Life insurance: premium income for private players

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Likely factors are the strong traction of non-par savings reflecting the replacement of fixed deposits (FDs) / small savings and the rally in the capital markets that support unit-linked insurance plans (Ulips).

Individual annualized equivalent premium (APE) growth remained strong in October 2021 for private players (23% increase y / y / 19% growth on a 2-year CAGR basis). Likely factors are the strong traction of non-par savings reflecting the replacement of fixed deposits (FDs) / small savings and the rally in the capital markets that support unit-linked insurance plans (Ulips).

HDFC life, SBI Life and Max Life recorded strong growth of 33%, 23% and 22% in individual APEs on a two-year CAGR basis. ICICI Pru Life’s individual APE grew by 23%, albeit less than 35-40% in the last two months. Bajaj Allianz Life and Tata AIA Life individual APE growth in 2 years remained strong, at 29% and 19% respectively.

Individual EPA growth remains strong
Overall APE growth was strong at 23% yoy for private players in October 2021, down 2% yoy for LIC. On a two-year CAGR basis, APE individual growth increased for private players to 19% in October 2021 from 18% in September 2021, 14% in August 2021, 10% in July 2021 and 4% in June 2021. Individual sum policyholder fell 2% y / y for private players, indicating stagnation in the personal protection sector. The group’s insured sum increased by 24% year-on-year while the group’s APE fell 6% year-on-year.

HDFC Life: Overall EPA increased 19% year-on-year thanks to the 21% year-over-year growth of the individual APE (on a high basis). On a two-year CAGR basis, individual APE growth at 33% (15-31% compared to July-September 2021) significantly exceeded the sector average for private operators (+ 19% year-on-year). The individual insured sum fell by 7% on an annual basis. The group’s APE grew 5% year-on-year likely reflecting its focus on the GTI segment.

ICICI Prudential Life: reported growth of 23% y / y in individual APEs; on par with industry, despite the low base. On a two-year CAGR basis, the individual APE decreased by 2% compared to the growth of 4% in September 2021 and to the decrease of 2-11% compared to June-August 2021. The weakness of individual protection (individual sum insured down by 12% on an annual basis) has probably led to the brake in the individual growth of APEs for ICICI Prudential Life; Ulips, non-par and pension growth are likely to be offset in the coming months, in our view. The group APE fell 3% y / y, while the group sum insured rose 63% y / y, probably indicating strong growth in the life credit business.

Max Life: Max Life’s individual APE was stable on an annual basis in October 2021 (up a high of 49% YoY as of October 2020).

On a two-year basis, Max Life’s individual APE growth increased to 22% from 12% in September 2021, to 10% in August 2021 and to 6% in July 2021. After the industry average lag (based on CAGR at 2 years) in the last three months, his individual EPA was reborn over the course of the month.
The group’s APE growth was also strong at 69% yoy.

Edited excerpts from the Kotak Institutional Equities Research report

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