Investment income,
Underwriting income, asset return, combined ratio, solvency ratio and profits were used for
analysis of income and financial results. The analysis showed that the net average premium
over the last five years was the highest for ICICI prudential followed by the HDFC Standard
and SBI Life, while the lowest premium for the private sector life insurers was mobilised by
IDBI Federal. They concluded, too, that in almost every private sector corporation in the past
five years, the CAGR's underwriting revenue has decreased.

7. (Gulati & Jain, 2011) analysed business performance of all life insurers in industry on
the basis of various indicators. LIC was the highest rider in all forms of premiums whereas in
the private sector, ICICI Prudential Life Insurance led the Insurance Industry followed by
SBI Life Insurance and Bajaj Allianz Life Insurance. The study suggested that even after the
entry of private sector, the growth of public sector undertaking had not resulted in downfall
even after facing numerous opportunities and challenges.

8. ( Bawa & Chattha , 2013) examines the financial performance of Indian life insurance
companies by analysing their profitability determinants. Financial Efficiency was calculated
using financial ratios such as the current ratio, solvency ratio, equity ratio, and insurance debt
ratio. The samples for this analysis are 18 Indian Life Insurers (including 1 public and 17
private life insurers) and the study period is from 2007-08 to 2011-12.According to the
report, the public sector LIC is the most liquid of all life insurers. Future General Life
Insurance, IDBI, Sahara, Shri Ram Life Insurance, and SBI Life Insurance have a strong cash
position in comparison to other private insurers. Life insurers like Aviva, Bajaj Allianz, IDBI,
Max Life, Sahara and SBI Life insurance are more solvency-friendly than other insurers
.Bajaj Allianz and ICICI Prudential Return on Asset Measurements sounds good.

9. (Dar & Bhat, 2015) evaluate the financial statements and soundness of selected public and
private life insurance companies. The statistical findings of the analysis reveals that there are
significant statistical variations in the capital adequacy, revenue, profitability and liquidity
9
adequacy among selected private life insurers is much greater than the average amount of
capital of public life insurer. But the public life insurers surpass the private life insurers in
their profitability in the analysis period. The study also showed that public life insurers had a
higher liquidity in relation to private life insurers during the examined period.

10. (Solanki, 2016) examined the profitability of life insurance companies. For measuring the
profitability of the companies various ratios were calculated. The study shows that the private
sector life insurances companies should strive to increase its business by issuing more and
more policies in order to retain its market share in the competitive scenario.

11. ( Gour & Gupta , 2012) determined the solvency ratio of Indian Life insurance
companies for the period of 3 years from 2009-10 to 2011-12. It analysed whether
performance of different companies was similar or there was any significant difference. On
the basis of solvency ratio, ranks were assigned to different companies which showed that
ICICI found the best among selected companies of industry followed by Birla Sun Life, SBI,
HDFC and LIC. The paper also observed that solvency of life insures depend on returns
received from total investible funds and interest rate.

12 (Vasavi & Reddy, 2020) analysed that there is a significant difference in the earnings and
profitability performance of ICICI Prudential Life Insurance and SBI Life Insurance. The
findings suggested that ICICI Prudential Life Insurance outperformed SBI Life Insurance for
two indicators of the three indicators chosen for the report. ICICI Prudential Life Insurance
has shown itself to be a more stable insurer by having a higher mean valuation for the income
on investments ratio and return on equity ratio. Although ICICI Prudential Life Insurance has
taken SBI Life Insurance’s lead over the whole study period in retaining the higher
investment earnings ratio, it is evident that its results include a persistent decrease in its
investment earnings ratio.

13. (Neelaveni, 2012) evaluated the performance of five life insurance companies in the
period of 2002-03 in terms of various plans and policies on the basis of annual growth rate.
The study concluded that LIC being the public sector insurance provider was lagging behind
due to competition faced by private insurers whereas in terms of financial aspects, private life
insurance providers were doing well.

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 INTERNATIONAL REVIEWS:
1. According to (McKinsey, 2011) the Indian Life Insurance sector is the lowest-profit market
for shareholders in all Asian nations, However, according to IRDA figures in 2010-11, the
Life insurance industry showed net income of Rs 26,57 billion compared to a net loss of Rs
9,89 billion in 2009-10.

