The individual annualised new business premium of private life insurance industry grew 12% year-on-year in FY19 as compared to LIC's 5%
Individual annualised premium equivalent (APE) growth for private sector life insurance companies picked up to 19% from -1% to +16% over the last six months. Almost all large players reported over 15% growth except HDFC Life [up 6% year-on-year (yoy)].
A positive sentiment in the equity market likely revived inflows to equity mutual funds as well, which almost doubled month-on-month (mom). On a full year basis, APE growth was lower at 14% for private sector as compared to 26% and 22% during FY2017-18. Focus on protection anyway makes APE growth less relevant.
Private sector individual APE growth was strong
Private sector players reported 19% y-o-y growth in individual APE in March 2019, gradually picking pace since November 2018. Overall industry growth was lower at 10% y-o-y as Life Insurance Corporation of India (LIC) was sluggish with 6% growth.
HDFC Life reported muted 1% y-o-y increase in individual APE after witnessing marginal growth of 2% in January 2019 and 6% decline in February 2019. Overall APE was better at 6%, as its group protection remained a segment of focus. Its business has been a bit volatile this year with minus 20% to plus 37% growth during the last 10 month. On a full year basis, APE was up 8% y-o-y with 5% growth in individual APE.
ICICI Prudential Life saw growth of 14% yoy in March 2019 in individual APE, up from 8-9% over the last two months. Average ticket size in individual non-single segment was up 7% y-o-y; this likely explains half the growth. After a decline in 3QFY19, management had guided for an improvement in volumes in 4QFY19. On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE, according to a company release, was up 5% y-o-y.
SBI Life’s individual APE growth was strong at 29% y-o-y in March 2019, especially in the backdrop of a flat January 2019 and 13% average growth for 11MFY19 (15% in FY2019). Growth picked pace in the last two months. According to its management, its focus has been on streamlining its processes and increasing share of the protection business (up 140 basis points (bps) quarter-on-quarter in 3QFY19 to 7.3%). This was the reason for lower growth in previous months.
Edited extracts from Kotak Institutional Equities Research report