Almost all large players, except ICICI Prudential Life (up 2% y-o-y), reported over 15% yoy growth. HDFC Life, SBI Life and Max Life reported strong growth at 39%, 50% and 28% y-o-y, respectively .
Individual annual premium equivalent (APE) growth for private sector life insurance companies was up 18%, similar to March 2019. Almost all large players, except ICICI Prudential Life, up 2% year-on-year (y-o-y), reported over 15% yoy growth. HDFC Life, SBI Life and Max Life reported strong growth at 39%, 50% and 28% y-o-y, respectively. Surprisingly, LIC, that was weak for past three months, bounced back with 18% growth.
Private sector individual APE growth strong
Private sector players reported 18% y-o-y growth in individual APE in April 2019, gradually picking pace since November 2018. Overall industry growth and growth of LIC was a notch higher at 19% y-o-y.
HDFC Life reported strong 30% y-o-y increase in individual APE after witnessing muted growth since November 2018. Overall APE was better at 47%, as its group protection remained a segment of focus.
ICICI Prudential Life saw muted growth of 2% y-o-y in April 2019 in individual APE, down from 14% in March 2019. Average ticket size in individual non-single segment saw a marginal dip in April 2019. On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE, according to a company release, was up 9% y-o-y.
SBI Life’s individual APE growth was strong at 51% y-o-y in April 2019, on a low base. Notably, SBI Life had reported 11% y-o-y decline in April 2018 due to its focus on productivity and protection business. The overall business momentum picked up since December 2018. Current trends suggest that the company seems to getting back on its 30% plus APE growth trajectory; it would be crucial to see if this momentum can be sustained throughout FY2020E.
Max Life’s growth in individual APE was strong at 28% y-o-y, higher than 15% growth in March 2019. The company has increased focus on unit-linked insurance plans (ULIPs) in recent quarters. Its ticket size in individual non-single segment was up 7% y-o-y, unlike other large players who were mostly flat. Additional investment in proprietary channels will further fuel growth.
Birla Sun Life reported 46% y-o-y growth in individual APE, higher than 33% growth in March 2019, as it continued to make inroads in HDFC Bank. Tata AIA was up 1.3x, higher than 50% growth observed in 4QFY19. In its earnings call, Birla Sun Life guided that it will continue to grow at a rapid pace within the bank though it may maintain FY2019 growth rates.
Net equity MF inflows dip
Mutual fund inflows to equities declined, with inflows at `20 billion in April 2019 as compared to `95 billion in March 2019, `44 billion-`66 billion in December 2018-February 2019 and `86 billion-`107 billion in the preceding six months. This is the lowest inflow since recent correction in equity markets.
Interestingly, systematic investment plans (SIPs) are broadly stable over the past few months at `80 billion-`82 billion; this meant that the non-SIP flows reported large net outflow. Liquid fund reported strong inflows at `898 billion post recording outflows (`0.2 trillion-`0.5 trillion) in the past two months.
Edited excerpts from Kotak Institutional Equities Research report