Life insurance: Upward trend in premium growth of private players
Private life insurance companies reported gradual improvement in individual annualized premium equivalent (APE) growth over the past few months, up 39% year-on-year (y-o-y) in August 2021, 31% y-o-y in July 2021, and 16% y-o-y in June 2021 on a low base of 6% y-o-y decline in August 2020 and 7% y-o-y decline each in July 2020 and June 2020.
As such, low base and improving month-on-month (m-o-m) trends support strong growth. The two-year individual APE CAGR increased to 14% in August 2021 from 10% in July 2021 and 4% in June 2021, indicating improving m-o-m trends. Buoyant capital markets supporting revival in unit-linked insurance plans (Ulips) and continued strong momentum in non-par savings and annuity segments are likely drivers for private players.
base effect gradually recedes, y-o-y growth is likely to taper down a bit although strong demand for select products is set to support robust growth over the next few months. As such, overall growth trends remain encouraging. Group APE was down 1% y-o-y in August 2021 for private players.
Performance of life insurersThe overall individual APE of LIC declined 5% y-o-y in August 2021 (down 4% y-o-y in July 2021 and up 1% y-o-y in June 2021). The base is, however, higher than that of private players. Two-year individual APE CAGR was weak at -2% versus 14% for private peers. Robust 18% y-o-y growth in group APE, however, led to muted 2% y-o-y growth in overall APE.
HDFC Life holds up well despite a high base. It reported 17% y-o-y growth in overall APE led by strong 27% y-o-y growth in individual APE even as group APE was down 32% y-o-y. Two-year individual APE CAGR at 20% was higher than average of private peers at 14%. Sharp decline in group APE likely reflects cautious stance in the group term business.
ICICI Prudential Life’s recovery is on track as it reported 36% y-o-y growth in overall APE led by 34% y-o-y growth in individual APE and 59% y-o-y growth in group APE. Two-year individual APE CAGR was weak at -2% due to lower volumes in FY2021 (-10% to -11% y-o-y decline over the past two months and 15% decline in Q1FY22). Product mix diversification and new bancassurance partnerships have led to a gradual revival in APE.
Max Life reported modest 9% y-o-y growth in individual APE; 10% two-year individual for August 2021 and 6% for July 2021 is lower than average for private peers at 14% and 10% growth, respectively. Even as Max Life outperformed the industry on growth since the start of the pandemic, it seems to have slowed down a bit over the past three months.
Source : Financial Express