Life Insurance: Premium collections of private life insurers’ up 15%

Life insurers reported 14% year-on-year (y-o-y) growth in individual annualised premium equivalent (APE) in October 2020 compared to 4% y-o-y in September 2020 and 6-40% y-o-y decline over April-August 2020. Gradual revival in unit-linked insurance plans (ULIPs), increase in sales through agency channels and strong traction in non-par savings segments are likely drivers.

Individual APE increased 14% y-o-y in October 2020 for private players while group APE was up 24% y-o-y, translating to 15% y-o-y growth in overall APE. On a sequential basis, this was up from 4% y-o-y in September 2020 from 7% y-o-y decline over June-August 2020.

Even as protection growth has likely slowed down from peak levels (ratio of individual non-single sum assured to individual non-single premium was broadly flat y-o-y at 31X; 41X for 7MFY21 compared to 32X in 7MFY20), pick-up in ULIPs, traction in non-par savings and gradual revival in group credit business (11% y-o-y growth in group sum assured against 37% y-o-y decline in 7MFY21 and 30% y-o-y decline in September 2020) led to strong growth in overall APE. LIC’s individual APE was up 6% y-o-y; overall APE was up 7% y-o-y on the back of 9% y-o-y growth in the group business.

HDFC Life reported 45% y-o-y increase in individual APE in October 2020 (up 43% y-o-y in September 2020); individual sum assured was up 6% y-o-y (up 4% y-o-y in September 2020 and 11% yoy in 7MFY21) in October 2020. Overall APE was up 47% (up 45% y-o-y in September 2020) on the back of strong growth in the group business (group APE was up 60% y-o-y compared to 55% in September 2020); credit life has likely picked up. Growth in individual business was likely driven by strong traction in the flagship traditional businesses. HDFC Life’s strategy to toggle between product classes has helped it deliver better than industry.

ICICI Prudential Life reported 22% y-o-y decline in individual APE in October 2020 (down 24% y-o-y in September 2020). It continues to report lower-than-industry growth owing to pressure on ULIPs and likely slowdown at ICICI Bank. Individual sum assured was down 3% y-o-y reflecting moderation in protection product. While ULIPs have likely picked up sequentially, it remains weak on a y-o-y basis.

SBI Life’s individual APE was up 14% y-o-y in October 2020 (decline of 4-14% y-o-y over July-August 2020). Overall APE was up 13% y-o-y. Individual sum assured was up 10% y-o-y while group sum assured was up 45% y-o-y; credit life has likely held on well.

Max Life’ individual APE was up 49% y-o-y while individual sum assured was up 25% y-o-y. Traction in the non-par savings business continued to support growth in Q2FY21. Max Life has fared better than most peers during the pandemic. Group APE was up 35% y-o-y while group sum assured increased 1.1X y-o-y; credit life has likely revived.