INSUBCONTINENT EXCLUSIVE:
SBI Life gained traction (up >27 per cent YoY) after four soft months.
Private insurance players reported soft growth in premiums in May- individual APE or Annual Premium Equivalent
rose 12 per cent with private players growing merely 4 per cent on a year-on-year (largely base effect) basis, according to a report
APE is a measure for comparing life insurance revenue by normalising policy premiums into the equivalent of regular annual payments
This is usually used when sales contain both single and regular premium business
LIC jumped 20 per cent last month, according to the report released by Edelweiss Securities.The growth softness was broadly led by ICICI
Prudential Life (down >30 per cent year-on-year on a high base); excluding which, private players grew 19 per cent
SBI Life gained traction (up >27 per cent YoY) after four soft months
While overall growth momentum seems to be moderating (partially due to base effect), Edelweiss said that it maintains that proclivity
towards financial savings will persist and the industry will regain growth momentum.Growth momentum softened as the overall growth
(individual APE) softened to 12 per cent YoY in May versus 20-23 per cent run rate in FY18
There was divergence in performance of insurance players- while ICICI Prudential Life was largely responsible for the soft growth (excluding
it, private players grew >19 per cent YoY), SBI Life's performance improved, Edelweiss said
Private sector's growth was driven by volume rather than higher ticket size, implying a tilt towards higher-margin protection
products."Steeping into FY19, growth in the first two months has been soft, largely on a higher base
We expect the momentum to improve as the base effect impact wanes," Edelweiss said.Here are the key insurance players mentioned in the
report:1) ICICI Prudential: "We had predicted some moderation in May due to base effect (strong flows post demonetisation) and management's
stance of containing business volatility
We expect the trend to normalise post Q1FY19
Meanwhile, we believe, the company's strong distribution franchise (balanced contribution from distribution channels) will cushion the
impact," stated Edelweiss Securities.2) SBI Life: Post four months of soft growth (sub-20 per cent growth versus >40 per cent run rate
during 9mFY18), individual APE grew >27 per cent YoY.3) Max Life: The volatile trend continued with growth improving to 19.7 per cent YoY
(down 1.4 per cent in April 2018)
Growth seems to be tilted in favour of ULIPs or unit-linked insurance plans, given the 13 per cent YoY rise in ticket size
The company has pulled out of IDBI Federal Life Insurance buyout; in this backdrop, sustained growth momentum through Axis Bank and other
channels holds the key, Edelweiss securities said
We believe, the company is set to deliver on operating parameters and at 1.8x FY20E P/EV, the risk-reward seems favourable.4) HDFC Life:
After robust surge in April (up 70 per cent YoY), growth softened to 11 per cent YoY
Importantly, growth was supported by higher volumes given a dip in ticket size.5) Bajaj Life Aditya Birla Sunlife: Bajaj Life reported
individual APE growth of 17 per cent
Birla Sunlife's growth momentum improved (up >40 per cent YoY), largely supported by >50 per cent rise in ticket size, indicating a dip in
