Insurance Monthly Update – November 2009

In November ‘09, Indian Life Insurance industry, second time in a row, sustained its double digit growth. The industry’s total Annual Premium Equivalent (APE)# grew by 22.4% yoy vis-à-vis 35.4% in October ’09. LIC APE grew by 34.5% yoy and private players by 13.8% yoy. The growth among private players was largely contributed by big and medium sized players namely HDFC Standard Life, Birla Sun Life and Tata AIG Life. However, on a mom basis industry APE declined by 6%. The fall was mainly due to poor performance by the private players, which fell by 11.9% mom. LIC growth remained flat on a mom basis at 2%, it APE was only up by Rs402mn.

Key observations

• The life insurance industry continues its double digit growth in November ‘09 with 22.4% yoy rise in APE. Though, both contributed to the growth, but it was mainly led by LIC which grew by 34.5% yoy. LIC witnessed strong inflows in the group premium of Rs 244mn, up by 189% yoy. Private players cumulatively witnessed a growth of 13.8% yoy, slightly lower than October ‘09 which was at 29.6% yoy.

• In November ‘09, on a standalone basis, ICICI Prudential Life positioned itself on the top by registering an APE of Rs4.2bn. Only three players witnessed a declined in APE namely SBI Life, which witnessed highest APE fall by 22.8% yoy due to the higher base effect. Other two were Reliance Life and Max New York Life, which were down by 10.2% and 2.8% respectively.

• Among the top-10 private players, HDFC Standard Life witnessed the highest growth at 63% yoy. It was mainly due to strong inflows in group premium, which zoomed up by 148% yoy. Among others, Birla Sun Life, Met Life and Tata AIG Life registered +40% yoy APE growth in November ‘09.

• On a mom basis, insurance industry APE was dragged into the negative zone by the poor performance of the private players. The insurance industry APE was down by 6% and the private players were cumulatively down by 11.9%. However, LIC grew flat at 2% in November ‘09. SBI Life underperformed the industry and peers on a mom basis; APE was down by 39%. Among the top-10, only two private players witnessed growth namely Birla Sun Life (+8.5%) and Bajaj Allianz (+5.4%).

• On a YTD basis, LIC outperformed the industry and private players by registering a growth of 25% yoy. Among the private players, only three players witnessed a growth viz. SBI Life (up by 11.2%), Birla Sun Life (up by 4.5%) and Tata AIG (up by 19.1%). LIC’s market share improved significantly from 41% in FY09 to 45% in 8MFY10 and among the private players, SBI Life’s market share rose by 326bps to 18% in 8MFY10.