An Analytical Study of Profitability and Liquidity Postions of Selected Life Insurance Companies in India

The main objective of this study is to find out the truth which is hidden and which has not been discovered as yet. And this study used to evaluate the liquidity and profitability position of selected HDFC Standard Life insurance Co. Ltd. and SBI Life Co. Ltd. In addition to evaluate which company is performing best among the selected companies and make suggestions for improvement in financial or liquidity position of the selected companies. This study focused on knowing insurance sectors and it is performance in India through study conceptual framework of profitability and liquidity. This study deals with data analysis and interpretation of the different ratios which are useful for current assets, current liabilities, net profit, gross profit, all are use. It includes hypothesis testing by using t-test of HDFC and SBI companies. Simple random sampling was used to select the sample from top banks in India. The study relies largely on secondary data that was obtained from the annual reports and financial statements of the selected HDFC and SBI standard life insurance companies. In addition to the annual reports, different publications have also been used in this study. The study is made for a period of five years from 2014-15 to 2018-19.


Introduction
Wherever there is uncertainty there is risk. The risk can't be averted. It involves multiple losses. And so, the risk is uncertainty of financial losses. We do not have any command on uncertainties. The insurance is a co-operative device to spread the loss. Further, it is also a social device to accumulate funds to meet uncertain losses. The main function of insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses at destruction of property and death. It also provides capital to the society as the accumulated funds are invested in the productive heads. The product of insurance benefits the industry, the business, an individual and a group of persons. Hence, the insurance is the outcome of man's constant search for security and finding out ways and means of ameliorating the hardships arising out of calamities. Here, the persons exposed to similar risk contribute some amount periodically and those who actually face the loss are indemnified out of these funds. Life Insurance is a contract for payment of a sum of money to the person assured (or failing him/her, to the person entitled to receive the same) on the happening of the event insured against. Usually the insurance contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at the unfortunate death if it occurs earlier. So, there is a price to be paid for this benefit. Among other things, the contract also provides for the payment of premiums by the assured. Life Insurance is universally acknowledged as a tool to eliminate risk, substitute 3 certainties for uncertainty and ensure timely aid of the family in the unfortunate event of the death of the breadwinner. In other words, it is the civilized world's partial solution to the problems caused by death In a nutshell, life insurance helps in two ways: premature death, which leaves dependent families to fend for itself and old age without visible means of support [11]. In the era of uncertainty where people want to insure their life and family's future in any unforeseen event, life insurance sector offers its services to deal with such situation. Life insurance is a contract between two parties. [13] Life insurance is a professional service which is characterized by high involvement of the consumers, due to the importance of tailoring specific need, the variability of the products available, the complexity involved in the policies and processes and ultimately the need to involve the consumer in every aspect of the transaction. Life insurance more fondly known as Life Assurance has, in recent times ceased to be only a 'Protection' or 'Legacy' for the family and has turned into an important investment outlet [15].

