SJIF Impact Factor: 6.473 ISI Impact Factor: 0.

815 Print ISSN: 2348 – 814X

EPRA International Journal of Environmental Economics, Commerce
& Educational Management (ECEM)
Volume: 6 September-August 2019-2020

ANALYSIS OF FINANCIAL PERFORMANCE OF SELECTED

PRIVATE LIFE INSURANCE COMPANIES

Ms. Rathnavathi K
Research Scholar, S.D.M. Research Centre, Ujire, Karnataka, India

Dr. P.N.Udayachandra
Research Guide, S.D.M. Research Centre, Ujire, Karnataka, India

ABSTRACT
Insurance sector has been playing a vital role within the financial system and also performs significant socio-economic
function, making inroads in to the interior of the Indian economy. It also has been facilitating economic development with
an objective to build an efficient, effective and a stable insurable business in India as well as a strong base to cater to the
needs of both the real economy and socio-economic objectives of the country. Enactment of IRDA Act 1999 lead to entry of
the private insurers and the monopoly enjoyed by Life Insurance Corporation of India has been troubled. By launching
many innovations in terms of products, market channels and advertisement of products and through agent training and
customer services, private insurers created stiff competition to LICI. On this background, this paper intends to analyse the
financial soundness and performance of private life insurance companies in the light of CARAMEL parameters. From the
study it is clear that Indian private life insurance companies are satisfactorily financially sound on the whole. However the
researcher observed strange weaknesses and believes that it is due to the companies have given excessive attention on
innovations in products and marketing to increase the premium without a proportionate designating the funds towards risk
management.
KEY WORDS: Insurance, Financial performance, CARAMEL
INTRODUCTION as Indian Government allowed privatization by passing
Insurance sector has been playing a vital role within the
Insurance Regulatory Development Authority Act (IRDA
financial system and also performs significant socio-economic
Act). IRDA has been established to regulate and develop
function, making inroads in to the interior of the Indian
insurance industry and to safeguard the interest of
economy. It also has been facilitating economic development
policyholders. It issued licenses and has opened life insurance
with an objective to build an efficient, effective and a stable
market to private life insurers. As a result, insurance sector
insurable business in India as well as a strong base to cater to
has grown at a rapid rate and expanded tremendously from
the needs of both the real economy and socio-economic
2000 onwards in terms of premium income, new business
objectives of the country.
policies, number of offices, agents, products etc.
Up to 19 th century the insurance was in the
The liberalization policy of Government of India opened
commencement stage. Therefore no legislation was required
the doors for private companies for entering into insurance
and usually the Indian Company Act 1883 was applicable.
business and allowed foreign direct investment up to 26% in
Since 1956, with the nationalization of insurance sector, till
the year 2000. As a result, four private life insurance
the year 1999, Life Insurance Corporation of India (LICI)
companies were established in India in 2002 and the number
had a complete monopoly over the Indian life insurance
of private insurance companies in insurance sector is increased
business. The year 1999 was the landmark in insurance sector,
year by year and now, the Indian life insurance market currently
66 Volume - 6 September - August 2019-2020
Analysis of Financial Performance of Selected Private Life Insurance Companies Ms. Rathnavathi K & Dr. P.N.Udayachandra
has 23 private insurers fighting a fierce battle for taking the hand, the growth rate of HDFC Life Insurance Company is
largest possible slice of the growing life insurance market and the highest followed by SBI life and if this trend continues
at the same time maintaining their current hold. private companies will soon overtakes the growth trend in
After the entry of these private players, the market share LIC.
of Public Sector Life Insurance has been considerably reduced. Kumar Naveen (2014) in his study explains that life
For the past some year’s private insurers have launched many insurance density has continuously increased during the study
innovations in the industry in terms of products, market period except the year 2011. Despite an impressive growth
channels and advertisement of products, agent training and in life insurance density in the post reform period in India, it
customer services. is still very small to compare to other top economies of the
In the post liberalization era, the life insurance sector of world. Life insurance penetration in India has increased from
India witnessed a significant growth as there is healthy 2.15% in 2001 to 3.8% in 2011. The study reveals that after
competition from many domestic as well as foreign private opening up of the 4 insurance sectors for private participation,
insurers. There is tremendous growth potential for life India has reported an increase in both insurance density and
insurance sector in India as we have huge population and still penetration up to 2010. After 2011, it is showing a decline in
the Indian life insurance market is untapped. Further, it the trend.
indicates the growth prospects and a huge potential for life Darzi, Tanveer Ahmad (2012) in his study assesses the
insurance business in the country. financial performance of insurance industry in post
REVIEW OF LITERATURE liberalisation era in India. The analysis of overall performance
