Group Policies Aid Life Insurers’ New Business Premium In February
The industry’s new business premium rose 27% over the previous month to Rs 27,465 crore in February: IRDAI
India’s life insurers’ revenue recovered on growth in group premiums even as the number of policies sold fell.
The industry’s new business premium rose 27% over the previous month to Rs 27,465 crore in February 2022, according to data released by the Insurance Regulatory and Development Authority of India. That’s 22% higher year-on-year and 42% over the pre-pandemic February 2020.
The total number of policies sold fell 33% month-on-month and 7% over the year earlier.
“The robust growth in monthly numbers can be attributed to an increase in single premiums both individual and group in the penultimate month of the financial year (with individuals undertaking tax planning measures), with LIC substantially outpacing its private peers for the month,” CARE Ratings Ltd. said in a report. “Due to the Covid-19 pandemic lockdown and its impact, premiums were affected in FY21, [so] base effect may also be possible in monthly FY22 numbers.”
In the group policy category for the industry, single premiums were up 48%, non-single premiums jumped 1.8 times and yearly renewable premiums rose 26% over the previous month. That buoyed the revenue for both Life Insurance Corporation of India and private peers in February.
New business premium of private insurers rose 10% to Rs 9,976 crore in February. Year-on-year, it was up 4%.
The country’s largest insurer saw its revenue increase 39% to Rs 17,489 crore. Year-on-year, it was up 35%.
“The private sector has a larger share in the non-single sub-segment (mainly individual premiums), while LIC continues to dominate the single premium sub-segment,” CARE Ratings said. Pension plans, general annuity and group gratuity schemes continue to account for a significant chunk of the group, while general annuity plans dominate individual single premiums, it said.
According to Emkay Global, despite relatively better growth by LIC in February, LIC's retail weighted received premium contracted in two years through February, while it grew at an annualised rate of 10.5% for private peers. “This divergent growth trend has led to the private sector gaining 7-percentage-point market share from LIC in the last two years.”
Given the recent slowdown in growth, a stronger base of March 2021 and the current macroeconomic and geopolitical situation, Emkay Global expects the sector’s FY22 growth to be a tad lower than year-to-date FY22.
For the life insurance industry, short-term disruptions have little impact on business and should be ignored, the brokerage said. Beyond near-term turbulence, the sector’s RWRP growth should broadly track nominal GDP growth, with private leaders growing faster than that and LIC growing slower.
“After the sharp correction in recent months, listed life insurance stocks are valued attractively, trading materially below their pre-Covid price-to embedded value multiples,” Emkay Global said.
How India’s listed private insurers fared in February 2022:
HDFC Life Insurance Co.
Revenue rose 12% over the previous month to Rs 2,076 crore. That was led by a recovery in group single premium policies, accounting for 51% of the revenue for the month.
Year-on-year, its new business premium rose 8%.
SBI Life Insurance Co.
New business premium fell for the third straight month.
It was down 7% over January to Rs 1,872 crore, mainly dragged by a 28% fall in individual non-single premium—accounting for 49% of the total revenue for the month.
Year-on-year, however, the new business premium rose 13%.
ICICI Prudential Life Insurance Co.
New business premium was up 6% over the previous month to Rs 1,340 crore.
Year-on-year, the revenue was down 29%.