2. (Malik, 2011) determined the relationship of profitability and internal factors of insurance
companies in Pakistan. Multiple regression models have been used to determine specific
factors under which profitability has been taken as a dependent variable while age, size of
company, volume of capital, leverage and loss ratio as independent variables .The study
covered the time period from 2005 to 2009. The findings suggested that there was no
relationship of profitability with age, but significant positive relationship with size and
volume of capital, and significantly negative relationship with loss ratio and leverage.

3. (Bikker, 2012) investigated the competitiveness and efficiency in the Dutch Life Insurance
Industry by the evaluation of unused scale economies and measuring efficiency market share
dynamics between 1995 to 2010. The result of the study showed that economies significantly
decrease with size of insurer and unused economies of scale did not exist under strong
competition.

4. ( Akotey, Sackey, Amoah , & Manso, 2013) examines in particular the main drivers of
Ghana's life insurance industry's profitability. The annual financial statements of ten life
insurance companies covering a period of 11 years (2000‐2010) were sampled and analysed
through panel regression. The results showed that while gross written premiums relate
positively to the performance of profits by insurers, their relationship to investment income is
negative. The findings also revealed that life insurers suffered considerable damages as a
result of overtrading and price reductions.

5. (Ayele, 2012) explores the effect on Ethiopia's success of the insurance industry from
2003 to 2011 for the period of 9 years. The samples taken for this analysis are 9 Life
Insurance Companies. The findings of the regression analysis shows that the most important
determinants of the success of life insurance industry are leverage, scale, amount of stock,
growth and liquidity, while ROA has statistically negligible relation to, age and tangibility.

11
 6. In (Greene & Segal , 2004) Research 'Profitability and Economical efficiency in the U.S.
Life insurance industry' the relationship between cost inefficiency and sustainability has been
discussed in the US Life Insurance Industry. An established, dynamic life insurance market
can be the primary engine of sustainability and cost-effectiveness. The study indicates that
cost inefficiency is significant in comparison to profits in the life insurance sector and that
inefficiencies are adversely correlated with performance ratio including equity income.

7. (Smajla, 2014) highlighted Croatian insurance firms level of financial well-being using
CARAMEL Model. This research is being conducted in Croatia on 24 insurance
undertakings. The study found that company liquidity ratios were not good and suggests that
the health of the insurance firms capital adequacy and liquidity indicators be taken into
account by the Croatian regulatory bodies.

12
 CHAPTER 3:

RESEARCHMETHODOLOGY

Objectives of the Study

Research Hypothesis

Scope of the Study

Research Design

Limitation of the study

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 OBJECTIVES OF THE STUDY:

The main objective of the present study is to study the financial performance of SBI and
ICICI Prudential life insurance companies. The other objectives of the present study are the
followings.
I. To evaluate the financial soundness, business efficiency and overall performance of SBI
Life Insurance and ICICI Prudential Life Insurance.
II. To analyse the solvency, profitability and liquidity position of SBI Life Insurance and
ICICI Prudential Life Insurance for last three years (i.e. FY 2020 to FY 2023).
RESEARCH HYPOTHESIS:

H0: There is no significant difference between Current Ratio of SBI Life Insurance and
ICICI Prudential Life Insurance.

SCOPE OF THE STUDY:

The present study is based on secondary data, which has been extracted from different
websites, National and International articles as well as annual reports of ICICI Prudential Life
Insurance and SBI Life Insurance. To analyse the quantitative data, the ratio analysis has
been used. For the purpose of the present study, two renowned private life insurance
companies in India namely, ICICI Prudential Life Insurance and SBI Life Insurance are
selected. This study aims to examine the profitability performance of ICICI Life and SBI
Life during the period 2021-22 to 2022-2023.

RESEARCH DESIGN:

SAMPLE OF THE STUDY:

The sample for this study includes 2 Indian life insurers namely, ICICI Prudential Life
Insurance and SBI Life Insurance.

DURATION OF THE STUDY:

The research analyses the data for 3 years from 2017-18 to 2019-20

SOURCE OF DATA:

This study mainly depends on the secondary data. The relevant and required data were
collected from the text books, websites, National and International articles, as well as annual
reports of ICICI Prudential Life Insurance and SBI Life Insurance.

