Financial soundness in Indian insurance sector: A comparison between two leading life insurers

Joy Chakraborty, P. Sengupta
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Abstract

In the pre-reform era, Life Insurance Corporation of India (L.I.C.I) dominated the Indian Life Insurance market. But the situation drastically changed since the beginning of the year 2000. With the development of the IRDA Act in 1999, private players started entering into the life insurance market. At the end of the FY 2011-12, there were 24 life insurance companies (inclusive of 1 public sector player), (L.I.C.I) operating in India. The present paper attempts to compare the level of financial soundness of two leading life insurers in India namely Life insurance Corporation of India (LICI) and ICICI Prudential Life Insurance Company Limited (ICICI Pru). The former is the sole public-sector life insurance player whereas the latter is a dominant private-sector life insurance player in India at present. As financial intermediaries, life insurers tap savings of the public in the form of premium. Hence, they should be financially viable to maintain the timely and anticipated returns of the public. In this regard, the International Monetary Fund (IMF) has come up with the CARAMELS model to analyze the financial soundness of several organizations spread across different industries. This study makes an attempt to analyze the financial soundness of two dominant life insurance players operating in India based on the CARAMELS framework in terms of capital adequacy, asset quality, reinsurance, management soundness, earnings and profitability, liquidity and solvency parameters.
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印度保险业的财务健全性:两家主要人寿保险公司的比较
在改革前,印度人寿保险公司(Life Insurance Corporation of India, l.i.c.i.)主导着印度人寿保险市场。但自2000年初以来,情况发生了巨大变化。随着1999年IRDA法案的发展,私人参与者开始进入人寿保险市场。截至2011-12财年末,印度共有24家人寿保险公司(包括1家公共部门参与者)(l.i.i.)在运营。本文试图比较印度两家领先的人寿保险公司的财务稳健性水平,即印度人寿保险公司(LICI)和ICICI保诚人寿保险有限公司(ICICI Pru)。前者是目前印度唯一的公共部门人寿保险公司,而后者是占主导地位的私营部门人寿保险公司。作为金融中介,寿险公司以保费的形式利用公众的储蓄。因此,它们在财务上应该是可行的,以维持公众及时和预期的回报。因此,国际货币基金组织(IMF)提出了“CARAMELS模型”,对分布在不同行业的多个机构的财务健全性进行分析。本研究试图基于CARAMELS框架,从资本充足率、资产质量、再保险、管理健全性、收益和盈利能力、流动性和偿付能力参数等方面分析在印度经营的两家主要寿险公司的财务健全性。
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