The company has increased focus on ULIPs in the past two years. Its ticket size in individual non-single segment was up moderately by 13% y-o-y/m-o-m.
Strong annualised premium equivalent (APE) growth at 36% year-on-year (y-o-y) in June 2019 was driven by moderate (13%) APE growth in individual APE and almost two times group business booked by LIC. Private players gained market share in the individual business with 24% APE growth, while LIC was flat y-o-y. Overall net inflows to equity mutual funds almost doubled month-on-month (m-o-m) after being muted for the past two months.
Private sector individual APE growth in June 2019
Private sector players reported 24% y-o-y growth in individual APE in June 2019, gaining share from LIC. Overall industry growth was 13% as LIC was flat y-o-y. ICICI Prudential Life reported 1% y-o-y increase in June 2019 in individual APE, similar m-o-m. Average ticket size in individual non-single segment was down 8% y-o-y but up 22% m-o-m. On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE was up 3% y-o-y as compared to 5% in May 2019.
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SBI Life’s individual APE growth was strong at 25% y-o-y in June 2019. The company had moderated its overall growth momentum in 9MFY19 due to its focus on productivity and protection business. The overall business momentum picked up since December 2018 with 25-45% y-o-y growth in individual APE. SBI Life has guided to continue its focus on protection though y-o-y growth in protection will be lower in FY2020E (individual protection APE was up 5X in FY2019); in that sense, savings business APE will likely remain strong.
Max Life’s growth in individual APE was strong at 20% y-o-y (23% in 1QFY20), although somewhat lower growth than 4QFY19. The company has increased focus on ULIPs in the past two years. Its ticket size in individual non-single segment was up moderately by 13% y-o-y/m-o-m.
HDFC Life reported sharp increase in individual APE for a third straight month at 87% y-o-y (31% in April, 59% in May) after witnessing muted growth from November to March 2018. This pulled up its overall APE growth to 69%. Birla Sun Life reported 22% y-o-y growth in individual APE, lower than 32-110% in the past 12 months since it continued to make inroads in HDFC Bank. Tata AIA was up 56% y-o-y, higher than 50% observed in 4QFY19 although lower than 125% in April 2019. It now appears that the market shares of these three players are closer to getting aligned in HDFC Bank’s franchise.
New inflows in mutual fund and insurance trends converging
Net mutual fund inflows to equities improved significantly to Rs 58 billion in June 2019 from Rs 27 billion in May 2019, although lower than preceding months. Interestingly, SIPs are broadly stable over the past few months at Rs 80-82 billion. Thus, trends in growth between individual business of insurance companies and mutual funds now seem to be converging.