Chapter - VI FUND UTILISATION OF LIFE INSURANCE COMPANIES

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1 Chapter - VI FUND UTILISATION OF LIFE INSURANCE COMPANIES The previous chapters have given the details pertaining to the direct and indirect funding made by LIC in Kerala, the sector wise and industry wise distribution of the same and a comparison between the operations in Kerala and India. This chapter deals with the various strategies and approaches adopted by public and private insurance companies in India, with special reference to the financial sector. This section is to deal with the changes in the outlook of LIC particularly in the structure and pattern of investment and to evaluate the contribution made by Life Insurance Companies in general, to Development Finance. Basically this chapter narrates the various approaches made by both the public and private insurance companies. The recent economic reforms relating to the financial sector becomes applicable to insurance sector and it made the areas previously specified for public sector accessible to the private sector; the part of the government

2 shareholding in selected public sector enterprises is being offered to the public; the regulation over the capital market and the banking sector has become strengthened; and there comes the high pre-emption of insurance company s funds through government mandated investments. Liberalisation, Privatization and Globalisation (LPG) had made branding as a shield to protect and advance in a stiff and competitive market. With the entry of private life insurance companies, brand has now been turned as the new religion which actually enables the financial services market, not only in facing the problem of securing and retaining customers in an increasingly competitive market place but also to experience the needs for heightened relevance of the brand proposition. This made all the competitors in the insurance market to redefine their traditional products in the context of overall financial planning. Canons of investment of insurance companies are safety, profitability, liquidity, diversification and enhanced volume of business. This has made it necessary for both the public and private life insurance companies to make concerted efforts to capitalize the situation both in the short term and long term perspective. On a broader base the skilful manipulation of Life fund remains as the mainstay of every strong player in the market, and these players make sensible mixing of a variety of products, to achieve better productivity. Though there is change in the proportion of mixing and in the level of concentration on certain selected, branded and conventional products, the competition of life

3 insurance companies are mainly confined to life fund, pension and annuity fund, other funds and unit linked funds. The major items of fund generated and utilized by the life insurance companies in India are Life Fund, Pension & Annuity Fund, Other Funds, and Unit Linked Funds. This chapter is mainly to discuss these funds, their utilization and the market share of public and private insurance companies and also to identify the major players in private life insurance sector. The study is mainly dependent on the secondary data and the relevant data pertaining to the period , were gathered mainly from annual reports of life insurance companies, IRDA journals and websites which were duly synthesized for the purpose of analysis. Table 6.1 Total Investments made by Life Insurance Companies in India (Rs in crores) Average percentage Public sector (LIC) Private sector Total Source: Published documents of Insurance companies Average value of investment made by the life insurance companies in India came to Rs crores and percent of it (Rs crores) was contributed by the public life insurance company and 3.67 percent(rs crores) by private life insurance companies functioning in India. (Table 6.1)

4 Fig. 44 Investment by Life Insurance Companies in India Private sector, % Public sector (LIC), % Table 6.2 Total investment by private sector insurance companies in India. (Rs in crores) Average percentage ICICI Prudential Allianz Bajaj Birla Sun HDFC Standard SBI Life Tata AIG Other cos Total Source: Published documents of Insurance companies

5 Fig. 45 Investment by private life insurance companies in India Tata 5% Others. 19% ICICI 34% SBI Life 9% HDFC 10% Birla 11% Bajaj 12% The average investment made by private sector insurance companies in total came to Rs crores and the major contribution came from ICICI Prudential (32.68 percent), Allianz Bajaj (12.18 percent), Birla (10.88 percent), HDFC Standard(10.49 percent) and SBI Life (9.22 percent). ICICI prudential has contributed Rs crores, Allianz Bajaj Rs crores Birla Sun Rs crores HDFC Standard Rs crores and SBI Life Rs crores and the total investment by these five companies together amounted to percent of the total investments for various development activities in India by private life insurance companies. (Table 6.2)

6 Table 6.3 Average investments and Funds of Life insurance companies in India. (Rs in crores) Total Fund Total % to total Investments Rs in crores investment Public sector Private sector Total Source: Published documents of Insurance companies On observing the investment pattern followed by private and public life insurance companies in India from it was found that 93.6 percent of the investments of life insurance companies in general and percent of the LIC and percent of the private life insurance companies are met from various funds mobilized by the companies such as life fund, pension and annuity fund, other funds and unit linked funds. (Table 6.3)