14
TOOLS and TECHINIOUE:

The present study is an analytical study. For the analysis of data in the form of various
profitability ratios, liquidity ratio, Persistency Ratio, Solvency Ratio and the statistical tools
like T-Test have been employed.

LIMITATION OF THE STUDY:

➢ The data collected for the study depends on published financial statements of the
companies which may incorporate some drawbacks.
➢ The horizon of the study merely confined to very less number of variables as the
determinants of insurance company's profitability and measuring financial
performance without considering any overall performance measurement tool.
➢ The data which has been used for the study mainly secondary data, so limitation of
secondary data remains with it and also applies to this study.
➢ The Financial statement study is based on only three years.

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 CHAPTER 4:

DATA REPRESENTATION AND ANALYSIS

Data Representation & Interpretation

Hypothesis Testing

14
 DATA REPRESENTATION AND INTERPRETATION:

LIQUIDITY RATIOS:

Liquidity is a very critical part of a business. Liquidity is required for a business to meet its
short term obligations. A higher liquidity ratio represents that the company is highly rich in
cash.

Liquidity ratios determine how quickly a company can convert the assets and use them for
meeting the dues that arise. The higher the ratio, the easier is the ability to clear the debts and
avoid defaulting on payments.

This is a very important criterion that creditors check before offering short term loans to the
business. An organisation which is unable to clear dues results in creating impact on the
creditworthiness and also affects credit rating of the company.

A. Current Ratios – Current Ratio also known as the working capital ratio is the most
widely used ratio. The current ratio is a measure of a company’s ability to pay off the
obligations within the next twelve months. This ratio is used by creditors to evaluate whether
a company can be offered short term debts. Thus, Current Ratio is a measurement of financial
health of enterprise.

Computation: The formula for calculating Current Ratio is:

Current Ratio = Current Assets

Current Liabilities

The ideal level of Current Ratio is 2:1. The ratio is considered as safe margin of solvency due
to the fact that if the current assets are reduced to half, then also the creditors will be able to
get their payments in full.

17
Significance of Current Ratio

• This financial metric helps to determine a company’s immediate financial standing.

• A higher ratio often indicates greater liquidity and more stability.

• The financial tool helps to understand a firm’s working capital requirement more
effectively.
• It comes in handy for making an informed investment-related decision.

TABLE 1 - CURRENT
RATIO
YEAR SBI LIFE INSURANCE ICICI PRUDENTIALLIFE INSURANCE

MAR 2018 1.83 0.79

MAR 2019 1.78 0.91

MAR 2020 1.93 1.15

GRAPH 1-CURRENT RATIO

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Interpretation:

➢ Graph 1 depicts that the current ratio is fluctuating during the study period in the case
of SBI Life Insurance. A considerable decline in the current ratio from 1.83 in FY
2018 to 1.78 in FY 2019 and an increase in the ratio from 1.78 in FY 2019 to 1.93 in
FY 2020 can be observed from the graph whereas there is a constant increase in the
current ratio of ICICI Prudential Life Insurance from FY 2018 to FY 2020 i.e. from
0.79 to 1.15 respectively.

➢ The Current ratio is higher in SBI Life Insurance than ICICI Prudential Life Insurance
for all the years during the study period.
B. Quick Ratios- Quick Ratio also known as Liquid Ratio is used to determine whether a
company or a business has enough liquid assets which are able to be instantly converted into
cash to meet short term financial obligations.

Computation: The formula for calculating Quick Ratio is:

Quick Ratio = Quick Assets

Current Liabilities

Quick ratio of 1:1 is an accepted standard, since for every rupee of current liabilities, there is
a rupee of quick assets.

Significance of Quick Ratio:

It is precisely an indicator of a company’s ability or limitation in discharging its debts and

obligations. A company’s lenders, suppliers and investors rely on quick ratio to determine if
it has enough liquid assets for discharging its short-term liabilities.

