Growth rate had moderated in April-July 2018 but has picked up in later months.
Individual annual premium equivalent (APE) growth for private sector life insurance companies was modest at 10% in January 2019 translating into year-to-date (YTD) growth of 11%. ICICI Prudential Life witnessed sharp rebound with 9% year-on-year (y-o-y) growth after reporting decline over the past three months.
On the other hand, SBI Life was flat as compared to about 17% growth over the past three months. Meanwhile, net mutual fund equity inflows continue to weaken. Against this backdrop, improving share of protection business augurs well for supporting value of new business (VNB) growth of key players and in that sense makes APE growth less relevant.
Individual APE reports growth
Private sector players reported modest 10% year-on-year (y-o-y) growth in individual annual premium equivalent (APE) in January 2019, lower than 14% y-o-y growth in December 2018. Growth rate had moderated in April-July 2018 but has picked up in later months prior to recording some sluggishness in November 2018 and inching up again.
HDFC Life reported 2% y-o-y growth in individual APE, better than 3% y-o-y decline in December 2018 and 20% y-o-y decline in November 2018. Its business has been a bit volatile this year with 4-37% growth during May-October 2018.
ICICI Prudential Life saw strong improvement in January 2019, recording 9% y-o-y increase in individual APE post sharp decline in the past few months. Management had guided an improvement in volumes in 4QFY19. The company has worked on monthly paying policies.
On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE, according to a company release, was up 16% y-o-y.
SBI Life’s individual APE growth was muted at 1% y-o-y in January 2019, especially against the backdrop of 24% growth in December 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 (up 140 bps q-o-q in 3QFY19 to 7.3%).
Max Life revived growth of individual APE to 35% post slowing down in the past two months. The company has increased focus on ULIPs—a likely reason for superior growth of the company. Additional investment in proprietary channels will further fuel growth.
Birla SL reported 81% growth in individual APE, continuing its high growth momentum (YTD growth of 70%) as it continued to make inroads in HDFC Bank. Tata AIA was up 46% translating into YTD growth of 63%.
Net MF equity inflows continue to decline
Mutual fund inflows to equities declined, with inflows at `55 billion (bn) in January 2019 as compared to `66 billion in December and `86-107 billion in the preceding six months. This is the lowest inflow since recent correction in equity markets.
Edited extracts from Kotak sInstitutional Equities Research report