7 Table 6.4 Sectoral Funds Utilized by Life Insurance Companies in India (Rs in crores) LIC Private Total Life fund Other Funds Pension and Annuity fund Unit linked fund Total funds Source: Published documents of Insurance companies Pension and Annuity fund, Rs % Other Funds, Rs % Unit linked fund, Rs7527 2% Fig. 46 Sectoral Funds utilised by Life Insurance Cos. In India (average) Life fund, Rs %

8 It was found that Rs crores from life fund, Rs crores from pension and annuity fund Rs crores from Other Funds and Rs crores from unit linked fund was utilized by life insurance companies in India for investments and it was observed that Life Fund had the major share of the total funds utilized by life insurance companies for investment purpose in India. On enumeration it was found that Rs crores from Life Fund, Rs crores from other funds, Rs from pension and annuity funds and Rs crores from unit linked funds were utilized for its investment purposes in India. Private insurance companies have taken Rs crores from Life Fund, Rs crores from Unit linked Funds, Rs crores from Other Funds and Rs crores from Pension and Annuity funds for investment purposes in India (Table 6.6)

9 Life fund, Fig. 47 Sectoral allocation of Funds in LIC and other Private life insurance cos. in India (Rs. crores) Pension & Unit Annuity fund, Other Pension & linked Funds, Annuity Other fund, Life fund, fund, Funds, LIC Private Unit linked fund, 4769 Life fund Pension and Annuity fund Other Funds Unit linked fund Table 6.5 Investment of Sectoral Funds by Life Insurance Companies in India- (in percentage) Life fund Other Fund Pension & Annuity fund Unit Linked Fund Total funds LIC Private Total Source: Published documents of Insurance companies percent of the total funds utilised for investment purposes was arranged from Life Fund, 2.80 percent from other funds, 9.96 percent from pension and annuity funds and 1.76 percent from unit linked fund by the life insurance companies in India. When the public life insurance company (LIC) arranged percent was from Life fund, percent from other funds, 2.64

10 percent from pension and annuity and 0.68 percent from unit linked funds, private life insurance companies utilized percent from life fund, 5.53 percent from other funds 0.40 percent from pension and annuity fund and percent from unit linked fund for investment purposes in India. (Table 6.5) It was observed that when LIC was able to depend on Life fund to the extent of percent of their investment requirements, private companies had percent dependence on life fund in this regard. The availability of accumulated fund in abundance made it possible for LIC to operate with ease and private insurance companies found it difficult to have a straight competition in this regard with LIC. Other Fund 2.8 Annuity & Pension Fund 9.96 Fund Unit Linked 1.76 Fig. 48 Sectoral Funds utilised by Life Insurance Cos. in India (%) Life fund, 85.48

11 When private life insurance companies had utilized percent of the unit linked fund for investment purpose LIC took only 0.68 percent from the same head percent of other funds were utilized by LIC for investment purpose whereas private insurance companies took 5.53 percent from this. As regards pension and annuity fund, when LIC used 2.64 percent, private insurance companies had it to the tune of 0.40 percent for investment purpose. (Table 6.5) Fig. 49 Sectoral Utilisation of Funds by LIC & Pvt. Life insurance companies in India. (%) Annuity fund Fund Life fund Other Fund Pension & Unit Linked LIC Private

12 Table 6.6 Sectoral Funds Utilised by Life Insurance Companies in India - (in percentage) LIC Private Total Life fund Other Funds Pension and Annuity fund Unit linked fund Total funds Source: Published documents of Insurance companies The study into the allocation of various funds by life insurance companies in India revealed that percent of the total funds is contributed by LIC and only 2.37 percent is the contribution of private sector. The detailed evaluation made it clear that when LIC accounted for percent of the total Life Fund put in investments, only 1.31 percent was accounted for by private life insurance companies. As for Pension and Annuity fund investment percent of it was made by LIC and only 0.01 percent was left to the private insurance companies. However, percent of the Unit Linked Fund investment is made by private sector insurance companies and the claim of LIC came to percent. (Table 6.6)

