Published on 13/10/2017 4:58:52 PM | Source: Kotak Securities Ltd

Insurance Sector Update - Kotak Sec

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Select large players drive growth. Business momentum in September 2017 remained robust with 23% growth in private sector’s overall APE and 19% at LIC translating into 21% growth for overall industry. Within private sector, growth was driven by select large players, viz. Bajaj Allianz, HDFC Life and PNB Metlife, while Max Life and ICICI Life witnessed moderate growth.

 

Private sector remains strong

Private sector reported yet another month of strong performance with 23% overall APE growth and 30% growth in individual APE. LIC reported 19% growth in overall APE largely from the group business as its individual APE growth was lower at 10% yoy. Thus, overall industry growth was moderate at 21%. On YTD basis, private sector individual growth was strong at 37% and LIC moderate at 13%.

 

Muted month for some as select players drive growth

* Within the private sector, growth was strong for select players while others were a bit muted. Among large players, in the individual APE segment Bajaj Life was up 31% yoy, HDFC Life 71% yoy and PNB Metlife up 31% yoy while India First was up 70% yoy. Interestingly, growth in ticket size in the individual non-single segments was moderate at 13% yoy for Bajaj Life and 11% yoy for HDFC Life. This means that these companies have grown because of sharp increase in number of policies. PNB Metlife’s average policy size was up 27% yoy and India First was up 23% yoy.

* first two months this year. The company had then guided for a higher base effect and hence moderation in growth. Its average ticket size in the individual non-single segment was down 7% yoy, though at ₹91,000 it remains about 2X of key players.

* Birla SL has reported a bit of volatility with 14-32% growth since April; the company reported 18% growth in September 2017. Birla SL’s average policy size in the individual nonsingle segment was up 31% yoy; this means that it lost in terms of number of policies.

*  Max Life moderated to 19% from 23% in August 2017 with 9% growth in average policy size in the individual non-single segment; YTD growth at Max is moderate at 19%.

* Reliance Life reported 3% decline; YTD growth was moderate at 12% yoy. This is despite the fact that its average policy size in the individual non-single segments was up 34% during the month; this means that the company has significantly reduced the number of policies.

 

Mutual fund inflows moderate mom

Exhibit 7 shows that the overall inflow to financial savings remains extremely strong with mutual fund inflows to equities at ₹246 bn in September 2017, though this is marginally lower than ₹265 bn in August 2017.

 

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