Private sector players reported improvement in individual Annualised Premium Equivalent (APE) growth, up 14% year-on-year (y-o-y) in December 2018 after remaining flat in November 2018.
Private sector players reported improvement in individual Annualised Premium Equivalent (APE) growth, up 14% year-on-year (y-o-y) in December 2018 after remaining flat in November 2018. Notably, growth rate had moderated in April-July 2018 but picked up in later months to once again slow in November 2018.
HDFC Life reported 4% decline in individual APE, better than 20% decline in November 2018. Its business has been a bit volatile this year with 4-37% growth in the preceding six months. ICICI Prudential Life improved its growth over November. The company reported 5% decline in individual APE in December, lower than 17-24% decline in the past two months.
The company has worked on monthly paying policies and hence growth on received premium basis was negative. On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE, according to a company release, was up 3% yoy.
SBI Life and Max Life
SBI Life’s individual APE growth picked up to impressive 24% from 10% reported in November 2018. Its growth has been volatile; the company reported 6-27% growth in preceding six months (YTD growth of 14%), much below 30%+ reported during FY2016-18. According to its management, its focus has been on streamlining its processes and increasing share of the protection business.
Max Life slowed down further with 7% yoy growth in December 2018, from 13% in November 2018 and 20-40% in the preceding six months. The company has increased focus on ULIPs – a likely reason for superior growth of the company in 1HFY19.
Birla Sun Life reported 79% growth in individual APE, continuing its high growth momentum (YTD growth of 68%) as it continued to make inroads in HDFC Bank. Tata AIA was up 130% translating into YTD growth of 66%. Birla Sun Life and Tata AIA’s ticket size in the individual non-single segment was up 48% yoy and 38% yoy, respectively.
LIC’s focus on single premium products
LIC remained focus on single premium with 80% share in total premium in December 2018. The share of single premium for private players decreased to 37% from 42% in November 2018 (up 800 bps yoy). Among major private players, Bajaj Allianz Life, Aditya Birla SL and HDFC Life maintain high share of single premium at 50%, 43% and 69%, respectively.
The market share of private players in group business increased to 24% from 16% in December 2017 (23% in November 2018). There was month-on-month increase in group business market share
of HDFC Life and SBI Life in December 2018, while most other large players were almost flat.
Mutual fund equity inflows
Mutual fund inflows to equities saw a further steep decline, with inflows at `66 billion in December as compared to `86 billion in November and `97-140 billion in the preceding six months. This is the lowest inflow since recent correction in equity markets. Interestingly, SIPs were stable for past three months at `80 billion; this meant that the non-SIP flows reported a net equity outflow. On the positive side, liquid funds recorded strong inflows of `1.49 trillion in December 2018 following `1.36 trillion in November 2018.
Edited extracts from Kotak Institutional Equities Research report