13 The study thus made it clear that, excepting a negligible contribution from private sector insurance companies, more than 95 percent of the fund invested in various sectors in India came from Life Fund, Other Funds and Pension and Annuity Fund of LIC. However, the share of utilization from Unit Linked Securities is more of the private sector than that of LIC. Table 6.7 Sectoral Investment out of Life Fund By Life Insurance Companies in India (Rs in crores) C. G. Securities SG security & other Approved Securities Infrastructure & social sector Total Public sector Private sector Total Source: Published documents of Insurance companies The survey of the utilization of Life Fund by LIC and private sector insurance companies revealed that, of the total life fund investment of Rs crores by LIC, Rs crores was in central govt. securities, Rs crores in state government and other approved securities and Rs crores in the infrastructure and social sector. The corresponding share of private insurance companies was Rs crores in central government

14 securities, Rs crores in state govt. and other approved securities and Rs crores in infrastructure and social sector. (Table 6.7) Table 6.8 Sectoral investment out of Life Fund by life insurance companies in India (in percentage ) Central Govt. Securities State Govt. security & other Appr. Securities Infrastructure and social sector Total Public sector Private sector Total Source: Published documents of Insurance companies Private sector, Fig. 50 Sectoral Investment out of Life Fund by Life insurance Cos In India (Rs crores) Public sector,

15 Infrastructure and social sector, Fig. 51 Sectoral Investment from Life Fund in India by LIC (Rs crores) State Govt security & other Appr. Securities, Central Govt.Securities, Infrastructure and social sector, Fig. 52 Sectoral investment from Life Fund by Private Life Insurance Cos. In India (Rs crores) State Govt security & other Appr. Securities, Central Govt.Securities,

16 Table 6.9 Sectoral investment out of life fund by private insurance companies in India - Rs in crores (% to total in brackets) SBI Life CG.Security (21.65) SG security 5.00 (1.74) Infrastructure and social sector (18.04) Other investment (22.91) Total (20.05) ICICI Tata HDFC (20.36) (11.49) (10.53) Bajaj (8.68) - Max New (4.01) Birla (3.12) Kotak (3.98) (72.03) (9.07) 4.99 (1.74) ING Vysya (4.88) (18.48) (7.51) (1.97) (8.60) (10.35) (3.69) (5.45) (5.41) (27.85) (1.74) (11.48) (7.81) (3.31) (2.97) (4.37) (1.54) (20.25) (8.19) (10.03) (7.98) (9.10) (3.55) (4.18) (5.03) Total Source: Published documents of Insurance companies

17 In terms of percentage LIC has made percent of Life fund investment in central govt. securities, percent in state government and another percent in infra structure and social sector. As regards private sector insurance companies it came to 1.59 percent in central government securities, 0.73 percent in state government securities and 0.89 percent in infra structure and social sector. (Table 6.8) The average amount invested by private life insurance companies in India from Life Fund came to Rs crores and the major share in it was claimed by SBI Life (Rs crores), ICICI Prudential (Rs crores), Tata AIG (Rs crores), HDFC Standard (Rs crores), Allianz Bajaj (Rs crores), Max Newyork (Rs crores), Birl Life (Rs crores), Om Kotak Mahindra (Rs crores) and ING Vysya (Rs crores). In terms of percentage it came to percent for SBI Life, percent ICICI Prudential 8.19 percent for Tata AIG, percent for HDFC Standard, 7.98 percent for Allianz Bajaj, 9.10 percent for Max Newyork 3.55 percent for Birla Sun, 4.18 percent for Om Kotak Mahindra and 5.03 percent for ING Vysya. (Table 6.9) A thorough analysis of the investment made by life insurance companies in India revealed that out of Rs crores invested in central government securities, Rs crores was made by SBI Life, Rs crores from ICICI Prudential, Rs crores from Tata AIG, Rs crores from HDFC Standard, Rs crores from Allianz Bajaj, Rs crores from Max

