Private Life insurance industry reports a minor dip in retail APE for November -23; Emkay Global Financial Services
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According to the latest Insurance report from Emkay Global Financial Services, the private life insurance industry as anticipated reported a dip of 3.8% in Retail APE growth in Nov-23, due to higher base of Nov-22(post Diwali month) and given the Diwali festive disruptions during Nov-23. Private players saw a slight YoY decline of 1.3%, but LIC saw a much larger 8.7% decline in Retail APE in November 23. The industry experienced robust Retail APE growth in Nov. 22 of 22% (private sector: 27%; LIC: 13%), supported by the interruption of the Diwali celebrations earlier in Oct. 22 and some players' distribution incentive programmes (like MDRT) in the same month.
December 23 is critical for the FY24 sector development now that the festival disruptions have passed and with the ongoing incentive programmes. Private businesses, on the other hand, are probably going to have a YoY fall in Mar-24 YoY due to record-breaking sales in Mar-23. The industry is anticipated to increase by 6-7% in Retail APE during FY24E, driven by private players, who are projected to grow by 11–12%, while LIC is anticipated to grow by a low single digit percentage.
Among Listed Private Life Insurers, Nov. 23 saw Max Life post Retail APE growth of 8.3% YoY, above industry average, while SBI Life and HDFC Life recorded declines of 2.7% and 3.7%, respectively.
With stock price increase of 46%, MAX Financial also emerged as the top performer over the past year amongst its listed insurance peers.
The private life insurers' consistent growth alleviates the exaggerated worries about growth following the tax modifications on expensive, non-linked policies. The tale of margin compression has already been fully realised in FY24, thus private life insurers should expect strong VNB growth in FY25 and beyond.
Emkay Global Financial Services believes that life insurers' current valuation is attractive, even after the recent increase in share prices, given the growth comeback in FY25 and the removal of significant regulatory overhangs. SBILIFE, MAXF, and HDFCLIFE continues to be the top choices.