Nikhil Bhushan Dey (2015) investigated that there is was made with the help of loss ratio, expense ratio and
significant positive relationship of underwriting risk and size combined ratio and the analysis reveals that every rupee of
with financial performance (ROE) of life insurance companies earned premium is draining in the shape of claims and costs
in India under the study. There is significant negative plus some portion from non – operational income which the
relationship between volume of capital and leverage with insurers seem to adjust initially out of cross subsidisation
financial performance. However, there is insignificant positive and investment income. However, the price war in the post
relationship of tangibility and liquidity with financial detariffied regime has resulted in tapering of profit margins
performance. As a result, the study observes that Indian life from profitable segments and prevailing bearish capital market.
insurance companies should pay more attention towards size, Therefore insurers need to be choosy in business selection,
underwriting risk, volume of capital and leverage for better otherwise their funds may get drain away and to meet
financial performance. stipulated solvency norm, shareholders might not sustain
Gupta, Rupa (2014), in the study titled “Life insurance continuous funding without return resulting in the solvency
products performance evaluation and customer satisfaction of the companies.
in the regime of IRDA comparative study of LIC of India It was observed that overall financial performance of the
ICICI prudential life insurance company limited” observed selected private sector life insurance companies with special
that Net premium of LIC of India indicated an annual reference to capital structure and related ratio was the best
compound growth rate of 15.77 percent over a period of nine during the study period (2003-04 to 2012-13) in ICICI
years (2001-02 to 2009-10) whereas that of ICICI Prudential Prudential and followed by TATA AIA, SBI, Met, Birla Sun
Insurance Company Limited indicated an annual compound Life, HDFC Standard, Reliance, ING Vysya, Max Newyork
growth rate of 73.39 percent over the corresponding period. and Bajaj Allianz respectively (Varvadiya, Jignesh S 2015).
The growth analysis of the study infers that Net assets of The study further makes an inter firm comparison of net
LIC of India indicated an annual compound growth rate of profit to net premium and it finds that the Max Newyork
19.8 percent whereas that of ICICI Prudential Life Insurance LIC had generated a sizeable net profit throughout the study
Company Limited Indicated on annual compound growth rate period and ICICI Prudential Life Insurance Co. Ltd. was next
of 84.84 percent. All these indicate that net assets of ICICI one firm which also generated net profit throughout the study
Prudential Life Insurance Company Limited increased quicker period followed by Bajaj Allianz, TATA AIA, Birla Sun Life,
than LIC of India Limited. The study further suggests that as SBI and Met. While ING Vysya suffered weak profit then
the people are intended to carry Insurance policies not only HDFC standard and Reliance had maintain profitability except
for risk coverage but also for future savings, proper awareness one year loss during the study period 2003-04 to 2012-13.
campaign should be made among the villagers regarding the Further it is concluded that the earning position of seven
mobilization of savings and also to explore potentiality in firms under review were success in earning during the study
rural areas. period, while ING Vysya was under pressure in terms of
The study titled “An analysis of performance of private earning during the study period
sector life insurance companies vis a vis public sector The LIC of India has been investing its funds as per
companies and a study on analysis towards private sector IRDA regulations. The investment in India has increased over
life insurance companies” (Catherine Nirmala J (2015)) made the years from Rs. 255 crores in the year 1957 to Rs.
an analysis of the financial statements of LIC and the top 5 1,75,014.85 in the year 2001. Also there was an investment
private life insurance companies. The analysis revealed that of Rs. 476.33 crores out of India in the year 2001. It was
only LICI showed an increasing trend in Net profit when therefore concluded that the investments of LIC has increased
compared to the Net Profit of private companies. LIC has over the years which shows the development of working of
been consistently giving the mandatory 95% of the operating LIC of India, over the years and its role in the economic
surplus as bonus to policy holders. It was further found that development of country as well as the social development of
the percentage growth in LIC in the past 5 years is showing a country (Seth Neeth, 2005)
decreasing trend when compared to its own growth rate in the Bhatt Shilpa, (2012) analysed the profitability of LIC
initial 5 years of existence of private companies. On the other after liberalization policy in India taking the parameters as
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EPRA International Journal of Environmental Economics, Commerce and Educational Management|SJIF Impact Factor: 6.473|ISI I.F.Value : 0.815
premium, number of policies, claims settlement, assets growth where parameters used are premium, commission, operating
etc. This study found that the quantum of business of life expenses etc. and the analysis finds that the increase in
insurance has increased more than ten times in the span of 20 commission expenses being lower than the increase in gross
years premium and other operating expenses compared to premium
Dar and Bhat (2015) evaluated the financial performance underwritten is on the higher side.
