HDFC Life To LIC: Tax-Savers Drive Life Insurers’ New Business Growth In March

New business premiums of India’s life insurers recovered in March, driven by an increase in single-payout plans as investors rush to buy policies that can help save tax.

The industry’s new business premium rose 1.2 times over the preceding month to Rs 59,609 crore in March, according to data released by the Insurance Regulatory and Development Authority of India.

Revenue was up 37% year-on-year. The number of policies sold rose 37% over the previous month, with growth across individual and group categories.

"The robust growth in monthly numbers can be attributed to an increase in single premiums, for both individual and group segments, in the final month of the financial year (with individuals undertaking tax planning measures), with LIC substantially outpacing its private peers for the second month in a row," Care Edge said in its April 19 report.

After the growth moderated in January-February, the industry saw a healthy recovery in March, Motilal Oswal said in its April 19 industry report. "We expect trends to remain healthy, given the strong demand in annuity/non-par and recovery in the protection business, while unit-linked insurance plan growth can remain weak due to volatile market conditions."

Key Highlights

• Life Insurance Corp., the country’s largest insurer, saw its revenue jump 1.5 times over the previous month to Rs 42,319 crore. That came on the back of strong growth in its group and retail single and non-single premium policy revenue. Year-on-year, its new business premium rose 50%.

• New business premium of private companies rose 77% month-on-month to Rs 17,290 crore in March. Year-on-year, it grew 12%.

"Latest commentary from companies suggests that individual protection has started to recover," Nirmal Bang said in its April 19 report. "The short-term demand impact due to price hikes may be transitory and long-term growth will be driven by structural demand drivers."

• New business premiums of life insurers rose 15% to Rs 3.1 lakh crore over the previous year.

• LIC reported a growth of 11.5% with a revenue of around Rs 2 lakh crore.

• Private insurers' revenue rose 22.3% to Rs 1.2 lakh crore, narrowing gap with LIC.

"Compared with the pre-Covid base, the private sector retail weighted received premium two-year CAGR in FY22 came in at 14.5% vs a meager 1.6% for LIC, resulting in the private sector retail weighted received premium market share increasing by 5.7% in two years to 62.9% in FY22," Emkay Global said in a note.

Going into FY23, the brokerage expects overall retail weighted received premium growth to be around 12-13% year-on-year, with the private sector growing in the teens and LIC growing in high single digits.

"Powered by their brand and ubiquitous distribution strengths, listed private life insurers are in a position to grow strongly with relatively higher profitability."

SBI Life Insurance was the largest private insurer with a market share of 8.1%, followed by HDFC Life Insurance Co. at 7.7%, and ICICI Prudential Life Insurance Co. at 4.8% as on March 31, 2022. LIC's market share stood at 63.3% for FY22.

Here's how India’s listed private insurers fared in March:

• Revenue rose 52% over the previous month to Rs 3,164 crore in March. Year-on-year, it rose 4%.

• New business premiums grew 5% sequentially and 7% year-on-year to Rs 7,113 crore in the quarter ended March.

• HDFC Life reported revenue growth of 21% in FY22 over FY21 at Rs 24,301 crore.

• New business premium rose 60% over the previous month to Rs 2,845 crore in March. Year-on-year, it rose 6%.

• New business premiums declined 25% sequentially and grew 2% year-on-year to Rs 6,666 crore in the quarter ended March.

• SBI Life reported 19% growth in the yearly premium totaling to Rs 25,458 crore—the highest revenue among private peers.

• New business premium rose 74% over the previous month, the maximum among listed peers, to Rs 2,191 crore in March. Year-on-year, too, it was up 5%.

• The revenue rose 31% sequentially but fell 3% over the year earlier to Rs 4,788 crore in the quarter ended March.

• Year-on-year, ICICI Prudential Life's revenues grew 13% to Rs 15,036 crore.