ICICI Prulife gains in strength as life insurers show recovery in June

Private life insurance companies reported a healthy growth in retail business for June, helped by easing of restrictions and increased appeal of savings products.

On an annualised premium equivalent basis, private life insurers reported a 16% year-on-year growth for June but a sharper 84% jump from the previous month. Analysts at Jefferies India Pvt Ltd point out that June is seasonally stronger than the previous months of a financial year. Moreover, business growth for life insurers is strongest during the second half of a financial year. “As Covid-restrictions have largely eased with new Covid cases on a decline, the premium run rate is expected to improve. Also, the first quarter of the fiscal year is generally the smallest for life insurers, so the full-year impact from lockdowns (most severe in May) should be limited," the Jefferies report said.

Among the top five listed players, ICICI Prudential Life Insurance Company Ltd reported the biggest--43%--jump in growth. Analysts expect the company to outperform its peers in premium growth this year. The life insurer has been clocking strong growth for the past two quarters. New product launches and tie-ups for distribution have aided growth. For the June quarter, ICICI Prulife’s growth on a retail weighted received premium basis was 44%, higher than that of the largest private life insurer SBI Life Insurance Company Ltd which reported 32.5% growth. ICICI Prulife is the third largest private life insurer with 8% market share as of June.

Given that year-on-year growth metrics may overstate the performance due to the big contraction last year, a two-year compounded annual growth rate (CAGR) may give a clearer picture. Based on this, SBI Life has shown strong recovery with 4%. Both ICICI Prulife and HDFC Life Insurance Company Ltd reported a contraction on a two-year CAGR basis.

Meanwhile, the largest insurer Life Insurance Corporation (LIC) of India continued to lag behind its private sector peers in growth. LIC reported a mere 1% year-on-year increase in retail APE. LIC would need to guard its market share, which has eroded to 42% as of June ahead of its initial public offer. The IPO is expected in the second half of this year.

Source: Live Mint