Taking a bullish position, the domestic life insurnace companies have invested over Rs 25,000 crore in April ?July period.
Confirming the development, SB Mathur, secretary general of Life Insurance Council, an association of all life insurance companies constituted by the Insurance Regulatory & Development Authority (Irda) in the country, said the investment by the insurance industry in the stock market, in the first four months of this financial year, was about Rs 25,000 crore.
The life insurance industry, including the Life Insurance Corporation (LIC), had Rs 8,47,000 crore worth of assets under management as of March 2008
The council, in a briefing to the media here on Thursday, said the net investment by life insurance companies in the equity markets during 2007-08 was Rs 55,000 crore, against an investment of Rs 53,400 crore by foreign institutional investors.
The investment by mutual funds in the same period was estimated at Rs 16,300 crore.
During 2006-07, investment by insurance companies in equities was only Rs 20,000 crore.
Moreover, riding on the huge popularity of unit linked insurance products, the insurance industry emerged as the largest investor in the stock market during 2007-08 surpassing the foreign institutional investors.
Referring to the popularity of ULIPs among investors, the chiefs of some life insurance companies who had gathered in the council meeting, claimed that there has been no mis-selling by the life insurers in promoting ULIPs, but it is the customers who are preferring to invest in ULIPs, which helps them participate in the stock market.
ULIP is a life insurance cover, in which the policy value at any time varies with the value of underlying asset at the time. SBI Life Insurance Managing Director and CEO U S Roy said it was for the first time that the investment by insurance companies in the stock market was higher than the foreign funds.
According to the Council, 80% of life insurance business during last financial year was received by way of ULIP. Besides, an official said large investment made by the industry has helped the market to stabilise. He said it is not only in India but it is an international trend, as more people are getting attracted to the markets.
Even as investment by the industry in the markets is on the rise, it continues to be the major investor in government paper. According to the Council, investment by the industry in government securities during FY 2007 was Rs 2,75,000 crore, while for the FY 2008, the investment (provisional) was Rs 3,37,000 crore.