18 Newyork, Rs crores from Birla Sun, Rs crores from Om Kotak Mahindra, and Rs crores from ING Vysya. In percentage terms percent of it was made by SBI Life, percent from ICICI, percent from Tata, percent from HDFC, 8.68 percent from Bajaj Alliance, 4.01 percent from Max Nyl, 3.12 percent from Birla Sun, 3.98 percent from Kotak Mahindra, and 4.88 percent from ING Vysya. (Table 6.9) On analyzing the investments made by life insurance companies in India it was found that Rs crores was made in state government securities and Rs 5.0 crores was from by SBI Life, Rs crores from Max Newyork, Rs crores from Birla Sun, and Rs 4.99 crores from Kotak Mahindra. In percentage terms it came to 1.74 percent from SBI Life, percent from Max Newyork, 9.07 percent from Birla Sun, 1.74 percent from Kotak Mahindra. (Table 6.9) On analyzing the investment made by life insurance companies in India it was found that Rs crores was invested in infrastructure and social sector and Rs crores was made by SBI Life, Rs crores from ICICI, Rs crores from Tata, Rs crores from HDFC, Rs crores from Allianz Bajaj, Rs crores from Max Newyork, Rs crores from Birla Sun, Rs crores from Kotak Mahindra, and Rs crores from ING Vysya. In percentage terms percent was made by SBI Life, percent from ICICI Prudential, 7.51 percent from Tata, 1.97 percent from HDFC Standard, 8.60 percent from Allianz Bajaj, percent from Max Newyork, 3.69 percent from Birla Sun,

19 5.45 percent from Om Kotak Mahindra, and 5.41 percent from ING Vysya. (Table 6.9) On analyzing the investment made by life insurance companies in India it was found that Rs crores was made in other investments and Rs crores was made by SBI Life, Rs crores from ICICI Prudential, Rs crores from Tata, Rs crores from HDFC Standard, Rs crores from Allianz Bajaj, Rs crores from Max Newyork, Rs crores from Birla Sun, Rs crores from Om Kotak Mahindra, and Rs crores from ING Vysya. In percentage terms it was found that percent was made by SBI Life, percent from ICICI prudential, 1.74 percent from Tata AIG, percent from HDFC Standard, 7.81 percent from Allianz Bajaj, 3.31 percent from Max Newyork, 2.91 percent from Birla Sun, 4.37 percent from Om Kotak Mahindra, and 1.54 percent from ING Vysya. (Table 6.9) As for the total amount invested from the life fund, by private life insurance companies in India, SBI Life with percent, ICICI Prudential with percent, HDFC Standard with percent came ahead of others and they have together accounted for percent of the total. Private life insurance companies in India, SBI Life with percent, ICICI Prudential with percent, Tata AIG with percent and HDFC Standard with percent came ahead of others and they have accounted for percent of the total investment in Central Government securities. (Table 6.9)

20 As for the investment in state government securities, by private life insurance companies in India, Max Newyork with percent, and Birla Sun with 9.07 percent came ahead of others and they have accounted for percent of the total. As it is, the investment in infrastructure and social sector by private life insurance companies in India, SBI Life with percent, ICICI Prudential with percent, Tata AIG with 7.50 percent and Max Newyork with percent came ahead of others and they have together accounted for percent of the total. (Table 6.9) As regards the investment in other securities by private life insurance companies in India, ICICI Prudential with percent, SBI Life with percent, HDFC Standard with percent, Allianz Bajaj with 7.81 percent are ahead of others and they have accounted for percent of the total. (Table 6.9) A comparative evaluation of the life fund investment made by life insurance companies in India made it clear that related that LIC has remained unchallenged in this regard with more than 90 percent holding on central government securities, state government securities, social sector investments infrastructure and other investments across the period under review and among the players in the private sector insurance companies SBI Life and ICICI Prudential had a dominant share.

21 Table 6.10 Sectoral investment of life insurance companies in India out of other funds (Rs in crores) In central govt. securities In state Govt.and other approved securities In investment subject to exposure norms Total % to total LIC Private Total Source: Published documents of Insurance companies In investment subject to exposure norms, Fig. 53 Pension Sectoral Investment from & Annuity Fund by Life insurance Cos. in India. (Rs crores) In central govt. securities, In state Govt.and other approved securities,

22 In investment subject to exposure norms, Fig. 54 Sectoral investment by Private Life Insurance Cos in India out of Pension & Annuity Fund. (Rs crores) In state Govt.and other approved securities, 15.1 In central govt. securities, investment subject to exposure norms, Fig. 55 out of Sectoral investment Pension fund & Annuity in India by LIC (Rs. crores) central govt. securities, state Govt.and other approved securities, The total of other funds investment made by Life Insurance Companies in India amounted to Rs crores and the share of LIC came to Rs crores (95.33 percent) and that of private sector was 4.67 percent. From the total of other funds LIC has invested Rs crores in central government

