Life Insurers’ Premium Growth Slows In July
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Life Insurers’ Premium Growth Slows In July

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New business premiums of India’s life insurers grew at the slowest pace in five months in July despite a lower base.

The individual annual premium equivalent—a sum of first-year premium and single-premium policies—grew at 17 percent year-on-year last month compared with 4 percent in July 2018, according to data compiled by BloombergQuint from the Insurance Regulatory and Development Authority of India. Growth of private insurers remained flat at 22 percent during the month, while India’s largest insurer—Life Insurance Corporation—grew at 10 percent.

For the industry, the year-on-year premium growth across segments, including individual and group business, stood at 77 percent last month. This was led by a more than twofold growth in LIC’s new business premium.

Among the listed private insurers, HDFC Standard Life Insurance Co Ltd. continued to outperform peers.

Still, brokerage Prabhudas Lilladher said growth of HDFC Life slowed over the previous month as sales of its new savings product “Sanchay Plus”—that led to higher growth in the first quarter—“is now settling down”.

While ICICI Prudential Life Insurance Company Ltd. reported a decline in individual APE growth in July, its overall premiums rose on higher sale of group protection policies.

BloombergQuint had earlier reported that share of protection products has been growing at a faster pace in the portfolio of India’s listed private life insurers.

“For ICICI Prudential, given a change in strategy toward lower ticket size Ulips, SIP option in Ulips and a focus on higher-margin protection segment, comparison in terms of APE is less meaningful,” Emkay Global said in a report.

SBI Life Insurance Company Ltd., however, sold more policies last month compared with peers. While the number of policies sold by SBI Life rose 4 percent, it fell 1 percent and 12 percent for HDFC Standard Life and ICICI Prudential, respectively.

Market Share

The share of private life insurance companies by total premium continued to rise in July at the cost of LIC.

Private insurers now have 33 percent share against LIC’s 66 percent, IRDAI data showed. In June, private companies had 26 percent share compared with LIC’s 74 percent.

Prabhudas Lilladher continues to prefer life insurers as their recent price performance led to improved valuations. Emkay Global remains ‘Overweight’ on ICICI Prudential due to change in its product mix toward higher-margin segment and valuation comfort.

Also, Morgan Stanley expects the year-on-year growth in premium of private insurance companies to be in mid-teens over the next two years against 9 percent in 2018-19.

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