Page 17 - Insurance Times December 2023

domestic and foreign insurers are still The NBP expansion for private life Leaders in the bidding for
vying for market dominance. Large insurers was estimated by ICRA to be
multinational corporations have been 13.16% to 1.571.59 lakh crore in FY24 RIL's Rs. 20,000 crore
expanding steadily throughout Asia and 14.16% to 1.801.87 lakh crore in bond offering are insurers
over the last five years, steadily taking FY25. Additionally, their market share
Insurers will be very interested in
market share away from local insurers in NBP is anticipated to rise from 37% Reliance Industries' (RELI.NS)
and smaller multinational in FY23 to 40% by FY25.
impending bond offering, which is
corporations. In terms of market The industry's individual net benefit per expected to be the second-largest
share, MNCs predominate in rising share (NBP) increased 15.4% year over
nations like Malaysia and Thailand, year in FY23 to Rs. 1.45 lakh crore, for an Indian company. A
where this tendency is especially partially due to the noteworthy rise in competitive bidding process would
visible. the assured nonpaticipating person allow the conglomerate to borrow
money at rates that barely beat the
The two most unusual countries are segment. sovereign yield, according to a
China and India, where local firms like
The imposition of taxes on the returns number of merchant bankers.
Ping An Life and the Life Insurance from these insurance if the yearly The company, led by the billionaire
Corporation of India, respectively, are
premium paid was more than Rs. 5 lakh Mukesh Ambani, wants to raise
in charge. However, local and joint was another factor in the expansion.
venture insurers, as well as foreign According to ICRA's report, this $2.40 billion through 10-year notes,
insurers, have been gaining market adjustment took effect in April 2023 the most since May 2020.
share from these nations' leaders. and resulted in a significant premium Long-term investors, such as
rise in FY23. pension funds and insurance, are in
According to ICRA, life demand. This RIL issue comes at a
good moment because there
insurers' new business At Rs. 17,469 crore, LIC haven't been many corporate bonds
premiums will increase by reports its highest-ever issued with longer tenors in the
recent two quarters, according to
9-12% in FY24. half-year profit. Badrish Kulhalli, head of fixed
According to ICRA, the new business Life Insurance Corporation (LIC) income at HDFC Life Insurance.
premium (NBP) for the life insurance reported its highest-ever half-yearly
Using 10-year notes with a 7.97%
market is anticipated to increase by profit of Rs. 17,469 crore for the first
coupon, HDFC raised 250 billion
1113 percent to Rs. 4.494.66 lakh half of FY24. This was primarily due to rupees in February, the largest bond
crore in FY25, from Rs. 3.71 lakh crore the transfer of Rs. 13,768 crore, or the issue by an Indian business.
in FY23, and by 912 percent to Rs. accretion on available solvency margin,
4.064.14 lakh crore in FY24. from the nonparticipating policy- "Reliance's longer-tenor bond issue is
The gross premium written (GPW) is holders' fund to the shareholders' very attractive and we expect around
50%-70% of the issue size to be taken
anticipated to rise from Rs. 7.86 lakh account.
up by LIC, and another 10%-20% by a
crore in FY23 to Rs. 8.568.64 lakh The profit after tax of Rs. 16,635 crore
state-run provident fund house," a
crore in FY24 and Rs. 9.379.55 lakh for the same period last year is not fully
banker with knowledge of the
crore in FY25 due to a consistent comparable because it included a
development stated.
increase in renewal premium revenue. similar transfer of Rs. 4,542 crore for
Reuters emailed Reliance and LIC
"The private sector is still driving the same six-month period. As a result, asking for comments, but they never
development in both individual and the comparable PAT is Rs. 12,093
group companies, notwithstanding the crore, meaning that the profit for the responded.
decline in NBP for LIC's group business. first quarter of FY24 increased by According to traders, the
As a result, Neha Parikh, Vice President 44.5% year over year. Regarding the corporation is expected to receive
and Sector Head of Financial Sector transfer of this sum (net of tax), LIC bids between 7.70% and 7.80%, or
Ratings, stated, "We anticipate that modified its accounting policy in about 30-40 basis points (bps) over
the NBP expansion for the private September 2022. As a result, in FY23, the yield on the benchmark 10-year
sector will keep up with the industry it transferred Rs. 27,241 crore to the government bond on an annualized
growth." shareholders' account. basis.

16 December 2023 The Insurance Times