Life Insurance: Premium collections up for private players

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November 12, 2021 1:00 AM

Overall growth in APE was strong at 23% y-o-y for private players in October 2021

Strong traction in non-par savings reflecting substitution of fixed deposits (FDs)/small savings and rally in capital markets supporting unit-linked insurance plans (Ulips), are likely drivers.Strong traction in non-par savings reflecting substitution of fixed deposits (FDs)/small savings and rally in capital markets supporting unit-linked insurance plans (Ulips), are likely drivers.

Individual annualised premium equivalent (APE) growth remained strong in October 2021 for private players (up 23% y-o-y/19% growth on 2-year CAGR basis). Strong traction in non-par savings reflecting substitution of fixed deposits (FDs)/small savings and rally in capital markets supporting unit-linked insurance plans (Ulips), are likely drivers.

HDFC Life, SBI Life and Max Life delivered strong 33%, 23% and 22% growth in individual APE on a two-year CAGR basis. ICICI Pru Life’s individual APE was up 23%, although lower than 35-40% in the past two months. Bajaj Allianz Life’s and Tata AIA Life’s 2-year individual APE growth stayed strong at 29% and 19%, respectively.

Individual APE growth remains strong
Overall growth in APE was strong at 23% y-o-y for private players in October 2021, down 2% y-o-y for LIC. On a two-year CAGR basis, individual APE growth has increased for private players to 19% in October 2021 from 18% in September 2021, 14% in August 2021, 10% in July 2021 and 4% in June 2021. Individual sum assured was down 2% y-o-y for private players, indicating sluggish individual protection business. Group sum assured was up 24% y-o-y while group APE was down 6% y-o-y.

HDFC Life: Overall APE was up 19% y-o-y on the back of 21% y-o-y growth in individual APE (on high base). On a two-year CAGR basis, individual APE growth at 33% (15-31% over July-September 2021) significantly outpaced industry average for private players (up 19% y-o-y). Individual sum assured was down 7% y-o-y. Group APE was up 5% y-o-y likely reflecting its focus on the GTI segment.

ICICI Prudential Life: It reported 23% y-o-y growth in individual APE; at par with industry, despite low base. On a two-year CAGR basis, individual APE was down 2% compared to 4% growth in September 2021 and 2-11% decline over June-August 2021. Weakness in individual protection (individual sum assured down 12% y-o-y) has likely led to the drag in individual APE growth for ICICI Prudential Life; growth in Ulips, non-par and pension will likely offset in coming months, in our view. Group APE down 3% y-o-y while group sum assured was up 63% y-o-y, likely indicating strong growth in the credit life business.

Max Life: Max Life’s individual APE was flat y-o-y in October 2021 (on a high base of 49% y-o-y in October 2020).

On two-year basis, Max Life’s individual APE growth increased to 22% from 12% in September 2021, 10% in August 2021 and 6% in July 2021. After lagging industry average (2-year CAGR basis) over the past three months, its individual APE revived during the month.
Group APE growth was strong at 69% y-o-y as well.

Edited extracts from Kotak Institutional Equities Research report

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