The strong resilience in equity markets and falling term deposit rates have augured well for private life insurance companies. The insurers have clocked 42 per cent growth in individual first-year premium, on an annual premium equivalent (APE) basis, during April-July to Rs 8,346 crore on the back of Ulip sales. The figure was Rs 5,898 crore in the four months of last financial year.
The APE-based individual adjusted first-year premium gives full weightage to regular premium but takes into account 10 per cent of single premium..
Private life insurers increased their market share to 54.4 per cent during the four months of this financial year compared to 49.4 per cent in the year-ago period.
Banks promoted private life insurers and those having strong bank partners sold more of unit-linked insurance plans (Ulips) that continued to boost their growth prospects. For instance, ICICI Prudential Life Insurance, SBI Life, Max Life, Bajaj Allianz and HDFC Life reported a double-digit growth. ICICI Prudential Life Insurance grew by 56 per cent to Rs 2,220 crore, increasing its market share by 241 basis points to 27 per cent.
SBI Life grew by 48 per cent to Rs 1,750 crore, HDFC Life by 32 per cent to Rs 1,008 crore, Max Life 17 per cent to Rs 623 crore and Bajaj Allianz by 93 per cent to Rs 361 crore during the four-month period.
Public sector behemoth Life Insurance Corporation of India (LIC) grew by 16 per cent on the APE basis during the four months to Rs 6,998 crore.
The life insurance industry as a whole grew by 28 per cent to Rs 15,344 crore.
“We forecast strong industry growth of 16 per cent CAGR in APE over FY17-20 estimates. We continue to prefer insurers with strong bancassurance, as they will generate significantly superior operating Return on Embedded Value of 17 per cent over FY17-19 estimates versus 8 to 9 per cent for agency dependent insurers,” said Karan Singh, analyst at brokerage JM Financial.
LIC continued to focus on less profitable and risky group insurance business where it wrote Rs 27,518 crore, registering a growth of 20 per cent. Private life insurers that are more focused on profitable businesses stayed away from group business, underwriting Rs 4,784 crore during April to July, a fall of 5 per cent.