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NoP drives APE growth for private players

Private life insurers reported strong 22% yoy APE growth and 16% two-year CAGR. The growth was largely driven by higher volumes, Number of policies (NoP) up 17% yoy and at a two-year CAGR of 11%. Growth trends look promising compared with moderate outlook of listed players. Though ICICI Prudential delivered a 23% APE two-year CAGR, HDFC Life, SBI Life and Max Life reported 16-18% two-year CAGRs.

APE growth driven largely by higher volumes

Life industry reported strong 17% yoy APE growth in May 2024 on a low base. Two-year CAGR was muted at 10% for the industry. Similar trends are visible in NoP growth at 17% yoy and at a 2-year CAGR of 11%. Product mix stabilization likely resulted in stable ticket sizes. While the top-4 players reported strong 18% growth (2-year CAGR), tier-II players reported lower 15% 2-year CAGRs in APE.

Player-wise comments

4 HDFC Life reported 21% yoy APE growth and 18% two-year CAGR in May 2024. Growth was largely driven by higher volume of polices underwritten. NoP growth remains strong at 18% yoy and 23% two-year CAGR, likely driven by penetration into lower tier cities.

4 While ICICI Prudential Life’s APE shot up 52% yoy in May 2024, two-year APE CAGR was at 23%; this reflects weak momentum in April to May 2023, which picked up toward the end of the year. As such, the two-year CAGR may not be an accurate representation. NoP growth picked up to 36% in May 2024 from 9% in April 2024, even based on a two-year CAGR, NoP growth was strong at 17% similar to other listed peers.

4 Max Life reported 30% yoy APE growth and 16% two-year CAGR in May 2024. While we expect Max Life to report higher growth than peers, April-May 2024 trends are in line with peers. April and May tend to be weak months for insurance and growth should pick up in the subsequent months. NoP growth picked up to 43% yoy and at a 26% two-year CAGR in May 2024.

4 SBI Life reported 19% yoy APE growth and 17% two-year CAGR in April 2024. Growth for SBI Life in line with other listed peers. Contrary to peers, SBI Life’s NoP growth was muted at 7% yoy and at a 7% two-year CAGR. This is likely driven by a shift in product mix toward ULIPs; notably, ticket sizes were up 18% yoy ((-)8% to 5% for other listed private peers).

4 Bajaj Allianz Life reported 16% yoy APE growth and 9% two-year CAGR. Weaker volumes at the Axis Bank channel have likely led to its underperformance.

4 LIC reported 12% yoy APE growth, largely driven by group business (up 21% yoy). Individual APE growth was muted at 7% yoy in May 2024. We expect LIC to lag private peers and report muted 6% APE growth in FY2025E.

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