23 securities, Rs crores in state government and other approved securities, Rs crores in investments subject to exposure norms. Private sector life insurance companies have invested Rs crores in central government securities, Rs 15.1 crores in state government securities and Rs crores in Investment subject to Exposure Norms. (Table 6.10) Table 6.11 Share investment out of pension and annuity fund by life insurance company in India (in percentage) Public (LIC) Private Total In central government securities In state and other approved investment investment subject to norms Source: Published documents of Insurance companies

24 Fig. 56 Sectoral investment out of Pension & Annuity Funds.(%) In central govt security In state and other approved investment investment subject to norms Public (LIC) Private On a percentage wise anlaysis it was found that percent of the average investments from other funds of life insurance companies went to central government securities, percent to state government and other approved securities and 21 percent to investment subject to Exposure Norms. It was found that of the other funds, percent of the average investment from other funds of private sector and 49.3 percent from LIC went to central government securities and percent from LIC and 2.69 percent from private sector went to state government securities and other approved securities, percent from LIC and 3.47 percent from private sector went to the investments which are covered under exposure norms. (Table 6.11)

25 Table 6.12 Investment of private life insurance companies and general annuity fund (% to total in brackets) Rs in crores ICICI HDFC SBI Life Tata Sub total Total In CG securities (30.52) (29.39) (13.86) (14.59) (88.36) (100) In SG and other approved securities (33.18) (33.18) (100) In securities subject to exposure norms (30.36) (23.42) (12.62) (12.57) (78.97) (100) Total (29.66) (27.0) (14.05) (13.67) (84.38) (100) Source: Published documents of Insurance companies Analysis of Other Fund Investment made by private sector insurance companies revealed that out of the total fund investment of Rs crores, Rs crores was in central government securities, Rs crores in state government securities and Rs crores in Securities Subject to Exposure Norms percent of the total investment made in central government securities were accounted for by ICICI prudential (Rs crores), HDFC Standard (Rs crores) and SBI Life (Rs crores), on an average. In terms of percentage it came to percent in ICICI, percent in HDFC standard, percent in SBI Life, and percent in Tata AIG. As regards the investment in state government securities percent (Rs 5.01 crores) was

26 accounted for by SBI life and rest was contributed by other private sector companies percent of the contribution to investment in Securities Subject to Exposure Norms came from ICICI Prudential (Rs crores) HDFC Standard (Rs crores), SBI Life (Rs crores) and Tata AIG (Rs crores) (Table 6.12) Table 6.13 Sectoral investments of private life insurance companies out of Other Funds (Percentage to total in brackets) Rs in crores Public (LIC) % Private % Total % In central govt securities In state govt securities and other approved investments Investments subject to exposure norms Total Source: Published documents of Insurance companies

27 Investments subject to exposure norms, Fig. 57 Sectoral investment from Other Funds in India by Life Insurance Cos.(Rs crores) In central govt securities, In state govt securties and other approved investments, s Investments subject to exposure norms, 7.81 Fig. 58 Sectoral Investment from other funds by Pvt. Life Insurance Cos. (Rs in crores) In state govt securties and other approved investments, 6.66 In central govt securities, The total amount of pension and annuity fund invested by Life Insurance companies came to Rs crores and LIC accounted for 99.9 percent of it. The share of LIC amounted to Rs crores and that of private sector came to Rs crores. These amounts were invested in central government securities, state government securities and Investments Subject to Exposure

28 Norms percent of investment in central government securities, percent in state government securities and percent of Investments Subject to Exposure Norms came from LIC and the rest from private life insurance companies. A comparison between public and private sector insurance companies in this regard made it clear that LIC had an upper hand, exceeding 99 percent in each category of investment (Table 6.13) Investments subject to exposure norms, Fig. 59 Sectoral investment by LIC in India out of Other Funds (Rs crores) In state govt securties and other approved investments, In central govt securities, When LIC made an investment amounting to Rs crores in central government securities, Rs crores in state government securities and Rs crores in Investments Subject to Exposure Norms the contribution from private sector to the above categories came to Rs crores, Rs 6.66 crores and Rs 7.81 crores respectively. (Table 6.13)

