In our previous report Bridging the Gap: Perspectives on Indian Life Insurance Industry,' we highlighted the immense opportunities awaiting Indian life insurers

Overall growth pick-up slow but steady: Insurance companies' business momentum remains sequentially good but with growth rate bouncing back in Q2FY21 (post lockdown ending), the overall business growth rate has also remained steady. Saving products continue to be in demand especially...

Overall growth pick-up slow but steady: Insurance companies' business momentum remains sequentially good but with growth rate bouncing back in Q2FY21 (post lockdown ending), the overall business growth rate has also remained steady. Saving products continue to be in demand especially...

Private industry down 7% YoY due to high base Individual APE for Nov'20 was down 33% YoY. Post turning positive in Sept'20 and Oct'20, growth in Nov'20 turned negative on account of the high base of last year. Note that in Nov'19, the overall industry had reported individual APE growth of 60% YoY. Private industry's individual APE declined by 7.1% YoY in Nov'20 while LIC reported a sharper decline of 54.3% YoY. YTD, the total industry is down 10% YoY, with the private industry down 7.7% YoY and LIC down 12.8% YoY. We remain positive on the long-term growth prospects of the life insurance industry given the low insurance penetration levels in India as well as the protection gap. Earlier, our expectation was that FY21 would...

Private industry APE up 14%; HDFC Life strong, ICICI Pru getting better Individual APE growth (YoY) for Oct'20 was 10.7%. Post turning positive in Sept'20, growth was very strong in Oct20, partially because of a low base. Oct'19 had seen a 10.5% MoM drop in individual APE compared to a 4.8% decline in Oct '20. Private industry's individual APE grew by 14.4% YoY in Oct'20 while LIC reported a growth of 6% YoY. YTD, total industry is down 4.8% YoY with the private industry being down 7.8% YoY and LIC is down <1% YoY. We remain positive on the long-term growth prospects of the life insurance industry given the low insurance penetration level in India as well as the protection gap. Earlier, our expectation was that FY21 would see subdued demand for...

Linked business RoAE deteriorated across companies despite lower growth mainly due to weak equity markets in FY20. Expenses as a percentage of net new money raised (premiums less benefit paid) reduced for IPRU/SBILIFE to 25.3/16.5 (-1,320/-464bps since FY17), while increased for HDFCLIFE to 41.0% (+730bps since FY17). Additionally, the first-year commission percentage is the highest for HDFCLIFE at 17.9% in FY20. On an overall basis, expense ratios and commission ratios are the lowest for SBILIFE across business lines. Lastly, in this report we have also covered surrender percentages, reinsurance efficiency, provisioning, related party transactions, reserving, and asset composition. We conducted a deep dive comparative analysis of the annual reports of the top three private life insurers. Our analysis revealed that VIF unwind conversion to PAT has deteriorated across companies with the worst hit being IPRU (61.9% -7,586bps since FY17). HDFCLIFE/SBILIFE continued to report stable conversion trends at 94.7/74.9% for FY20. With life insurers focusing on growing NPAR businesses, RoAEs continue to slide as the new business strain has increased. HDFCLIFE/SBILIFE reported non-linked RoAE of 9.1/10.6% (-851/-1,251bps since FY17) vs. IPRUs 21.3% i.e. -5,581bps since FY17.

Pvt players keep the momentum; SBI steady, IPru & HDFC Life improving Going by the August 2020 numbers, we believe that new business sales in the industry seem to be holding the momentum we have seen post re-opening of the economy. Latest numbers and the recent new business trends have been in line with our expectation of a generally improving industry scenario. For August 2020, total industry-wide individual APE was down 2.3% YoY compared to an 18% decline in 1QFY21. LIC continued to outperform the industry, growing by 2.1% YoY (individual APE). The private industry individual APE was down 5.8% YoY, though much better when compared to the 23% YoY decline in 1QFY21. We remain extremely positive on the long-term growth prospects...

lockdowns have led to pause in pick up and move slowly, although protection products continue to remain in high demand. We have turned cautious in the near term as valuations do not provide margin of safety....

lockdowns have led to pause in pick up and move slowly, although protection products continue to remain in high demand. We have turned cautious in the near term as valuations do not provide margin of safety....

