Prabhudas Lilladher said as financial markets remain volatile, ULIP sales growth could continue to be slow
Life insurance industry's annual premium equivalent (APE) growth in January was at 14 percent YoY led by strong growth in group insurance business, according to Prabhudas Lilladher. However, it was slower for private players, at 11 percent YoY.
More importantly, retail (individual or non-group) APE growth rate for the industry was slower at 9.3 percent YoY as highest market share player SBI Life lost steam reporting flattish growth, Prabhudas Lilladher added. The biggest insurer in the country, LIC, reported 8 percent YoY growth.
For private sector insurers, the APE growth rate was 10 percent YoY in January. ICICI Prudential Life and HDFC Life saw recovery in growth, flourishing at 9 percent and 2 percent YoY, respectively in the month.
"ICICI Prudential Life has not seen recovery in ticket size due to the company's strategy. The firm is looking to reduce its overall ticket size and increase volumes (32 percent growth in policies in January). Barring HDFC Life, all other players are seeing a mix of volume and ticket size growth," Prabhudas Lilladher said.
Mid-sized players like Aditya Birla Sun Life Insurance, TATA AIA, Max Life continued to grow at a strong rate continuing to improve their respective market share, it added.
In fact, non-bank promoted players Bajaj Allianz and Birla Sun Life are emerging as strong players, Shailendra Kumar, Director at Narnolia Financial Advisors said.
Aditya Birla Sun Life Insurance continued its industry-leading growth at 84 percent YoY, Max Life grew at strong 35 percent YoY over the base of 64 percent growth registered in January 2018.
Prabhudas Lilladher said mid-sized insurers have seen higher growth due continuous addition to product line in both individual and group insurance segments trying to reach in-line with larger players' offerings.
Four mid-sized players have added 500bps in market share in January and 400bps in 10-month FY19 within the private market share.
Private insurers' retail APE market share improved to 60 percent, up 50bps YoY in January. This makes 10-month FY19 growth to be 58 percent, up 120bps.
Private players added 17 products in both individual + group segments during the month, which has been highest in a standalone month.
SBI Life added two new products in the individual category in ULIP segment. "On slower growth, SBI Life saw a sharper decline in market share at 150bps/270bps YoY in January," Prabhudas Lilladher said.
As financial markets remain volatile, ULIP sales growth could continue to be slow, the brokerage said. But taking cues from Q3FY19 results, companies continue to improve their protection share and non-par savings as well which are margin accretive, it added.
After steady growth in January, Prabhudas Lilladher expect four insurance companies (HDFC Life, ICICI Prudential Life, Max Financial and SBI Life) to give 23-67 percent return going ahead.