Private sector players reported 16% year-on-year (y-o-y) growth in individual annual premium equivalent (APE) in February 2019, higher than in the past few months.
Private sector players reported 16% year-on-year (y-o-y) growth in individual annual premium equivalent (APE) in February 2019, higher than in the past few months. Growth rate had moderated in April-July 2018 but picked up in later months prior to recording some sluggishness in November 2018 and inching up again. On year-to-date (YTD) basis, individual APE was up 11% y-o-y.
HDFC Life reported 6% y-o-y decline in individual APE after witnessing marginal growth of 2% in January 2018. Overall APE was a tad better with 4% y-o-y decline, as its group protection remained a segment of focus. Its business has been a bit volatile this year with 3-37% growth during May-October 2018 followed by decline in November and December 2018.
ICICI Prudential Life saw growth of 8.5% y-o-y in February 2019 in individual APE, marginally lower than last month. After a decline in 3QFY19, the management had guided an improvement in volumes in 4QFY19, which seems to be on track. It has worked on monthly paying policies. On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE, was up 15% y-o-y. With a large base in March 2018 (up 30% month-on-month, we expect growth to moderate in March 2019.
SBI Life’s individual APE growth was strong at 30% y-o-y in February 2019, especially against the backdrop of 0.1% decline in January 2019 and 15% year till date. This was its best month YTD. According to the management, its focus has been on streamlining its processes and increasing share of the protection business (up 140 bps quarter on quarter in 3QFY19 to 7.3%). The company seems to be getting back on APE growth though we are not sure if 30% growthrate can be sustained in the current environment.
Max Life’s growth in individual APE was strong at 27% y-o-y though lower than 35% growth in January 2019. It has increased focus on ULIPs—a likely reason for its superior growth. Its ticket size in individual non-single segment was up 15% y-o-y, unlike other large players who were flat. Additional investments in proprietary channels will fuel growth further. Birla Sun Life saw 60% growth in individual APE, continuing its high growth momentum (YTD growth of 66%) as it made inroads in HDFC Bank. Tata AIA was up 52%, a YTD growth of 61%.
Edited extracts from Kotak Institutional Equities Research report