The life insurance business has taken its real shape in India when the IRDA (Insurance Regulatory

Development Authority) has been set up in the year 2000 and the monopoly business right of LICI
(Life Insurance Corporation of India) in life insurance is abolished. The Malhotra Committee on
reform in the insurance sector has suggested for co-existence of both the public company and the
private companies side by side and the Life Insurance Corporation of India is now facing
competition from Private Life Insurance Companies. As a result of entry of private life insurance
companies in India, the industry has made a rapid growth. However, because of stringent
regulations with respect to solvency margin and investment rules protecting the interest of the
policyholders and shareholders imposed by IRDA, it has become imperative to have a detailed
study of the impact of supervisory interference on the profitability of life insurance companies in
India.

There are several major types of insurance policies. Some companies offer the entire suite of
insurance, while others specialize in specific areas:

 Life Insurance - Insurance guaranteeing a specific sum of money to a designated

beneficiary upon the death of the insured, or to the insured if he or she lives beyond a
certain age.
 Health Insurance - Insurance against expenses incurred through illness of the insured.
 Liability Insurance - The miscellaneous category. This insures property such as
automobiles, property and professional/business mishaps.

There are many factors to examine when looking at insurance companies. More than anything,
both consumers and investors should concern themselves with the insurer's financial strength and
ability to meet ongoing obligations to policyholders. Poor fundamentals not only indicate a poor
investment opportunity, but also hinder growth. Nothing is worse than insurance customers
discovering that their insurance company might not have the financial stability to pay out if it is
faced with a large proportion of claims.

Financial analysis is structural and logical way to present overall financial performance of a
financial institution. It’s also help to evaluate and decision making for business operation. In
financial analysis process ratio analysis is the most dominant and logical structure to help business
related stakeholder. Under the financial ratio analysis process there are few categories to identical
area of financial institution. So business stakeholders try to concentrate to get overall business
overview from profitability, liquidity, assets management and solvency ratio analysis. These ratios
not only help to decision making process also emphasized on risk avoiding and profit raising
related factors. To calculate this ratio need to take quantitative data from bank trading activity and
other sources.