1. How private insurers beat LIC on ‘APE’ factor

How private insurers beat LIC on ‘APE’ factor

The life insurance industry saw strong growth in the month of May as Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow at 22% year-on-year in May.

By: | Mumbai | Published: June 17, 2016 6:05 AM
The life insurance industry saw strong growth in the month of May as Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow at 22% year-on-year in May. (PTI) The life insurance industry saw strong growth in the month of May as Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow at 22% year-on-year in May. (PTI)

The life insurance industry saw strong growth in the month of May as Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow at 22%  year-on-year in May.

According to a Kotak Institutional Equities Research report, private players reported little higher growth compared to LIC at 26% at Rs 1,452.5 crore in APE in May.

Officials in the insurance industry say that, in the past few months insurance has seen huge participation from invetsors in both traditional as well as unit lined products.

“After a subdued April, yoy APE growth bounced back to 26% for private players (translating to 19% yoy growth FYTD); this was largely led by higher ticket size of the business. LIC reported 22% growth on the back of higher volumes. Equity market inflows to equity mutual funds continue to remain strong; this may be driving growth in ULIPs as well,” said the report.

In the last few months, LIC has seen sustained growth after it had launched few products in the last financial year. Though in the month of May, APE of LIC was lower than of private players in the current financial year its better than the industry.

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The research report also states that, private players reported growth of 19% y-o-y at Rs 2,372.1 crore in APE while LIC saw its growth at 23% y-o-y at `3,410.7 crore in the period of April and May.

Many insurers like ICICI Prudential, Aegon Religare, Reliance Life and Aviva, among others saw negative APE in the month of May. While others players like SBI Life, Kotak Life Insurance, TATA AIA and Birla Sun Life continued to see its APE growth in positive. “In the last two months when markets had turned volatile, but we are witnessing decent flows from both ULIPS as well as traditional policies.

Usually most growth in the insurance sectors comes towards the end of financial year, but its good to see that even at the start of financial year we are witnessing srong growth,” added a top official from the leading insurance company.

According to the Kotak Institutional Equities Research, “The average ticket size in the individual non-single segment was up by 30-40% for most players: Bajaj Allianz was up 29% yoy, Birla SL 23% yoy and Max Life 43% yoy. Ticket size of SBI was up just 20% and growth was largely driven by higher volumes.

Even in the case of LIC, ticket size was up just 7% yoy. ICICI Prudential Life delivered about 40% yoy growth in policies sold in the past two months while its ticket size was down.”

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