Review of Literature
"Kishore. R. B. "A Holistic View of Insurance Reforms and a Blue Print for Strengthening LIC" In his article "A Holistic View of Insurance Reforms and a Blue Print for Strengthening Life Insurance Company" stated that there is an Enormous scope for a big breakthrough and an accelerated growth with keen healthy Competition. He forecast that the Industry would generate 8 to 10 lakhs jobs in the Next 5 to 7 years [1]". "Kapse S. and Kodwanid G. "Insurance as an Investment Option" they argued that in the changing scenario for the insurance sector after liberalization of Indian insurance sector, it's a good opportunities for insurance sector to expand its market base. Finally, their study has suggested for improving and modifying the features the products to make them more liquid or short term schemes [2]". While "Krishnamurthy S, Mony S. V., Jhaveri N., Bakhshi S, Bhat S and Dixit M. R."Insurance Industry in India: Structure, Performance and Future Challenges" Their study has clearly discussed the status and growth of Indian insurance industry after liberalization and future challenges and opportunities with regard to insurance. The future growth of this sector will depend on how effectively the insurers are meeting the expectations of their customers and able to change the perceptions of the Indian consumers and make them aware of the insurable risks. The process of reforms has enhanced competition, provided number of alternatives to the customers and improved the efficiency level of the industry. The insurers have responsibilities not only to social sector but also to rural sectors [3]". "Rastogi S., and Sarkar R.,"Competitiveness among the Indian life insurers" Their study has dealt with enhancing competitiveness among the Indian life insurers. The Govt of India has identified the root of causes. Finally, Govt of India has adopted and completed the liberalization process in 2000 with the sole motive is to par with international insurance standard. Despite of huge population and abundance growth opportunity, India is one of the least insured countries compared to the other developed nations in the world. Opening of this sector for private players, it was aimed at fostering competition and innovation through launching the variety of products. Finally, their study has suggested for formulating the alternative strategies that can facilitate the development of sound policies and practices leading to a globally competitive insurance industry [4]". "Raman. N. and Gayathri. C. "A study Customers Awareness towards New Insurance Companies" In their article "A Study On Customer's Awareness towards New Insurance Companies", Indian journal of Marketing revealed that customers are now looking at insurance as complete financial Solutions offering stable returns coupled with total protection. Companies will need to constantly innovate in terms of product development to meet over changing consumer Needs. Understanding the customer better will enable insurance companies to design appropriate products, determine price correctly and increase profitability. In the Present scenario a key differentiated would be professional customer service in terms of quality of advice on enhancing the customer convenience [5]". "Murthy R. Babu and Ansari D., "The Performance of Life Insurance Corporation of India" The objectives of this study are to analyze the growth and development of LIC business before and after liberalization. There is no doubt that Indian life insurance industry has grown significantly after the entry of private players in the mean time the market share of LIC has declined gradually over a period of years. The study has suggested that LIC should adopt: an effective marketing strategy with innovative products, the better customer services to satisfy existing policyholders, should attract new customers to increase insurance-density and penetration levels in order to fulfill customer needs, and should be reachable their expectations of the Indian insurance market [6]". "Bodla, B. S. and Sushma Rani Verma. "Life Insurance Policies in Rural Area Understanding Buyer Behavior" revealed that insurance sector plays a very important role in the Development of any economy and it provides long-term funds for infrastructure Development and at the same time strengthens the risk taking ability [7]". "C. Barathi, Balaji C. D. and Meithei Ch. Ibohal "-"Innovative Strategies to Catalyse Growth of Indian Life Insurance Sector-An Analytical Review" Their study has clearly examined about the impact of global recession on the fastest growing Indian insurance market. This study also discusses the strategic options that can be effectively implemented by the insurers to improve the coverage and penetration of life insurance into untapped areas. The suggestions of the study are to focus and launch new and innovative products to target new segments and to implement innovative strategies to achieve sustainable growth and development and ensuring profitability of business [8]". "Sonal Nena. "Performance Evaluation of Life Insurance Corporation (LIC) of India" He found that the insurance industries in India now a day have taken a giant shape especially after privatization and introduction of Insurance Regulatory & Development Authority (IRDA). Life Insurance Corporation of India is one of the most significant public sector which plays excellent job in selling its products. But since last few years it is facing tremendous competition as many private players have emerged. The idea behind this study therefore to know the growth and performance of LIC. The researcher is going to analyze the major source of income (Premium Earned) of the sampled unit, as well as the significant heads of expenses of LIC to measure the performance during the period of the study [9]". as well as the "Keerthi, P. and Vijayalakshmi. R. "A Study on the Expectations and Perceptions of the Services in Private Life Insurance Companies" they revealed that the policyholders' expectations are well met in the case of certain factors reacting to service quality. But in the case of other variables, there exists a significant gap which means that policyholders have experienced low levels of service as against their expectations. If all the players in the Life insurance industry focus on the effective delivery of services, they can win the hearts of customers and anticipate their increased market share [10]". "Irem Hussanie and Bashir Ahmad Joo"),"Determinants of Profitability of Life Insurers in India-Panel Evidence" they found that liquidity, loss ratio, investment performance, operating margin, premium growth and tangibility were significant in determining the profitability, as measured by ROA, of Indian life insurers. Also, they noted that leverage, commission ratio and size are insignificant in explaining the profitability as measured by ROA. Charumathi (2012) revealed that profitability of life insurers was positively and significantly influenced by the size and liquidity. Moreover, the study depicts that the leverage, premium growth and logarithm of equity capital had negatively and significantly influenced the profitability of Indian life insurers [12]"."Deyganto and Alemu)" Factors affecting financial performance of insurance companies operating in Hawassa city administration" found that the underwriting, premium growth, solvency ratio, growth rate of GDP, and the rate of inflation had effect on financial performance of the insurance companies operating in Hawassa city [14]".

Methodology
The sample of the study includes only two banks SBI and HDFC. Simple random sampling was used to select the sample from top banks in India. The study relies largely on secondary data that was obtained from the annual reports and financial statements of the selected banks. In addition to the annual reports, different publications have also been used in this study. The study is made for a period of five years from 2014-15 to 2018-19. The most appropriate parametric and non-parametric tests are used in data analysis. The data obtained is presented through different graphs and tables. Data has been converted in to relative measure such as ratios, percentages, indices rather than the absolute data. The data has been analyzed and hypotheses have been tested at 5% level of significance, by employing t -test, ANOVA technique. In this study, the used tools for data analysis are gross profit ratio, net profit ratio, return on assets, current ratio and quick ratio.
Data analysis: GROSS PROFIT MARGIN RATIO Gross profit margin is calculated as follows: Gross Profit Ratio Sales -cost of goods sold Sales 100

Return on Assets Ratio
Net Income Total Assets 100

Based on Gross Profit Ratio
The gross profit ratio of selected sample.

Based on Net Profit Ratio
The Net Profit ratio of selected sample.

Based on Return on Total Assets
The Retune on Total Assets ratio of selected sample. As per the Return on Total Assets of the SBI Life Insurance and HDFC Standard Life Insurance during the period of the study

Based on Current Ratio
The Current ratio of selected sample. As per the Current Ratio of the SBI Life Insurance and HDFC Standard Life Insurance during the period of the study from 2014-15 to 2018-19. In SBI Life Insurance Shows Mix Trend With an average 11.47which is lowest in the selected sample the ratio moved between 17.76 in 2016-17 to 1.78 in 2018-19 during the period of study. The Current Ratio of HDFC standard life insurance shows continuously decreasing trend with an average 13.19 which is second in the selected sample the ratio moved between 15.93 in 2016-17 to 3.09 in 2018-19 during the period of the study.

Based on Quick Ratio
The Quick ratio of selected sample. As per the Quick Ratio of the SBI Life Insurance and HDFC Standard Life Insurance during the period of the study from 2014-15 to 2018-19. In SBI Life Insurance Shows Mix Trend With an average 11.47which is lowest in the selected sample the ratio moved between 17.76 in 2016-17 to 1.78 in 2018-19 during the period of study. The Quick Ratio of HDFC standard life insurance shows continuously decreasing trend with an average 13.19 which is second in the selected sample the ratio moved between 15.93 in 2016-17 to 3.09 in 2018-19 during the period of the study.

Conclusion
The process of research can be painstakingly time consuming. It can involve the overcoming of many obstacles and may unfortunately need to be revised several times as you progress through the steps. By completing your study in the correct order and making sure you don't forget important tasks, your progression from theory to publication will occur much more smoothly.