Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow at 31% year-on-year in February, higher than many of its private peers as well as the life insurance industry.
According to the Kotak Institutional Equities Research, private players reported growth of 17% in APE at R2,304.1 crore in the month under review.
Officials in the insurance industry say typically last three months of any financial year are good for insurance business, and strong growth was witnessed in January and February.
“Private players reported a 16% growth in individual APE, lifted by select players. Weak inflows to equity mutual funds implied that the sentiment for unit-linked insurance plans (ULIPs) was weak — a likely reason for Y-o-Y decline in ticket size for most players,” said a report from Kotak Institutional Equities Research.
In the last two-three months, LIC continued to report strong growth on the back of the launch of a few products. However, private players have seen higher growth compared to LIC in the current financial year. The research report also said private players reported growth of 14% Y-o-Y at R19,757.3 crore in APE while LIC saw its growth at 8% Y-o-Y at R22,115.8 crore in the April-February period.
Players such as ICICI Prudential, Aegon Religare, Reliance Life and Bajaj Allianz saw negative APE in February, while HDFC Life, SBI Life, Kotak Life Insurance, TATA AIA and IDBI Federal continued to witness positive APE growth.
“In the last two months when markets had turned volatile, we were witnessing decent flows from both ULIPS as well as traditional policies. Even in the first few days of March, participation has been very positive. We hope to end the year with growth in the range of 16-18%,” an official with a leading insurance company said.
Data from the Life Insurance Council shows that total new business premium of private insurance company stood at Rs 33,025.73 crore in the current financial year, against Rs 28,215.83 crore in the previous fiscal.
According to the Kotak Institutional Equities Research, “Inflows to equity funds of mutual funds crashed to Rs 25 billion (R25-36 billion for the past three months), down from R63 billion in October and November 2015.
This should intuitively imply that inflows to unit-linked policies may be stable, but weaker than 1HFY16.