and soundness of selected public and private life insurance STATEMENT OF PROBLEM
companies. In this paper a set of ratios have been presented Life Insurance Corporation of India (LICI) currently
and discussed to lend a hand in the analysis of a life insurer’s holds share of 71.81% of the total Indian Life Insurance market
financial and statistical returns. Three parameters taken from as against 28.19% held by all the 23 private players for the
CARAMEL model have been used to analyse and evaluate year 2016-2017. LIC’s share has decreased from its previous
the financial performance and soundness holding of 72.61 % in 2015-16, the private insurers have
Mr. Sumit Bodla Dr. Deepak TandonDr. B. S. Bodla made a gain of 0.8%. The premium underwritten in the year
(2017) endeavored to analyse the profitability of life insurance 2016-17 stands at Rs. 4, 18,476.62 crores, from the previous
companies and identifies that the life insurance industry has year’s Rs. 3,66,943.23 crores, a clear growth of 14.04%.
made a remarkable growth of premium after the entry of private During the year 2016-17, all the life insurers of India issued
players. The CAGR of net premium has been worked out at 264.56 lakh new policies. Out of these, Life Insurance
8.89 % for the last 10 year. The highest CAGR in net premium Corporation (LIC) alone has issued 201.32 lakh policies
was found in case of Max Life followed, very closely, by (76.1%) on the other hand; all the private life insurers combined
HDFC Standard, PNB MetLife and SBI Life. The market together have issued just 63.24 lakh policies (23.9%).
share of the leader i.e. LICI has been above 70% in each of the However, private players have registered a growth of 2.13%
last 10 years except 2010-11 where the same was 69.89%. against the previous year, whereas, LIC has registered a decline
Among the private sector life insurers ICICI Prudential has of 2.02%. The one thing that every individual looks before
enjoyed the highest market share in each of the last 10 years. buying a life insurance plan is the claim settlement reputation
Its share has been in the range of 3.92% to 6.92% in this of the insurer. The claim settlement ratio for 2016 -17 stands
duration. It is notable that market share, in net premium, of at 98.31% for LIC and 93.72% for the private players
HDFC Standard has been rising year after year during the combined. These facts clearly show that private insurers are
study period and the same rose to 4.52% in 2015-16 from gaining and slowly people are looking up to them to meet
1.81% in 2006-07. their insurance and investment needs. But there still remains
In recent 5 years the CAGR of underwriting income has doubt in the general population at large about private insurance
declined in case of almost every private sector company. companies. Therefore the study is basically intended to assess
However LIC, the public sector corporation is exception to the financial performance of selected private insurance
the above pattern because the underwriting income has companies.
registered an impressive CAGR (12.68%) in the recent 5 years.
In the light of above findings, it can be concluded that many
OBJECTIVES OF THE STUDY
Present study aimed to assess the financial performance
of the life insurers in India are required to improve their
of ICICI Prudential, SBI, HDFC Standard, Bajaj Allianz and
underwriting income for sustainable development. Further,
Birla Sun life insurance companies using CARAMEL model
they need to have control on expense ratio and other outflows
so as to register profits. during the period of 2007-08 to 2016-17.
Bawa and Chattha (2013), attempts to examine the STATEMENT OF HYPOTHESIS
financial performance of Indian life insurers on the basis of There is no significant difference between the selected
various parameters. For measuring it, various financial ratios life insurance companies with respect to Capital Adequacy
have been calculated taking into consideration liquidity, Ratio, Asset quality ratio, Re-insurance and Actuarial issues
solvency, profitability and leverage of the insurance players. ratio and Earning and Profitability ratios and Liquidity ratios.
Generally, performance can be estimated by measuring the RESEARCH METHODOLOGY
profitability of firm and insurers. In order to accomplish the Present study seeks to examine the financial performance
aim, the study determines the impact of liquidity, solvency, of private life insurance companies in India over the post
leverage, size and equity capital on the profitability of life liberalization period. There are 23 private life insurance
insurers in India. The sample for this study includes 18 Indian companies in India, out of that 5 private life insurance
life insurers (including 1 public and17 private) and it analyses companies viz. HDFC Standard Life Insurance Company,
the data of 5 years from 2007-08 to 2011-12. The study uses SBI Life Insurance Company, Bajaj Allianz Life Insurance
multiple linear regression models to measure the extent to Company, Birla Sun Life Insurance Company and ICICI
which these determinants exert impact on life insurers’ Prudential Life Insurance Company are chosen for study.
profitability. The results of the study reveal that profitability The performance of insurance companies is measured by
of life insurers is positively influenced by liquidity and size CARAMEL (Capital adequacy, Asset quality, Reinsurance,
and negatively related with capital. Profitability does not Adequacy of claims and actuarial, Management soundness,
show any relationship with solvency and insurance leverage. Earnings and profitability, Liquidity, and Sensitivity to market
Shahid Hussain (2010) has evaluated the growth of LIC risk) parameters.
during post privatization period from 2004-05 to 2008-09

