Private insurers’ premium collections growth down 11 pct in August

After four months of strong growth, private sector individual annualised premium equivalent (APE) finally slowed down to 11% year-on-year (y-o-y) growth in August 2019 from 18-27% y-o-y growth during April-July 2019. With about 290 basis points (bps) market share gain for LIC to 44%, the overall industry individual APE growth was higher at 13.9%. HDFC Life, Max Life and Bajaj Life delivered strong growth in individual APE at >25% y-o-y.

ICICI Prudential Life disappointed with decline of 10% y-o-y, while SBI, Birla Sun Life and Tata AIA reported modest rise of 13-18% y-o-y. Also, net inflows to equity mutual funds remained weak, broadly flat mom in August 2019.

Private sector individual APE growth strong

Private sector players reported 12% growth in overall APE in August 2019, with 11% growth in individual APE. Overall individual industry growth was 14% as LIC’s growth was high at 17.7% as compared to 10.4% in July 2019 and decline in the preceding two months.

ICICI Life reported 10% y-o-y decline in individual APE, despite a low base of 6% growth in August 2018. Average ticket size in individual non-single segment was up 2% yoy/month-on-month (m-o-m), while most other players have reported higher y-o-y growth. On considering overall (individual and group) adjusted APE including accrued but not received premium, its APE was down 7.8% y-o-y as compared to 0.9% in July 2019 and 3% in June 2019. Its shift to participating business from ULIPs has likely led to lower volumes and hence this decline.

SBI Life slowed down after eight months as the insurer’s individual APE growth was up 14% y-o-y in August 2019 (26% YTD), lower than >20% y-o-y growth observed over the past six months. The overall business momentum picked up since December 2018 with 25-45% y-o-y growth in individual APE. Growth has, however, started to moderate from peak levels over the past three months. The company has guided 20-22% growth for FY2020E. As such, overall growth momentum will likely remain moderate from here. The company will continue its focus on protection although y-o-y growth in protection (up 2X overall APE growth) will be lower in FY2020E (individual protection APE was up 2.5X in 1QFY20; 5X in FY2019).

Max Life remains strong as the company’s growth in individual APE was strong at 28% y-o-y. The company has increased focus on Ulips in the past two years although non-par savings business increased significantly in Q1FY20. Its ticket size in individual non-single segment was up by 28% y-o-y/2% m-o-m. Investment in proprietary channels has led to strong growth in individual business.

HDFC Life moderated a bit as the private insurer reported strong individual APE growth for a fourth straight month at 35% y-o-y, albeit lower than strong trends observed over the past three months (31% in April, 59% in May and 87% y-o-y in June 2019 and 58% in July 2019). This pulled up its overall APE growth to 36%. Average ticket size in individual non-single segment was up 52% y-o-y (flat m-o-m). Strong momentum in the non-par savings business has been its driver.

Birla Sun Life and Tata AIA slowed down as it appears that tables have turned at the bancassurance business of HDFC Bank. While HDFC Life was strong, growth for Birla SL and Tata AIA has been modest. Birla SL and Tata AIA reported 18% and 13% y-o-y growth, respectively in individual APE. Tata AIA reported 40-125% growth in the preceding four months while Birla SL was up 23-46% in that period.

Source: Financial Express