Life insurance companies investing money in equity market

The rising equity market has attracted the fancy of life insurance companies. Life insurance companies are inching their way to becoming the largest institutional investors.
Rs 150,000 crore. That’s what 16 Life insurance companies have invested in capital markets till March this year. LIC the largest life insurer contributed about 75% of this investment which comes to about Rs1, 24,000 crores. LIC has already invested Rs 17,000 crore in equities as against Rs 24,000 crore last year. Private insurers too are not lagging behind. Over the last one year, their equity portfolio has swelled immensely.


"About 2 years back we had one third of our total investments into equity today its about two thirds. Of the total money coming in about 80% is going into equity,” says Puneet Nanda, Exec VP & CIO, ICICI Prudential Life Insurance



ICICI Prudential Life Insurance doubled its equity exposure from Rs 5,900 crores last August to Rs 12,200 crores in August this year. Equity exposure of Bajaj Allianz too has more than doubled from Rs 2,150 crores last August to Rs 5,850 crores this year. SBI Life Insurance has trebled its equity investments from Rs 633 crores in August 2006 to Rs 2,600 crores in 2007.


Insurers say the increased equity exposure is driven by ULIPs, which now constitute upto 80% of their total portfolio. And with equity markets on the roll, insurers feel their equity exposure will only grow with time.