JM Financial has come out with its sector report on Life Insurance dated November 13, 2017. YTD, industry reported healthy 25% YoY APE growth driven by private insurers at 32% YoY.
JM Financial's sector report on Life Insurance
In Oct’17, the life insurance industry reported strong APE growth of 30% YoY led by private insurers at 31% YoY and LIC at 29% YoY. Among major private insurers, only SBI Life(+43% YoY) outperformed both private peers and the overall industry in terms of APE growth thereby emerging as the largest private insurer with a market share of 23.3% as ofOct’17. Other private players like ICICI Pru (+27% YoY), Max Life (+28% YoY) posted healthy double-digit APE growth in Oct’17. On an unweighted NBP basis, the industry recorded a28% YoY growth led by LIC which outperformed the industry with a 29% YoY growth. YTD,the industry recorded a 25% YoY growth driven by private players with 32% YoY while LIC lagged with 18% YoY resulting in its market share declining by 280 bps. The biggest beneficiaries of this have been SBI Life (+38% YoY), ICICI Pru (+36% YoY), HDFC Life (+35%YoY) and BALIC (+52% YoY) which posted robust APE growth YTD. We expect healthy industry APE growth of 16% CAGR over FY17-20 due to a) strong equity markets which augers well for ULIPs and b) increasing financialisation of savings and within that an expanding share of life insurance. Moreover, we prefer insurers with strong bancassurance,as they will generate significantly superior operating RoEVs of c.17% over FY17–19E v/s 8-9% for agency-dependent insurers.
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