IGI Logo

Nov’21: Growth momentum continues

The life insurance industry maintained strong growth momentum in Nov’21, with the retail weighted received premium (RWRP) seeing 26% YoY growth for the month, improving materially from ~13% YoY growth in Oct’21. A large part of this strong growth delivery came from 22% growth in LIC’s YoY RWRP in Nov’21 vs. a 2% decline in Oct’21. YTD FY22, private sector RWRP grew strongly at 30% YoY vs. a muted 5% YoY for LIC. The private sector’s share in RWRP increased by ~6.5ppts in two years due to the sustained divergence in growth of the sector vs. LIC. In our coverage universe, SBILIFE continued its strong growth momentum, with 30% YoY growth in Nov’21. Overall, developments in FY22 validate the long-term trend of a gradual shift of the retail life insurance market to private players with strong brand and distribution reach. SBILIFE, which we believe is on a strong growth track, is our top pick in the sector

* Private players maintain growth momentum; Growth rebounds for LIC: Maintaining strong momentum, RWRP for private insurers increased by ~29% YoY in Nov’21, leading to YTD FY22 RWRP growth of 30.1% YoY. Growth for private players seems to be largely driven by an increase in the ticket sizes, as the new retail policy count grew by a meagre 6% YoY in Nov’21. LIC’s RWRP saw a YoY growth of 22% in Nov’21 and 5% for YTD FY22. The individual policy count for LIC grew by 13.6% YoY for YTD FY22. Growth driven by increased ticket size is reflected in the shift of product mix toward ULIPs and non-par products. These factors corroborate the long-term trend of a gradual shift of the retail life insurance market to large private players with strong brand and wide bancassurance network.

* SBILIFE reports solid all-round growth: RWRP growth for SBILIFE was strong at 30.2% YoY in Nov’21. For YTD FY22, its RWRP growth was robust at 44% YoY. SBILIFE saw a 2-year CAGR of 11.3% in RWRP, higher than 9.6% for the private sector, supported by ~21% YoY growth in the individual policy count in YTD FY22. This highlights its powerful brand, distribution strength and consistent product strategy. With all its distribution engines firing and it being relatively immune from the reinsurance price hike in protection, SBILIFE is well-positioned to deliver strong profitable growth over the coming years, in our view.

* HDFC Life maintains its consistent growth: For YTD FY22, HDFC Life reported RWRP growth of ~18.8% YoY and WRP growth of ~21% YoY. These growth rates appear moderate in comparison with the top peers, but this comes on a relatively high base (vs. top peers) of last year. HDFC Life’s 2-year RWRP CAGR stood at ~13.9%, better than the Top-4 listed life insurers. RWRP growth seems to be largely driven by ticket size growth as the individual policy count was down ~8.5% YoY. This indicates low sales volume in the retail protection segment and increased volume of high-ticket non-par savings in the individual business.

* IPRU’s growth strong, but sees material moderation in Nov’21: On a low base, IPRU’s YTD RWRP growth was strong at 31.3% YoY. However, RWRP for Nov’21 grew by 13% YoY, reflecting a moderation from 23% seen in Oct’21. The 2-year RWRP CAGR for IPRU stood at -8% for YTD FY22. IPRU’s RWRP growth for YTD FY22 seems to be driven by an increase in the policy ticket size as the policy count for YTD FY22 was up only ~2.7%. This seems to be largely a reflection of lower retail protection sales, leading to an increased average policy ticket size.

* Max Life reports weak growth but remains consistent performer: Max Life reported RWRP growth of ~18.5% YoY for YTD FY22. In Nov’21, RWRP for Max Life stood at ~36%. The slow growth for Max Life and very strong growth of Bajaj Allianz (71.2% YoY Nov’21) reflect a likely near-term share loss of the former in the Axis Bank channel. On a 2-year CAGR basis, Max Life’s RWRP growth for YTD FY22 stood at ~13.7%. Max Life’s RWRP growth also seems to be largely driven by ticket size growth, as YTD FY22, the individual policy count is down by ~7% YoY.

* Private life insurers’ market share continues to consolidate toward top players: Top4 private players’ share of private RWRP remained stable at 61.7% from a year ago. For Top-8 players (Top 4 + Tata AIA Life, Bajaj Allianz Life, Birla Sun Life and Kotak Mahindra Life Insurance), the market share in private RWRP was stable at ~83%, despite sluggish growth for Kotak Mahindra Life and some acceleration for smaller bank-led insurers. Overall, the trend of market share consolidation toward bigger private life insurers continues.

* Despite the rebound in Nov’21, LIC is struggling in retail segment: RWRP growth bounced back for LIC in Nov’21, largely driven by increased ticket sizes. However, from a trend perspective, there is a clear divergence in growth of LIC and private players. With its unchanged way of doing business over decades, LIC may lose its stronghold in retail life segment, particularly in the high-ticket segment. With the bank channel increasingly becoming important for savings product distribution and digital channels becoming important for retail protection, LIC may witness turbulent times in terms of growth due to its heavy reliance on the agency-led distribution mix. The sustained growth outperformance by Top-4 private players (SBILIFE, HDFCLIFE, IPRU and MAX) has meant that the RWRP market share of these four together has crossed LIC’s market share for YTD FY22 again in Nov’21.

To Read Complete Report & Disclaimer Click Here

For More  Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354

Above views are of the author and not of the website kindly read disclaimer