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 TABLE 2 - QUICK RATIO
YEAR SBI LIFE INSURANCE ICICI PRUDENTIALLIFE INSURANCE

MAR 2021 1.83 0.79

MAR 2022 1.78 0.91

MAR 2023 1.93 1.15

20
Interpretation:

➢ Graph 2 depicts that the quick ratio is fluctuating during the study period in the case
of SBI Life Insurance. A considerable decline in the quick ratio from 1.83 in FY 2018
to 1.78 in FY 2019 and an increase in the ratio from 1.78 in FY 2019 to 1.93 in FY
2020 can be observed from the graph whereas there is a constant increase in the quick
ratio of ICICI Prudential Life Insurance from FY 2020 to FY 2023 i.e. from 0.79 to
1.15 respectively.

➢ The Quick ratio is higher in SBI Life Insurance than ICICI Prudential

Life Insurancefor all the years during the study period.

PROFITABILITY RATIOS:

The primary objective of each business enterprise is to earn profits. In fact profit earning is
considered essent ia l not onlN
yetf oPrrothfiet Rsautr ivoiv=al of thN
e etbuPsrionfeitss but is also xr1e0qu0ired for its
expansion and diversification. Profitability ratios are a type of accounting ratio that helps in
Revenue from Operations
determining the financial performance of business at the end of an accounting period.
Profitability ratios show how well a company is able to make profits from its operations.

Net Profit Ratio (%) – This ratio establishes the relationship in terms of percentage
between Net Profit and Revenue from Operations, i.e., Net Sales. It shows the percentage of
Net Profit earned on Revenue from Operations.

Computation: The formula for calculating Net Profit Ratio is:

20
Higher the net profit ratio, better the business.

Significance of Net Profit Ratio:

• Investors, shareholders and business owners can review the firm’s net profit margin
toanalyse its growth trends effectively.

• Net Profit Ratio is an indicator of overall efficiency of the business.

20
 TABLE 3-NET PROFIT RATIO (%)
YEAR SBI LIFE INSURANCE ICICI PRUDENTIAL

LIFE INSURANCE

MAR 2021 89.77 88.57

MAR 2022 88.20 66.36

MAR 2023 73.33 40.35

Interpretation:
➢ Graph 3 depicts that there is a considerable decline in the Net Profit Ratio from
89.77% in FY 2021 to 73.33% in FY 2022 in the case of SBI Life Insurance and from
88.57% in FY 2021 to 40.35% in FY 2023 in the case of ICICI Prudential Life
Insurance.

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 PERSISTENCY RATIO (%)

Persistency is a key parameter for insurance companies. It measures the proportion of

policy holders who have continued with their policies. It indicates the ability of the
Company to retain customers. In India, the persistency ratios are published for the 13 th
month, 25th month, 37th month, 49th month and 61st month as majority of savings
regular premium policies have a minimum 5-year premium payment period.
Computation: The formula for calculating Persistency Ratio is:

Persistency Ratio = Number of Policyholders Paying the Premium x 100

Net Active Policyholders

Higher Persistency Ratio indicates a large pool of satisfied customers

Lower Persistency Ratio indicates inability to retain customers.
Significance of Persistency Ratio:

• It’s important for insurers to maintain a persistent book as it contributes to profitability.

• It gauges the trust customer have in long-term products and services being offered
by theinsurer.

A. PERSISTENCY RATIO% [13TH MONTH] –

The 13th month persistency measures the renewal premium paid by the policyholder
at the commencement of the second year.
It reflects the quality of the sale made by the company.

20
 TABLE 4- PERSISTENCY RATIO % [13TH
MONTH]
YEAR SBI LIFE INSURANCE ICICI PRUDENTIAL

LIFE INSURANCE

MAR 2021 83.0 86.8

MAR 2022 85.1 86.2

MAR 2023 86.1 86.8

The 13th month persistency ratio is higher in ICICI Prudential Life Insurance than

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 SBI Life Insurance for all the years during the study period.

B. PERSISTENCY RATIO% [49TH MONTH] -

The 49th month persistency measures the renewal premium paid by the policyholder
at the commencement of the fourth year.
The 49th month tells about the ability of the Insurance Companies to retain their
customers.