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 Analysis of Financial Performance of Selected Private Life Insurance Companies Ms. Rathnavathi K & Dr. P.N.Udayachandra

Category Indicator
Capital Adequacy Share Capital/ Total Assets
Asset Quality Equities/ Total assets
Re-insurance and Actuarial issues Risk Retention Ratio: Net Premium/ Gross Premium
Management Soundness Operating Expenses/Gross Premium
Earnings and Profitability Return on Equity: Net Income/ Equity
Return on Investment: Investment Income/ Investment Assets
Liquidity Liquid Assets/ Current Liabilities
Present study is based on secondary data and data and Journals, Daily papers and government reports relating to
information were extracted from Annual Reports of the the issues under study. The period of study was 10 years
concerned private life insurance companies and IRDA, IRDA from 2007-08 to 2016-17.
FINANCIAL PERFORMANCE OF PRIVATE LIFE INSURANCE COMPANIES
Capital Adequacy Ratio: Share Capital/ Total Assets
Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
SBI LIC 0.0954 0.0666 0.0338 0.0242 0.0207 0.0186 0.0165 0.0135 0.0120 0.0098
BA LIC 0.0106 0.0084 0.0044 0.0037 0.0037 0.0038 0.0037 0.0033 0.0033 0.0029
BS LIC 0.1800 0.1899 0.1164 0.0958 0.0893 0.0826 0.0740 0.0612 0.0596 0.0528
HDFCS LIC 0.1288 0.1510 0.0919 0.0715 0.0590 0.0475 0.0381 0.0288 0.0260 0.0210
ICICIP LIC 0.0416 0.0476 0.0246 0.0207 0.0200 0.0190 0.0174 0.0142 0.0137 0.0115

One of the key indicators of financial soundness of an where as higher ratio indicates high reliance on capital &
insurance company is Capital Adequacy ratio. Capital is seen inefficient use of capital to create assets. The companies under
as a bolster to protect insured and to promote the stability study are revealing quite satisfactory ratio, except with some
and efficiency of financial system. It also indicates whether fluctuations. Bajaj Allianz is showing strong asset base as it
the insurance company has enough capital to absorb losses has lowest average ratio followed by ICICI, SBI, HDFC and
arising from claims. For the purpose of calculation of capital Birla Sun life showing comparatively great capital base i.e.
adequacy of companies under study, the ratio Share Capital average ratio is higher.
to Total Assets is used. This ratio indicates the proportion of The analysis reveals that the asset base of all the
capital in the total assets of the companies, growth in assets companies has been increasing over the period and capital
of the business and how efficiently the capital has been levels in relation to assets are relatively smaller. This indicates
invested to create assets. Lower ratio is preferred to higher efficient employment of capital to create a strong asset base.
one, as it indicates the greater assets base of the company;
Asset Quality Ratio: Equities/ Total assets
Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
SBI LIC 0.0961 0.0666 0.0428 0.0395 0.0447 0.0504 0.0551 0.0545 0.0567 0.0543
BA LIC 0.0853 0.0678 0.0355 0.0558 0.0876 0.1215 0.1440 0.1491 0.1667 0.1640
BS LIC 0.1800 0.2020 0.1448 0.1192 0.1111 0.1044 0.0844 0.0698 0.0680 0.0603
HDFCS LIC 0.1344 0.1550 0.0954 0.0794 0.0654 0.0525 0.0423 0.0374 0.0412 0.0404
ICICIP LIC 0.1121 0.1593 0.0824 0.0696 0.0692 0.0682 0.0608 0.0523 0.0508 0.0514

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EPRA International Journal of Environmental Economics, Commerce and Educational Management|SJIF Impact Factor: 6.473|ISI I.F.Value : 0.815

