Chennai: Even though the start-up capital is fixed at Rs100 crore, the shareholders of domestic life insurers have been infusing additional capital at regular intervals. According to some industry watchers, the infusion is mainly to meet the increased cost of operations and most of the life insurers have a large expense gap. Expense gap is the difference between priced expenses and actual expenses. Priced expenses are the expenses assumed while pricing the products for a required rate of return.

But Birla Sun Life Insurance Company Limited says that it is the most capital efficient company amongst all the private life insurers. According to appointed actuary, K S Gopalakrishnan, the company hasn't taxed the shareholders much by demanding additional capital infusion. Even products are designed in such a way requiring less demand for capital.

Additional capital infusion is a function of accumulated losses, distribution structure, solvency margin maintenance levels and capital expenditure. Hence the ratio of capital efficiency (total new business procured to total equity capital employed) denotes cost efficiencies.

On this the Rs370 crore equity based company has better performance to boast of. In line with the business plans, the company's equity base may go up by Rs80 crore this fiscal.

Gopalakrishnan says that Birla Sun Life ranks first in cumulative new business premium for its total capital. See table: