Insurance Sector Update - Aug`21: Strong APE performance by the industry By JM Financial
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Aug’21: Strong APE performance by the industry
In Aug’21, the industry APE recorded 18% YoY with private APE up 36% and LIC up 2%. Category wise, growth was driven by both individual APE, up 19% YoY in Aug’21 and group APE, up 14% YoY. On a 2-yr CAGR basis, Aug’21 was a strong month for the industry with total APE up 11% vs. an average of -2% over Apr-Jun’21.
Private insurers recorded 14% APE growth on 2-yr CAGR basis while LIC clocked in 7% APE growth in Aug’21. Among major players, YoY APE growth leaders were SBI Life (58% YoY) and BALIC (50%). On a 2-yr CAGR basis, BALIC (28%), SBI Life (20%) and HDFC Life (18%) put up a strong performance in Aug’21.
On unweighted basis, industry NBP was up 3% YoY in Aug’21 driven by 21% growth for private insurers. On a 2-yr CAGR basis, Aug’21 is the first month of positive growth for the industry with NBP up 9% driven by 17% growth for private insurers. YTD, industry APE is up 13% YoY in Aug’21 driven by private (29%) while LIC APE declined 1% YoY.
Player wise, BALIC (46% YoY), SBI Life (39%) and IPRU (38%) outperformed peers. On unweighted basis, industry NBP increased 2% YoY as of YTD FY22 driven by 23% YoY growth for private insurers. Key monitorables going forward are momentum in linked sales, reinsurance led price hikes in protection and persistency/ mortality movement.
HIGHLIGHTS
* Industry APE up 18% YoY in Aug’21: In Aug’21, the industry APE recorded 18% YoY with private APE up 36% and LIC up 2%. Category wise, growth was driven by both individual APE, up 19% YoY in Aug’21 and group APE, up 14% YoY. Among major players, YoY APE growth leaders were SBI Life (58% YoY) and BALIC (50%). On unweighted basis, industry NBP was up 3% YoY in Aug’21 driven by 21% growth for private insurers.
* Versus pre-COVID19, Aug’21 was a strong month: On a 2-yr CAGR basis, Aug’21 was a strong month for the industry with total APE up 11% vs. an average of -2% over Apr-Jun’21. Private insurers recorded 14% APE growth on 2-yr CAGR basis while LIC clocked in 7% APE growth in Aug’21. Among major insurers, BALIC (28%), SBI Life (20%) and HDFC Life (18%) put up a strong performance in Aug’21. On a 2-yr CAGR basis, Aug’21 is the first month of positive growth for the industry on unweighted NBP basis which was up 9% driven by 17% growth for private insurers. Among major insurers, SBI Life (25% 2-yr CAGR) and Max Life (18%) outperformed peers on unweighted NBP basis in Aug’21.
* YTD, industry APE growth improved to 13% YoY driven by 29% growth for private insurers: YTD, industry APE is up 13% YoY in Aug’21 driven by private (29%) while LIC APE declined 1% YoY. Category wise, individual APE continued to post strong performance and was up 17% YoY as of YTDFY22 while group APE growth improved to 1%. Player wise, BALIC (46% YoY), SBI Life (39%) and IPRU (38%) outperformed peers. On unweighted basis, industry NBP increased 2% YoY as of YTD FY22 driven by 23% YoY growth for private insurers. Among major insurers, IPRU Life (54%) and BALIC (43%) posted robust performance on unweighted NBP basis in YTDFY22.
* Private players gained c.7pps YoY in APE market share to 54% as of YTD FY22: For Aug’21, private insurers gained 7pps YoY in APE market share to 54.5% with SBI Life emerging the biggest gainer with APE share up 366bps YoY to 14.6%, followed by IPRU Life gaining 89bps YoY to 6.7%. YTD Aug’21, private insurers gained 657bps YoY in APE market share with the biggest gainers being SBI Life (223bps YoY to 12.2% market share) and IPRU Life (121bps to 6.7% market share).
* In Aug’21, industry’s individual premium per policy declined YoY; in contrast private individual ATS improved 22% YoY: Industry’s individual NBP per policy declined 30% YoY in Aug’21 driven by LIC which was down 54%. Individual ticket sizes for erstwhile leaders improved YoY - IPRU Life individual ATS is up 27% YoY to INR144,360 as linked sales recover, HDFC Life individual ATS is up 26% YoY to INR135,077.
* Group premium share was up 6pps YoY to 62% in Aug’21: Overall, group premium contribution was up 6.1pps YoY to 62% of total new business premium in Aug’21 driven by 14pps YoY jump in group premium share for LIC. Compared to pre-COVID19 Aug’19 levels, the group premium share in total premium share was up 16pps to 62% in Aug’21 mainly driven by LIC.
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