Insurance Monthly Update – September 2009

After reporting growth for two consecutive months, cumulative Annual Premium Equivalent (APE)# of Indian Life Insurance industry again slipped into negative territory in September ’09. Total APE witnessed a decline of 6.1% yoy. The fall was largely on the back of poor performance of the private players as they cumulatively reported a decline of 14.9% yoy, steeper than last month which was at 5.2% yoy. However, LIC has been maintaining its growth momentum since April ’09. In September ’09, it registered a growth of 12.3% yoy on the back of strong inflows in individual non-single premium (up by 51% yoy). On a mom basis, total APE increased by 2.5% primarily on the account of 16.4% mom jump in private player’s APE led by leaders such as SBI Life and Reliance Life. LIC underperformed the industry and private players by posting negative APE at 13.8% mom.

Key observations
The insurance industry, after witnessing growth for last two months, posted a poor performance in September`09 with 6.1% yoy fall in APE. Private players majorily contributed to the fall, as their total APE was down by 14.9%. However, the industry decline was contained by LIC’s growth of 12.3% yoy.
ICICI Prudential Life, after regaining the top position last month, got displaced again by SBI Life on YTD basis. SBI Life with a market share of 17.5% YTD overtook ICICI Prudential Life, which had a market share of 16.5% in September ’09. SBI Life mopped up Rs6.9bn in its first year premium in September ’09 (highest till date in FY10) vis-à-vis Rs3.1bn in the previous month, up by 123.9% sequentially. ICICI Prudential Life managed to mobilize Rs4bn vis-à-vis Rs5.3bn down 23.3% mom.

Among the top ten private players, only Tata AIG Life reported yoy APE growth in September ’09, up 9%. On a yoy basis, APE of big private players was significantly down with ICICI Prudential, Bajaj Allianz and HDFC Standard Life witnessing falls of 38.2%, 31.2% and 45.2% respectively. SBI Life managed to restrict its fall to 1%yoy, on the back of strong inflows under group category for both single and non-single.

On YTD basis, LIC again outperformed the others by registering APE growth of 19.8%yoy. Among the private, only two players successfully posted APE growth namely SBI Life and Tata AIG Life, with growth of 3.4% yoy and 9% yoy respectively. ICICI Prudential Life witnessed the steepest decline among the Top 10 players, down by 38.1%yoy. It was closely followed by MetLife, which witnessed a decline of 37.5% yoy.

Private players market share increased by 100bps from last month to 55% in 6MFY10. Among the top ten players, SBI Life gained the most; its market share was up by 246bps over FY09. ICICI Prudential Life, lost the top slot among the private players with 16.5% market share, saw a decline of 413bps compared to the last fiscal.

Growth in Annual Premium Equivalent  (APE)