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:

• 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.

• 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.

• 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.