June 2020 much better than last two months; IPRU Life remains a laggard New business generation for June 2020 seems to have been much better as the economy partially re-opened. Total industry-wide individual APE for June 2020 is down 1.4% YoY compared to a decline of 43.7% in April 2020 and 19.8% in May 2020. LIC has shown a remarkable turnaround, posting a 7.5% YoY growth in June 2020. On the other hand, the private industry individual APE is down 7% YoY in June 2020, though still better than 32-40% decline seen in April and May. Though the lockdown was still in force through the whole month of June, we believe that the companies have generally been extremely quick to deploy digital tools and...

Life insurance business data for Jun'20 showcased a continued strong pull back month over month post lockdown in Mar'20. Industry de-grew 6% YoY v/s -45% YoY seen in Mar'20 and 36% YoY growth in Jun'19. Although, in Q1FY21, industry de-grew by -19% YoY with private de-growth at -23% YoY. On Individual APE basis, industry de-grew by mere 1.4% YoY pulled by LIC which grew at 7% YoY, private players showed a pullback but still have degrown 7% YoY. For month wise trends, SBILI have seen strong pull back from ~70% de-growth in Apr'20 to 5% de-growth in Jun'20 & HDFCLI from -29% in Apr'20 to -3% YoY In Jun'20, Max Life also saw material pick up with 13% YoY...

Life insurance business data for Jun'20 showcased a continued strong pull back month over month post lockdown in Mar'20. Industry de-grew 6% YoY v/s -45% YoY seen in Mar'20 and 36% YoY growth in Jun'19. Although, in Q1FY21, industry de-grew by -19% YoY with private de-growth at -23% YoY. On Individual APE basis, industry de-grew by mere 1.4% YoY pulled by LIC which grew at 7% YoY, private players showed a pullback but still have degrown 7% YoY. For month wise trends, SBILI have seen strong pull back from ~70% de-growth in Apr'20 to 5% de-growth in Jun'20 & HDFCLI from -29% in Apr'20 to -3% YoY In Jun'20, Max Life also saw material pick up with 13% YoY...

cost of funding and unsecured loans especially for private banks. For our coverage universe we expect, 12% YoY NII growth with 16% YoY for private banks and 8% for PSBs, PPOP growth of 23% YoY similar for Pvt & PSBs led by treasury, stake sale (SBI/ICICIBC) and benefit in opex, while PAT growth of 6% YoY for coverage with 14% YoY for private banks. Our preference continues remains with HDFCB, ICICIBC & Kotak on back strong deposit accretion, steady operating performance and strong capital base to protect hits from asset quality. While, we also believe underwriting...

cost of funding and unsecured loans especially for private banks. For our coverage universe we expect, 12% YoY NII growth with 16% YoY for private banks and 8% for PSBs, PPOP growth of 23% YoY similar for Pvt & PSBs led by treasury, stake sale (SBI/ICICIBC) and benefit in opex, while PAT growth of 6% YoY for coverage with 14% YoY for private banks. Our preference continues remains with HDFCB, ICICIBC & Kotak on back strong deposit accretion, steady operating performance and strong capital base to protect hits from asset quality. While, we also believe underwriting...

Effect of Withdrawal of Long Term Policy Cover for Motor Insurance: Long-awaited industry relief is finally been delivered by IRDAI on June 8, 2020, with the withdrawal of long term insurance schemes

Better than Apr'20 but still down significantly New business generation for May'20 indicates that Apr'20 may have been the worst impacted due to the lockdown. The de-growth for the private sector seems to have been arrested with individual APE down 32.1% YoY compared to the 40.3% decline in Apr'20. On the other hand, LIC has reported a relatively better performance with individual APE down only 3.1% YoY. Total industry individual APE collection stood at Rs34.8bn, down 19.8% YoY, but on MoM basis, it grew by 91% (private: 61%, LIC: 133%). Though the lockdown was still in force through the whole month, we believe that the companies have generally been extremely quick to deploy...

From our channel checks it has been evident that protection remains in demand with review in health coverage and medical checkups also opening up, while certain key flagship savings product are also picking up as Banca channel pulls back from easing of the lockdown and savings v/s deposits Source: Life Insurance Council, PL...

From our channel checks it has been evident that protection remains in demand with review in health coverage and medical checkups also opening up, while certain key flagship savings product are also picking up as Banca channel pulls back from easing of the lockdown and savings v/s deposits Source: Life Insurance Council, PL...