Asset quality is one of the most critical areas in under study are revealing quite satisfactory ratio, except with
determining the overall financial health of an insurance some fluctuations. Bajaj Allianz is showing strong asset base
company. The primary factor effecting overall asset quality as it has lowest average ratio followed by ICICI, SBI, HDFC
is the quality of the real estate investment and the credit and Birla Sun life showing comparatively great capital base
i.e. average ratio is higher. Asset quality ratios of companies
administration program. Ratio of equities to total assets has
been used to assess the asset quality ratio in the present chosen for study are pretty sound because all the companies
are recording downward Asset quality ratio. Asset class has
study. Lower ratio may be preferred to higher one, considering
been one of the key problems in insurance failure in some
that higher ratio indicates large amount of equity held for the
countries, but in India, the insurance companies revealing good
large amount of NPAs in the total gross assets. The companies
assets as they are controlled by IRDA regulations.
Re-insurance and Actuarial issues Ratio: Net Premium/ Gross Premium
Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
SBI LIC 0.9981 0.9987 0.9977 0.9972 0.9960 0.9935 0.9924 0.9932 0.9899 0.9923
BA LIC 0.9986 0.9978 0.9975 0.9964 0.9933 0.9916 0.9885 0.9885 0.9889 0.9901
BS LIC 0.9895 0.9877 0.9854 0.9855 0.9766 0.9685 0.9611 0.9685 0.9699 0.9667
HDFCS LIC 0.9916 0.9917 0.9929 0.9945 0.9949 0.9943 0.9928 0.9955 0.9918 0.9912
ICICIP LIC 0.9982 0.9975 1.0824 1.1064 0.9933 0.0991 0.9883 0.9905 0.9914 0.9911

Reinsurance and Actuarial issue ratios reflect the overall Companies under study are considerably retaining the risk
underwriting strategy of the insurer and depict what and only an insignificant portion of risk is passed to reinsurers
proportion of risk is retained and what proportion of risk is which is witnessed by the above table (i.e. average ratio ranging
passed on to the reinsurers and indicates the risk bearing from 92.38% - 99.49%)
capacity of the country’s insurance sector. Risk retention From the above discussion, it is clear that the life insurers
ratio is used to assessing the same. If the insurer relies on prefer retaining the risk at their own destiny to transferring
reinsurance to a greater extent, it is critical that the financial the risk onto the reinsurers so as to boost up their profits by
condition of its reinsurers is examined. Higher ratio may be reducing the transaction costs and sharing of premium income
preferred to higher one, considering that the company retained with reinsurers.
the risk at its own hand and it does not rely on reinsurance.

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 Analysis of Financial Performance of Selected Private Life Insurance Companies Ms. Rathnavathi K & Dr. P.N.Udayachandra
Management Soundness Ratio: Operating Expenses/Gross Premium
Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
SBI LIC 0.0795 0.0860 0.0745 0.0684 0.0780 0.1101 0.1028 0.0915 0.0921 0.0783
BA LIC 0.2061 0.1766 0.1551 0.1672 0.1879 0.2322 0.2304 0.2256 0.1880 0.1708
BS LIC 0.2059 0.2565 0.2410 0.2120 0.0553 0.0576 0.2433 0.1664 0.1621 0.1345
HDFCS LIC 0.2085 0.3163 0.2138 0.1661 0.1245 0.1187 0.1062 0.1004 0.1147 0.1227
ICICIP LIC 0.2153 0.1783 0.1554 0.1223 0.1429 0.1506 0.1301 0.1079 0.0985 0.1054

