Published on 21/11/2019 11:12:54 AM | Source: ICICI Securities Ltd

Insurance Sector Update By ICICI Securities

Posted in Broking Firm Views - Sector Report| #Insurance Sector #Sector Report #ICICI Securities

Premium trend stabilises in October

New business premium (NBP) and total annualised premium equivalent (APE) grew 10% and 7%, respectively, in Oct’19 for private life insurers. Weakness in Individual APE growth continued in Oct’19 indicating lower growth in ULIPs. For a trend, individual APE has grown by 18%/27%/24%/22%/11%/3%/4% in April/May/June/July/Aug/Sept/Oct, respectively. Notably, HDFC Life (HDLI) reported 9%/15% decline in total/individual APE which would be on account of a high base and shift away from guaranteed savings products under declining interest rates. Bajaj Allianz (BALIC) and SBI Life (SBLI) continue to outperform. SBLI maintained leadership in the number of individual polices (NOP) which grew 11% for it in FY20TD compared to 4% for private life insurers. Total/individual APE grew 16%/18% for IPRU life (IPRU) in Oct’19 aided by weak base.

* Private industry NBP grew 10% YoY in Oct’19 and 19% YoY in FY20TD. NBP in Oct’19/FY20TD grew 37%/40% for SBLI and 38%/23% for IPRU. HDLI witnessed a decline of 7% in NBP in Oct’19 (also declined in Sep’19) but grew 22% in FY20TD. NBP market share FY20TD was 6.4% for HDLI, 6.5% for SBLI and 4.3% for IPRU.

* Private industry total APE (weighted) grew 7% YoY in Oct’19 and 17% in FY20TD. Weighted total APE in Oct’19/FY20TD grew 6%/22% for SBLI and 36%/12% for IPRU. HDLI witnessed a decline of 9% in total APE in Oct’19 (also declined in Sep’19) but is up 29% in FY20TD. IPRU benefitted from a low base in Oct’18 while HDLI suffered on account of product mix shift away from non-par guaranteed portfolio. Max Life clocked total APE growth of 4%/20% in Oct’19/FY20TD. BALIC clocked total APE growth of 13%/15% in Oct’19/FY20TD.

* Private industry individual APE grew 4% in October and 14% in FY20TD. Individual APE in Oct’19/FY20TD grew -15%/26% for HDLI, 3%/19.3% for SBLI and 18%/-0.4% for IPRU. The individual APE market share for FY20TD was 8.7% for HDLI, 13.6% for SBLI and 10% for IPRU. Max Life clocked individual APE growth of 3%/20% in Oct’19/FY20TD. BALIC clocked individual APE growth of 36%/26% in Oct’19/FY20TD.

* Group APE share stood at 16% for private industry players in Oct’19 with HDLI, SBLI and IPRU having group APE shares of 21%, 9% and 20%, respectively.

* Individual policies fell sharply by 5.8% YoY in Oct’19 (+4% YoY FY20TD) for private industry. In terms of individual policy count (NOP), SBLI recorded highest growth of 11% in FY20TD due to higher growth witnessed in Q1FY20. Post Q1FY20, NOP growth for SBLI has largely been low. Oct’19/FY20TD NOP declined 13%/6% for HDLI and 13%/9% for IPRU.

* HDLI reported strong growth in individual non-single premium ticket size in H1FY20. During H1FY20, average growth in individual non-single premium ticket size has been 35% for HDLI compared to 8% for SBLI and 3% for IPRU. In October, corresponding ticket size growth for IPRU was 31%, indicating revival in ULIPs along with benefit of low base.

* IPRU total/individual APE (as per company) rose 16%/18%, respectively, in Oct’19. (FY20TD growth in total/individual premium is at 1.8%/-0.4%.

* Higher mix of protection continues to be the main business driver. ULIP business is expected to move in-line with market dynamics. Guaranteed savings products will also incrementally become less attractive amidst declining interest rates. As such, rising protection share remains the main driver of new business growth for Indian life insurers. 


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