Published on 16/11/2017 12:48:20 PM | Source: Kotak Securities Ltd

Insurance Sector Update - Kotak Sec

Posted in | #Kotak Securities Ltd #Insurance Sector #Sector Report


High growth for all; are we close to the peak? All players reported strong APE growth, largely in the individual segment during October 2017, translating into 28% growth for the industry and 29% for the private sector. Interestingly, all large players reported growth in volumes while the smaller players have reported higher ticket-size growth. MF inflows moderated for the second consecutive month; this may be a lead indicator of moderation in ULIP inflows as well.

 

Most players in 30s

Most large private players reported about 30% growth in individual APE during October 2017. Interestingly, even LIC was up 26% yoy. Private sector reported 33% growth in individual APE with SBI leading (up 46% yoy) followed by Star Union Daichi (43%) and Canara HSBC (38%). HDFC Life was up 31% yoy, Max Life up 31% and ICICI Life at 26%. Bajaj Allianz was the only large player with moderate (16%) growth; Birla SL was a bit higher at 23%.

 

Higher volumes for large players, ticket size growth for others

Average ticket size in individual non-single segment (Exhibit 5) suggests that large players have delivered lower ticket-size growth, i.e. their growth is driven by higher volumes. Thus, average ticket size growth for HDFC Life was 10%, Max was up 12% while ICICI Life was down 4%. SBI Life’s ticket size was up 24%, still much lower than individual APE growth of 46%. Players with higher ticket size growth driving premiums were Bajaj Allianz (up 31%), Birla SL (up 31%), Tata (up 38%), Canara HSBC and DHFL (up 35%).

 

Mutual fund inflows are moderating

Exhibit 7 shows that the overall inflow to equity mutual funds have declined consecutively for past two months; 201 bn in October 2017 as compared to peak of rs.265 bn in August 2017. This may be a lead indicator of slowdown in financial savings inflow (likely on a high base) even as life insurance inflows remain strong.

 

Will momentum continue post November?

Life Insurance premium have been strong since FY2015. Demonetization provided a boost last year with consistent growth of over 25% since November 2017. It would be crucial to see if this trend continues in the next month as well or a high base leads to some fatigue. Mutual fund inflows are anyway showing some weakness.


To Read Complete Report & Disclaimer Click Here

 

For More  Kotak Securities Ltd Disclaimer http://www.kotaksecurities.com/pdf/generaldisclosure.pdf    

 

 

Above views are of the author and not of the website kindly read disclaimer