This ratio indicates the operational efficiency of life Lower the ratio is considered as better one as it indicates
insurers and also reflects the cost efficiency of the business, highest gross premium income which reflects overall volume
which ultimately reflects the efficiency of decisions regarding of business activity of insurance companies. The study reflects
proper utilisation of funds. Efficiency in management of that all the companies under study are showing lower ratio
operations is crucial for sound financial performance of ranged from 0.0861 to 0.3970 and it indicates that companies
insurance companies. It is difficult to find any quantitative are well managed. SBI discloses least average ratio, which in
measure of management efficiency. The indicator prescribed turn indicates high managerial efficiency. Analysis of the study
in present study is operating expenses to gross premium. depicts that no company has achieved constant improvement
The ratio reflects the efficiency in operations, which in managerial effectiveness and companies recorded
ultimately indicates the management efficiency and soundness. fluctuations in expenses to volume of their business activity.
EARNINGS AND PROFITABILITY RATIO
1. Return on Equity: Net Income/ Equity
2. Return on Investment: Investment Income/Investment Assets
Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
SBI LIC - 1 0.0342 -0.0263 0.2185 0.2248 0.2578 0.2296 0.2214 0.2030 0.1819 0.1719
2 0.0583 0.0719 0.0676 0.0789 0.1038 0.1052 0.1107 0.1070 0.1061 0.1059
BA LIC - 1 -0.0584 -0.1767 0.4479 0.4699 0.3683 0.2654 0.1745 0.1298 0.1152 0.0987
2 0.1041 0.1609 0.1485 0.1728 0.1463 0.1313 0.1132 0.0975 0.0983 0.0914
BS LIC - 1 0.3494 0.3512 -0.1778 0.1245 0.1881 0.2175 0.1709 0.1316 0.0645 0.0566
2 1.2468 0.4309 0.3532 0.3513 0.3482 0.3361 0.3102 0.2592 0.2370 0.1993
HDFCS LIC - 1 -0.1836 -0.2729 -0.1348 -0.0447 0.1226 0.2048 0.3277 0.3031 0.2591 0.2324
2 0.1095 0.1384 0.1300 0.1591 0.1515 0.1580 0.1503 0.1361 0.1276 0.1121
ICICIP LIC - 1 -0.3695 -0.1631 0.0539 0.1684 0.2795 0.2916 0.3143 0.3103 0.3100 0.2625
2 0.1769 0.2858 0.2410 0.2170 0.1907 0.1913 0.1738 0.1619 0.1517 0.1356

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EPRA International Journal of Environmental Economics, Commerce and Educational Management|SJIF Impact Factor: 6.473|ISI I.F.Value : 0.815
Earnings are the key and perhaps the only long term Investment income ratio quantifies the income earned on
source of capital. Therefore, the main objective of every investments. Higher ROE ratio reflects more profitability and
business is to earn profits. A business must be able to earn higher ROI indicates effectiveness of investment policies of
adequate profits in relation to the risk and capital invested in insurance companies. Table shows that ratio of returns to
it. The efficiency and the success of a business can be measured equity varies from year to year. Companies neither show
with the help of profitability ratios. Low profitability may constant improvement nor decreasing trend in the return to
be the gesture of fundamental problems of the insurers and shareholders. Return on investment ratio shows variations in
may be considered as a leading indicator for solvency problems. investment income from year to year, however it shows a
For assessing the earnings and profitability, two prescribed satisfactory performance of companies. Birla Sun life reveals
ratios namely, ROE and ROI are referred in the study. Return high performance in investment income as its ROI ratio stood
on Equity is the measure of return to shareholders and at 0.4072. It is concluded by the study that no company
achieved a constant growth in ROE and ROI.
Liquidity Ratio: Liquid Assets/ Current Liabilities
Company 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
SBI LIC 0.2640 0.1678 0.2250 0.1557 1.8374 1.5901 1.7263 1.4932 1.0456 0.8791
BA LIC 0.3642 0.4412 0.2079 0.4615 0.3149 0.6708 0.0186 0.0104 0.2729 0.3411
BS LIC 0.7661 0.7014 0.7023 0.7349 0.6698 0.6348 0.6520 0.6325 0.5821 0.6423
HDFCS LIC 0.7188 0.4550 0.2427 0.3823 0.3650 0.5721 0.3103 0.2813 0.2574 0.2111
ICICIP LIC 0.3834 0.3148 0.1943 0.2078 0.0643 0.0042 0.1204 0.1437 0.1099 0.0759

This ratio indicates whether the firm is in a position to relatively inadequate capital position and no consistency in
pay its short term obligations within a month or immediately. liquidity position Therefore it is necessary for them to cut
As such, the ratio is calculated by dividing liquid assets by their operating costs, improve their actuarial efficiency,
current liabilities. Liquid assets thus include those assets which liquidity position and long term solvency position.
will yield cash very shortly. The insurers need to plan their REFERENCES
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average liquidity ratio of 93.48% and the ICICI is having a Life Insurance Companies - An Empirical Study”,
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to LICI by launching many innovations in terms of products, India ICICI prudential life insurance company limited”,
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this paper intends to analyse the financial soundness and
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Most of the private life insurance companies are incurring 2014
high rising costs due to huge commission expenses, have

72 Volume - 6 September - August 2019-2020

Analysis of Financial Performance of Selected Private Life Insurance Companies Ms. Rathnavathi K & Dr. P.N.Udayachandra
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