A solid month.

A solid month. Individual APE growth was strong at 23% yoy in February 2020; higher than -7% to +14% yoy change over June 2020-January 2021. Pick-up in ULIPs and strong demand for non-par savings are likely drivers. SBI Life reported stellar 53% yoy growth in individual life followed by Max Life at 32% yoy. ICICI Prudential Life was up 6% yoy; decline has likely been arrested due to a change in base (down 15% yoy in February 2020). HDFC Life was strong at 16% yoy (despite high base). SBI Life remains our top pick; if ICICI Life maintains momentum, it can rerate hereon.  

Individual APE growth strong for private players

Individual APE for the private sector increased 23% yoy in February 2020; higher than -7%-15% yoy change since June 2020. Base was however weak with only 4% yoy growth in February 2020, likely following a strong Dec-Jan 2020.

Pickup in individual business indicates further increase in demand for ULIPs led by rally in capital markets and strong demand for non-par savings products.

Moderation in growth of protection business from peak levels seems to have been arrested (individual non-single sum assured to individual non-single premium for private players was flat mom at 25X compared to 23X in December 2020; it was however lower than 37X in February 2020 and 35X in 2QFY21).

Overall APE was up 21% yoy as group APE was muted at 2% yoy; while group credit business likely picked up further, group employee-employer volumes tend to be volatile. Group sum assured was up 35% yoy. LIC’s individual APE growth was low at 9% yoy despite a low base (down 7% yoy in February 2020).

Highlights of key companies

ICICI Prudential Life: Has it turned the corner on growth? ICICI Prudential Life reported 6% yoy increase in individual APE, reducing the gap with other large players. Its low base (down 15% yoy in February 2020) seems to have caught up. With increasing partnerships with new banks and low base sustaining till July 2021, headline growth might remain strong. Individual protection declined 25% yoy indicating weakness in protection. Overall APE was down 4% yoy owing to 49% yoy decline in group APE.

SBI Life: Stellar month. SBI Life’s individual APE was up 53% yoy; significantly higher than -6%-14% yoy change post September 2020. Pickup in ULIPs, traction in the newly launched par product and robust growth in non-par savings are likely drivers. Individual sum assured was up 30% yoy; retail protection has likely held on better than industry average (individual sum assured down 18% yoy for private players in February 2021 while individual APE increased 23% yoy). Group APE was up 59% yoy; group sum assured up 9% yoy.

Max Life: Another strong month. Max Life’s individual APE was up 32% yoy while individual sum assured was down 1% yoy indicating that growth was likely drive by non-par. Group APE was up 38% yoy while group sum assured increased 3.3X yoy indicating strong traction in credit protect business; this is margin accretive for the company.

HDFC Life: Moderates a bit on a high base. HDFC Life reported 16% yoy increase in individual APE in February 2021 (24% in January 2021) on a high base of 29% yoy growth in February 2020; the company has pushed its flagship par product in February 2020. Group APE was up 34% yoy likely reflecting traction in the newly launched group protection product; group sum assured was muted at 5% yoy. HDFC Life’s individual sum assured was down 28% yoy; majority of its growth was likely driven by traditional savings (par and non-par).

Bajaj strong; Aditya Birla Sun Life moderate, Tata AIA weak on a high base. Among other major players, individual APE growth was strong for Bajaj Life at 43% yoy; revival in ULIPs continues to support APE growth. Group APE was up 56% yoy. Aditya Birla Sun Life’s individual APE was modest at 13% yoy; similar mom. Tata AIA’s individual APE increased 3% yoy. On a high base growth has moderated over the past few months.

Share of single premium at 46% for private players

Share of single premium increased a bit for private players to 46% in February 2021 from 40-41% over the past two months; it was however lower than 50-54% over July-October 2020. Increase in the share of single premiums likely indicates pickup in the share of single pay annuity or lumpsum payout products. Among private players, almost all players witnessed a rise in share of single premium.

Market share in group business picks up

Private players gained market share in the group business on mom basis. Market share of private players in the group business increased to 29% in February 2021 from 23% in January 2021 and 25% in 3QFY21. Among major private players, barring Max Life, almost all players gained ~30-250 bps market share on mom basis.

Source: Kotak Institutional Equities Research