TABLE 5- PERSISTENCY RATIO % [49TH

MONTH]
YEAR SBI LIFE INSURANCE ICICI PRUDENTIAL

LIFE INSURANCE

MAR 2021 63.9 64.2

MAR 2022 66.4 65.0

MAR 2023 67.3 67.3

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20
Interpretation:

Graph 5 depicts that the 49th month persistency ratio (based on premium) has
increased from 63.9% in FY 2020 to 67.3% in FY 2023 in case of SBI Life Insurance
and from 64.2% in FY 2021 to 67.3% in FY 2020 in the case of ICICI Prudential Life
Insurance.
The 49th month persistency ratio is lower in SBI Life Insurance in the FY 2021, it
becomes higher than ICICI Prudential Life Insurance in the FY 2022 and then
becomes equal to ICICI Prudential Life Insurance in the FY 2023

SOLVENCY RATIO (%)

Solvency is a regulatory measure of capital adequacy. It is critical in determining any

organisation’s ability to meet future contingencies and fund growth plans. It defines how
good or bad an insurance company’s financial situation is on defined solvency norms. IRDAI
mandates a minimum solvency ratio of 150% to minimise bankruptcy risk. (Khatri, 2020)

Computation: The formula for calculating Persistency Ratio is:

Solvency Ratio = Available Capital

Required Capital

Higher the solvency ratio, the greater the chances of policyholders claim getting paid.

Lower Solvency ratio indicates inability of the Company to pay claims and meet future
contingencies.

Significance of Solvency Ratio:

Solvency ratio is an indicator of a company’s financial capacity to meet both short-

20
 TABLE 6- SOLVENCY RATIO (%)
YEAR SBI LIFE INSURANCE ICICI PRUDENTIAL

LIFE INSURANCE

MAR 2021 206 252

MAR 2022 213 215

MAR 2023 195 194

Interpretation:

Graph 6 depicts that the solvency ratio of SBI Life Insurance witnessed an increasing
trend from 206% in the period 2019- 2020 to 213% in the period 2020- 2022, but in

The Solvency ratio is higher in ICICI Prudential Life Insurance for the FY 2021 and

29
 FY 2022 by 46% and 2% respectively whereas it is lower than SBI Life Insurance for
the FY 2023 by 1%.

HYPOTHESIS TESTING:

T –TEST

SBI LIFE ICICI PRUDENTIAL

INSURANCE LIFE INSURANCE

Mean 1.846667 0.95
Variance 0.005833 0.0336

Observations 3 3

Pearson Correlation 0.785714

Hypothesized Mean 0
Difference

Df 2

t Stat 11.76255

P(T<=t) one-tail 0.003575

t Critical one-tail 2.919986

P(T<=t) two-tail 0.00715

t Critical two-tail 4.302653

Results

Since p is less than p< 0.05, H0 is rejected and hence it is proved that there is a significant
difference between Current Ratio of SBI Life Insurance and ICICI Life Insurance.

30
 CHAPTER 5:

RESULTS AND DISCUSSIONS

Major Findings

Discussions & Suggestions

Conclusion

31
MAJOR FINDINGS:

The Insurance Sector is growing and grooming from subsequent past years
considering their achievements and financial reports of both the companies.
The Current Ratio of ICICI Prudential Life Insurance indicates that current liabilities
of the enterprise are greater than their current asset which means that the enterprise
would be unable to meet its short –term financial obligations if they become due.
ICICI Prudential is not in a good financial health.
The Current Ratio of SBI Life Insurance indicates that the current liabilities of the
enterprise are lower than their current asset which means that the enterprise would be
able to meet its short –term financial obligations if they become due. SBI Life
Insurance gives the evidence of sound liquidity position.
SBI Life Insurance has higher Current Ratio than ICICI Prudential Life Insurance
during the study period which shows that SBI Life Insurance has better Liquidity
Position than ICICI Prudential Life Insurance.
The Quick Ratios and Current Ratios of both the companies are same which means
that there are no inventories and prepaid expenses in both the firms.
There is a decline in the Net Profit Ratio during the study period of 3 years which
shows deterioration in the operational efficiency of both the firms.
The Net Profit Ratio is higher in SBI Life Insurance than ICICI Prudential Life
Insurance during the study period which shows that SBI Life Insurance is performing
its operations more efficiently than ICICI Prudential Life Insurance.
The 13th month persistency ratios are improved from what they were in FY18 which
reflects that there is a rise in the sale of both the companies Insurance policies.
ICICI Prudential Life Insurance has higher 13th month persistency ratio than SBI Life
Insurance during the study period which shows that there are more sales of ICICI
Prudential Life Insurance than SBI Life Insurance.
The 49th month persistency ratios are improved from what they were in FY18 which
implies that the associated policyholders are satisfied with the customer service,
customer loyalty, product utility, post sales service, returns on their product, product
portfolio, etc. and are renewing their policies even after commencement of the fourth
year.

