Private life Insurance companies reported another month (November, 2017) of 30% growth in individual APE translating into 35% growth during April-November 2017. With 23% growth at LIC, overall growth rate was high at 27% y-o-y. Most players remained strong except Max Life and ICICI Prudential Life, both up just about 10% — we don’t read much into this moderation. Private players’ broad focus on agency expansion remained through bancassurance and it has gained share for large players in the last quarter.
Another month of strong business momentum
November, 2017 was another strong month with 30% growth in private sector individual business. This was driven by very strong growth among large private players, viz. Bajaj Allianz (up 49% y-o-y), HDFC Life (up 65% y-o-y), Metlife (up 35% y-o-y) and SBI Life (up 35% y-o-y). ICICI Life was up 11% compared to 32% YTD and Max Life was up 10% compared to 19% YTD — we don’t read much into this moderation.
Higher volumes in ULIPs; financial savings continue to grow
Three pointers to the fact that momentum of financial savings continues, viz. (i) with ticket size in individual non-single segment in single digit (except for Bajaj Allianz Life and Birla SL), most growth seems to have been driven by higher volumes. (ii) Q2FY18 public disclosures suggest that share of ULIPs has increased for HDFC Life (54% of APE in Q2FY18, 50% in Q1FY18) and Max Life (36% versus 29% q-o-q). It was stable at 66% for SBI Life, though down to 57% from 72% q-o-q for Bajaj Life and 83% versus 87% q-o-q for ICICI Life. (iii) Inflows to mutual funds moved up to Rs 256 bn in November, 2017 from Rs 201 bn in October, 2017; moderation for the third consecutive month of October had then raised some concerns — November has bucked this trend.
Will the base effect of note ban play out to sustain 30% for the next four months?
Private sector individual APE crossed Rs 30 bn from December 2016 from Rs 18-22 bn/month in the preceding six months. This was likely due to the effect of demonetisation and higher business volumes towards the end of the year. The business has sustained momentum in the range of `26-30 bn/month over the past six months. It would be crucial to see if the run-rate can break the current range and report similar (30%) growth over the next four months as well.For now, the momentum seems to be strong.
—Kotak institutional equities