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The private life insurance industry clocked a robust 19.8% YoY Retail APE growth in Oct-23, on a favorable base of Oct-22 (up almost 3% YoY, owing to Diwali holidays), while LIC grew a meagre 1.7% YoY in Oct-23, leading to industry’s Retail APE growing 13.1% YoY in the month. The decent growth trend during Oct-23 resulted in the industry’s Retail APE growing 9% YoY during YTDFY24, with the Private Sector growing 13.6% YoY and LIC 1.1% YoY. Among listed players, Max Life (up 37.6% YoY) reported strong Retail APE growth during Oct-23, followed by IPRU Life (up 21.1% YoY), HDFC Life (up 16.5% YoY) and SBI Life (up 16.4% YoY) reporting healthy growth. Owing to the stronger base of Nov-22 and Diwali festivities this year coming in November, we expect some slowdown in growth during Nov-23. With private players continuing to log robust growth momentum, we expect the industry to deliver a high single-digit retail APE growth (private sector: ~12-13%, LIC: low single-digit) in FY24, owing to growth slackening in Mar-24 on account of preponed buying of high-ticket non-linked policies in Mar-23. Given the recent performance of life insurance stocks, valuations in the sector remain attractive. Our preference order for private listed life insurance players is: SBILIFE, HDFCLIFE, MAXF and IPRU.

Private Life insurance industry reports strong growth in retail APE for Oct-23

The private life insurance industry registered a robust Retail APE growth of 19.8% during Oct-23, on a favorable base of Oct-22 (up almost 3% YoY), while LIC reported a muted 1.7% growth; this led to overall industry growth at 13.1% YoY. However, on a Total APE basis, the industry posted a muted 5% growth during Oct-23 owing to 11% decline in LIC’s APE and 19.1% growth for the private sector. Group APE continued to decline at 15% in Oct-23, due to 29% decline for LIC and private players reporting 16% growth. The performance during the last few months resulted in 9% YoY Retail APE growth for the overall sector, with private players growing 13.6% and LIC 1.1% during Oct-23

Max delivers superb growth; other listed private players put up a good show

Among Listed Private Life Insurers, MAXF reported a strong 37.6% YoY Retail APE growth during Oct-23, while HDFC Life and SBI Life reported a decent show—16.5% YoY and 16.4% YoY Retail APE growth, respectively. IPRU Life noted a robust 21.1% Retail APE growth during Oct-23, on a low base and considering the 25.6% decline in Retail APE during Oct-22. Among unlisted private players, Bajaj Allianz Life (up 26.7% YoY) and Tata AIA Life (up 22.8% YoY) reported resilient growth during Oct-23.

With growth momentum continuing, private listed life insures offer good value

The sustained growth delivery by private life insurers addresses the exaggerated concerns on growth post taxation changes on high-ticket non-linked products. With the margin compression story already having played out in FY24, private life insurers are on track to deliver robust VNB growth in FY25 & beyond. Against the backdrop of life insurers underperforming CY23, we find current valuation attractive. We maintain our preference for SBILIFE, HDFCLIFE, MAXF and IPRU, as we believe they offer a promising risk-reward ratio in the foreseeable future.

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