Private insurance players sustained strong growth momentum in August— individual APE grew ~29%, while LIC grew at a softer 9% y-o-y. SBI Life turned in yet another good performance, up >50% y-o-y, >48% YTD, overtaking ICICI Life. The latter’s growth normalised to 14% y-o-y >100% growth in April/May as higher base played out as anticipated; nonetheless, its YTD growth is still strong at >44%.
Max Life sustained the improving trend—up 23.2% y-o-y, 18.9% YTD. Bajaj Allianz also maintained momentum, up >30% y-o-y, vindicating management’s business revamp efforts. Having said that, these growth numbers do not capture the rising tilt towards protection business, which though entails lower ticket size products, is comparatively more profitable. In our view, rising financial savings and higher inflows post demonetisation helped the industry register impressive growth. Further, we anticipate proclivity for financial savings to continue and industry growth momentum to sustain.
Industry momentum (individual APE) sustained >19% y-o-y spurt in August, spearheaded by private players—jumped ~29% compared to LIC, which clocked sub-10% y-o-y growth. Robust momentum in higher ticket size, private sector ticket size rose >30% y-o-y, lent impetus to growth, implying tilt towards ULIPs.
SBI Life registered yet another strong month (individual APE grew >50% y-o-y, albeit also a function of lower base, largely driven by rise in ticket size, though number of policies declined, indicating sustained momentum in ULIPs.
ICICI Prudential Life’s growth normalised to ~14% from 100% y-o-y in May, as base normalisation played out. Growth in the number of policies sustained, indicating focus on protection business. We expect growth to sustain, balanced contribution from distribution channels and strong ULIP traction), but H2FY18 may see some moderation due to base effect, strong flows post demonetisation.
Improving trend continued, up >23% y-o-y, largely driven by volumes up >18% y-o-y. Consequently, YTD, growth also improved—~19%. Media articles about Axis Bank tying up with other company could have some bearing on Max Life’s growth, which needs to be monitored.