29 Table 6.14 Share of investments made out of Other Funds - (in percentage) Public (LIC) Private Total In central govt security In state and other approved security Investments subject to exposure norms Total Source: Published documents of Insurance companies On evaluating the total investment made by LIC from pension and annuity fund, it was found that percent was in central government securities, percent in state government and other approved securities and the rest percent was in Investments Subject to Exposure Norms. As far as the private sector insurance companies are concerned it came to percent, percent and percent respectively. On an average percent of the pension and annuity fund was made in central government securities, percent in state government securities and percent in Investments Subject to Exposure Norms. (Table 6.14)

30 Table 6.15 Sectoral investments made by private life insurance companies in India (Percentage to total in brackets) Rs in crores Tata SBI Life Met life Kotak Bajaj Aviva others Total In central govt. securities (54.50) 4.20 (15.57) 2.52 (9.34) 2.05 (7.60) 1.27 (4.71) 0.76 (2.82) 1.47 (5.45) (100) In state and other approved securities (19.51) 5.36 (80.48) 6.66(100) Investments subject to exposure norms (84.12) (10.24) 0.44 (5.63) 7.81 (100) Total (35.48) (26.00) 2.52 (6.08) 2.05 (4.95) 1.27 (3.06) 2.85 (6.88) 7.97 (17.55) (100) Source: Published documents of Insurance companies The total amount of investment made out of pension and annuity fund came to Rs crores and Rs crores was made in central government securities, Rs 6.66 crores in state and other approved securities, Rs 7.81 crores in Investments Subject to Exposure Norms. In terms of percentage percent of the investments made out of pension and gratuity fund by private life insurance companies in India to central government securities came from Tata AIG, percent from SBI Life, 9.34 percent from Met Life 7.60 percent from Om Kotak

31 Mahindra, 4.71 percent from Allianz Bajaj and 2.82 percent from Aviva and 5.46 percent from other companies. As far as the investment in state and other approved securities is concerned the only prominent investor was Aviva and it accounted for Rs 1.30 crores ( percent). (Table 6.15) The total amount of investment out of Pension and Annuity Fund made in Investments Subject to Exposure Norms came to Rs7.81 crores and the share of SBI Life was percent, Aviva percent, and other private insurance companies 5.64 percent; percent was invested in central government securities Rs 6.66 crores in state and other approved securities, Rs 0.44 crores in Investments Subject to Exposure Norms. In terms of value the share of SBI Life was Rs 6.57 crores, Aviva Rs 0.80 crores and that of other companies Rs 0.44 crores. (Table 6.15) A review of the investments made by private sector insurance companies out of the Pension and Annuity Fund revealed that percent of the investment in central government securities are made by Tata AIG (Rs14.70 crores), SBI Life (Rs4.20 crores), Met Life (Rs2.52 crores) and Om Kotak Mahindra (Rs 2.05 crores). The investment made in state government securities came mainly from Aviva (Rs 1.30 crores) and the rest was contributed by many other companies in a very negligible proportion. As regards the Investments Subject to Exposure Norms percent of it came from SBI Life (Rs6.57 crores). As regards the contribution of private insurance companies towards the pension and

32 annuity fund investment, SBI Life and Tata AIG were identified as the major players. (Table 6.15) Table 6.16 Investments made by life insurance companies in India- from unit linked funds (Rs in crores) LIC Private Total Other approved investments Other than approved investments Total investments Source: Published documents of Insurance companies Fig. 60 Sectoral investment by Life Insurance Cos. in India. (Rs crores) LIC PVt. Ins. Co

33 Other than approved investments, Fig. 61 Sectoral Investment by LIC out of Unit Linked Fund in India (Rs in cores) Other approved investments, Fig. 62 Sectoral Investments Out Of Unit Linked Fund In India, By Pvt. Other than approved investments, Life Insurance Cos. Other approved investments, Investments made from unit linked fund by life insurance companies in India was made in two different forms. i.e. other approved investments and other than approved investments. Investments made in approved funds came to percent and that of other than approved investments came to percent of the total investment. The share of LIC in this came to percent and that of