32
 Both the companies are at equal position in terms of 49th month persistency ratio for
the FY 2020 which shows that both the companies have same ability to retain their
customers in the particular year.
Both the Companies have a solvency ratio more than the mandatory requirement of
150% during the study period which shows that both the companies have enough
buffers to settle all claims in extreme situations.
Since p is less than p< 0.05, H0 is rejected and hence it is proved that there is a
significant difference between Current Ratio of SBI Life Insurance and ICICI Life
Insurance.

DISCUSSION AND SUGGESTIONS:

It is suggested to ICICI Prudential Life Insurance to raise extra finance to meet their
short-term financial obligations.
In my opinion, it will be beneficial to both the companies if they cut down their
expenses to increase their net profit as the study shows decline in their Net Profit
Ratio during the study period of 3 years.
Both the companies should look for the factors which are leading to deterioration of
their operational efficiency and taking necessary measures to counter them.
Since p is less than p< 0.05, H0 is rejected and hence it is proved that there is a
significant difference between Current Ratio of SBI Life Insurance and ICICI
Prudential Life Insurance.

32
 CONCLUSION:
The study has aimed to examine the financial performance of Indian life insurance companies

i.e. SBI Life Insurance and ICICI Prudential Life Insurance through analysing the
determinants of their profitability. Performance of companies can affect economy as a whole
and therefore it requires empirical analysis to judge the performance. For measuring financial
performance, financial ratios such as Liquidity Ratio, Profitability Ratio, Persistency Ratio
and Solvency Ratio have been calculated. T-Test was also conducted to check if there was a
significant difference between the Current Ratio of SBI Life Insurance and ICICI Prudential
Life Insurance .The study evaluated that SBI Life Insurance have sound liquidity position and
ICICI Prudential Life Insurance is not in a good financial health. Profitability measure of SBI
Life Insurance is better than ICICI Prudential Life Insurance. But, there is a decline in the

33
Profitability Ratio during the study period which shows deterioration in the operational efficiency of
both the firms. Hence, both the firms needs to adopt immediate corrective measures to arrest the
downfall in the ratio .As far as 13th persistency ratio is concerned the performance of ICICI
Prudential Life Insurance is better than that of SBI Life Insurance but it can be seen that SBI Life
Insurance is trying to increase their ratio over the previous yearsand has reached very near to the
ratio of ICICI Life Insurance in FY 2020.Both thecompanies are at equal position in terms of 49th
month persistency ratio for the FY 2020 which shows that SBI Life Insurance is equally cable to
retain their customers than that of ICICI Prudential Life Insurance and is better in FY 2019 . From
the analysis of T-Test results, it is clear that there is a significant difference between Current Ratio
of SBI Life Insurance and ICICI Prudential Life Insurance .Thus, in the light of above findings, it
can beconcluded that SBI Life Insurance is performing better than ICICI Prudential Life Insurance.

34
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 QUESTIONNAIRE

1. What types of life insurance policies does ICICI Prudential offer?

2. What is the maximum age limit for buying ICICI Prudential's term insurance policy?

3. What is the minimum entry age for the ICICI Prudential Child Plans?

4. What is the minimum premium payment term for ICICI Prudential's ULIP policies?

5. What is the death benefit payout option for ICICI Prudential's term insurance policy?

6. What is the minimum sum assured for ICICI Prudential's term insurance policy?

7. What is the minimum annual premium for ICICI Prudential's ULIP policies?

8. What is the policy term for ICICI Prudential's Savings and Income Plans?

9. What is the maximum maturity age for ICICI Prudential's ULIP policies?

10. What is the waiting period for ICICI Prudential's critical illness rider?

38