HDFC Life, ICICI Pru Drive Private Insurers' Growth In October
Analysts expect Indian life insurers to maintain revenue growth, led by private firms, as the industry emerges from the Covid-19 pandemic.
New business premiums of life insurers fell by nearly a third month-on-month in October, data released by the Insurance Regulatory and Development Authority of India showed. But the sequential drop, Jefferies said in a note, could be attributed to seasonality.
Last month of a quarter usually sees higher business for insurance companies.
Life insurance industry's revenue rose 4% over the preceding year to Rs 21,606 crore in October. The growth came despite a 0.5% fall in the number of policies sold.
Jefferies said the year-on-year growth momentum continued as retail annualised premium equivalent grew for the industry, led by private players.
Private insurers’ revenue grew 10% year-on-year to Rs 8,106 crore. On a sequential basis, it fell 37% on a high base of September.
For the country's largest insurer, Life Insurance Corp., the revenue fell 31% sequentially to Rs 13,501 crore. Over the preceding year, it rose 0.5%.
According to Emkay Global, poor sales of high-ticket annuity products and lesser focus on unit-linked insurance products are the main reasons hurting LIC’s growth. These factors, it said in a note, corroborate the long-term trend of a gradual shift of the retail life insurance market toward large private players that have a strong brand and a wide bancassurance network.
While latest commentary from companies suggests that individual protection would take longer to recover given the hike in reinsurance rates, Nirmal Bang said that "the long-term opportunity remains intact".
Jefferies agreed. "The premium run rate is likely to stay strong into 2H (the second half of the ongoing fiscal), with further pick-up in vaccinations and Covid-19 remaining under control," it said.
How the three listed private insurers fared:
HDFC Life Insurance
New business premium fell 36% month-on-month to Rs 1,845 crore in October. Still, its revenue was the highest revenue among private peers. Year-on-year, its new business premium rose 11%.
Although growth rates appear moderate in comparison with the top peers, Emkay Global said this came on a relatively stronger base of last year.
SBI Life Insurance
New business premium fell 44% sequentially to Rs 1,688 crore in October after recording the highest monthly revenue among private peers in September. On an annual basis, the premium fell 1.4%.
SBI Life’s deep reach and wide distribution network can help it to mitigate growth challenges, according to Nirmal Bang.
Emkay Global listed the company as its top pick in the sector that's on a strong growth track.
ICICI Prudential Life Insurance
New business premium fell 22% over the preceding month to Rs 1,154 crore. Premium rose 11% over a year earlier.
Loss of momentum in retail protection has been made up for by the group segment, Nirmal Bang said. The company, the brokerage said, also seems to have become a lot more comfortable in underwriting guaranteed products.