34 private sector insurance companies to percent. The investments made by private insurance companies came to Rs crores and that of LIC to Rs crores on an average. Investments made in other than approved investments by LIC came to Rs210.8 crores and that from private sector to Rs crores on an average. (Table 6.16) TABLE 6.17 Average investment made by life insurance companies from Unit Linked Funds (in percentage) LIC Private Total Other approved investments Other than approved investments Total investments Source : Published documents of life insurance companies The total unit linked fund investment made by private sector insurance companies in other approved investments was percent and that of LIC was percent. As regards investments in Other than Approved Investments, it came to percent for private sector and percent for LIC. (Table 6.17)

35 Table 6.18 Major players in Unit Linked Investments in India Rs in crores (percentage in brackets) Other approved investments Other than approved investment Total ICICI (45.33) (75.38) (49.01) Birla (25.03) (13.40) (23.61) Bajaj (8.03) (5.66) (7.74) HDFC (6.69) (1.79) (6.09) sub total ( 85.08) (96.23) (86.45) other companies (10.92) (3.77) (15.55) Total Source: Published documents of Insurance companies Total investment in unit linked fund investment by private life insurance companies in India came to Rs crores and percent was accounted for by ICICI Prudential, percent by Birla Sun, 7.74 percent by Allianz Bajaj, 6.09 percent by HDFC Standard, and percent by other companies. In terms

36 of absolute values it came to Rs crores from ICICI prudential, Rs crores from Birla Sun, Rs crores from Allianz Bajaj, Rs crores from HDFC Standard, and Rs crores from other companies. (Table 6.18) The investment of Unit Linked Fund by private sector life insurance companies disclosed that Rs crores was invested in other approved investments while Rs crores in other than approved investments percent of the total amount in other approved investments was accounted for by ICICI Standard (Rs crores), Birla Sun (Rs crores), Allianz Bajaj (Rs crores) and HDFC Standard (Rs crores). The claim of Birla Sun was percent, Allianz Bajaj 8.03 percent, HDFC Standard 6.69 percent and other companies together came to percent. (Table 6.18) percent of the total amount in other approved investments was accounted for by ICICI Prudential (Rs crores), Birla Sun (78.38 crores), Allianz Bajaj (Rs33.10 crores) and HDFC Standard (Rs10.49 crores). In terms of percentage, ICICI Prudential claimed percent and the claim of Birla Sun, Allianz Bajaj and HDFC Standard came to 13.4 percent, 5.66 percent and 1.79 percent respectively. (Table 6.18) A survey of the level of participation and various strategies of fund allocation by the major players revealed that public sector life insurance companies with their wide network, well established administrative set up, brand name, availability of huge sums of life fund and its assets structure have given

37 them absolute dominance in this regard. Life fund, other funds, pension and annuity funds and unit linked funds accounted for percent of the total investments in insurance sector in India and LIC has a share of percent in it. Out of the total life funds invested in India by insurance companies percent was from the life fund of LIC, percent of the other funds 99.9 percent of the pension fund and annuity fund as well as percent of unit linked fund was released from LIC. The investment from Life fund, other funds and pension and annuity fund was mainly made in central government securities, state government and other approved securities, infra structure and social sector, investments subject to exposure norms, other approved investments and other than approved investments percent of the investment in central government securities, percent of the investments is state government securities and percent of the investments subject to exposure norms made from pension and annuity fund of life insurance companies came from LIC and the rest from private sector percent of the unit linked funds of the insurance companies was invested in other approved schemes and percent was in other than approved schemes. When LIC has made percent of the investments in other approved schemes and percent in other than approved schemes from Unit Linked fund of LIC, percent of the investments in other approved schemes and percent

38 of the investments in other than approved schemes came from unit linked fund of private sector insurance companies. As regards to the allocation of life fund by private life insurance companies, SBI Life, ICICI Prudential, Tata AIG, HDFC Standard and Allianz Bajaj were the leading players. As for other funds, Tata AIG SBI Life, Met life and Om Kotak Mahindra were the top order players As far as the utilization of pension fund and annuity is concerned ICICI Prudential, HDFC Standard, SBI Life and Tata were identified as the major players. As regards the total utilization of Unit Linked fund in private sector, ICICI Prudential, Birla Sun, Allianz Bajaj and HDFC Standard were identified as the major players.

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