Insurance Sector Update : Muted start to the year By Kotak Institutional Equities
Weaknesses in both commercial and retail segments led to muted growth of 8% for the non-life industry in January 2025. The transition to the 1/n rule marred growth in the health business, while weak PV growth led to muted motor premiums. The weakness in commercial lines dragged down growth for both Bajaj Allianz (down 15% yoy) and ICICI Lombard (up 8% yoy). Star Health (up 4% yoy) tracked industry growth in retail health but lost market share in the group business.
Weak growth across segments
The non-life industry reported muted 7% GWP growth in January 2025. Key retail segments such as motor and retail health also reported moderate 8-10% GWP growth. The impact of the 1/n rule likely weighed in on growth in retail health. Growth in commercial lines also remained weak despite a strong outlook given by private GI players during earnings calls.
Private GIs lag PSUs and SAHIs
Private GIs reported yoy flat GWP numbers in January 2025; PSUs and SAHIs fared better, reporting 11-12% GWP growth. Even after adjusting for the lumpy crop business, GWP growth was muted at 4% for private GIs. The drag was largely driven by HDFC ERGO and Bajaj Allianz; ICICI Lombard and Go Digit also reported muted 7-8% yoy GWP growth.
Player-wise trends
* Strong motor growth was offset by weakness in commercial lines for Bajaj.
Bajaj Allianz reported a sharp 15% yoy decline in GWP in January 2025, driven by weakness in health premiums (down 39% yoy). Motor growth was strong at 19% yoy, but was offset by weakness in non-retail health and fire (down 10% yoy) businesses.
* ICICI Lombard reported muted 8% GWP growth.
Strong growth in health premiums (up 16% yoy) was offset by weakness in commercial lines. Motor premium growth at 7% was in line with the industry. Pickup in retail health was strong at 28% yoy.
* Star Health lagged peers in GWP growth.
Star Health reported 8% yoy growth in retail GWP, in line with the industry. Decline in group health premiums was sharp at 45% yoy in January 2025. Resultantly, overall health premium growth was muted at 4% (7% yoy for industry).
* Niva Bupa reported a 3% yoy decline in retail health premiums in January 2025, likely driven by the impact of 1/n rule. Share of multi-year policies has been high at ~25% for the company.
* GWP growth remains moderate at 8% yoy for Go Digit in January 2025 (9% YTD 2025). Pressure to meet EoM guidelines has likely weighed in on growth for the company.
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