Published on 18/06/2019 1:50:44 PM | Source: Emkay Global Financial Services Ltd

Insurance Sector - Insurance tracker May’19 – Strong show By Emkay Global

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Insurance tracker May’19 – Strong show

HDFC Life (HDFCL): HDFCL reported Annualized Premium Equivalent (APE) growth of 61.8% yoy to Rs5.4bn in May 2019 (robust growth for the second consecutive month). Retail APE growth was also strong at 58.9% yoy to Rs4.6bn. New Business Premium (NBP) rose 52% yoy to Rs12.0bn. Policies sold grew by 1.2% yoy in May 2019, while the retail APE ticket size rose by 56.4% yoy, reflecting a strong traction in the non-par annuity products (higher ticket size) and supposedly in the newly launched click2wealth online ULIP product.

■ ICICI Prudential (IPRU): IPRU reported APE growth of 12.3% yoy to Rs4.9bn in May 2019 on a received premium basis. APE as per business presentation grew 5.1% yoy to Rs4.6bn (based on an accrued premium basis). Retail APE was flat at Rs4.0bn (up 0.8% yoy) despite having last year’s favorable base led by focus on smaller ticket size ULIPs and the protection segment. Policies sold went up by 5.3% yoy in May 2019, while the retail APE ticket size fell by 4.4% yoy.

■ MAX Life (MAXL): MAXL continued its strong business performance, growing APE by 23.6% yoy to Rs2.1bn in May 2019. Retail APE rose by 23.1% yoy to Rs2.0bn. NBP increased by 21.6% yoy to Rs2.9bn. Policies sold based on retail APE went up by 8.3% yoy, while the ticket size increased by 13.7% yoy, reflecting a push toward the ULIP segment.

■ SBI Life (SBIL): SBIL continued its strong performance in May 2019 with APE growth of 37.3% yoy to Rs5.9bn (+37.3% yoy). Retail APE growth was also strong at 36.5% yoy to Rs5.6bn. NBP rose by 44.9% yoy to Rs9.3bn. Policies sold increased by 25.3% yoy, and the retail APE ticket size went up by 8.1% yoy in the same period, reflecting a push toward protection and traditional products.

■ May 2019 volumes surprised positively with across the board performance. APE of private players grew by 29.6% yoy (+30.5% yoy YTD), driven by strong performance of HDFCL, Kotak Life, Tata AIA Life and SBIL. Retail APE of private players grew by 27% yoy (23.3% yoy YTD). Surprisingly, LIC grew strongly in the group non-single premium segment, boosting its APE by 111.2% yoy to Rs53.8bn. However, on a retail APE basis, it de-grew by 2.6% yoy to Rs18.4bn.

We continue to remain OW on SBIL (also features in our high-conviction list) and MAXF in our sector EAP due to their consistent delivery in premium growth. However, the stake sale overhang to Axis by MAXL for a perpetual Banca tie-up and the reduction of promoter stake by SBIL to meet the minimum public shareholding (MPS) guidelines could limit the upside potential of these stocks.


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