Life Insurance Update- Lukewarm Nov’20 due to High Base

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India’s life insurance companies saw their business growth dip in November after a swift surge in the previous two months, mostly due to a base effect. While base effect dented the performance, strength in non-par savings and term products have sustained.

  1. The latest new business data from the insurance regulator showed that private life insurers reported a 5.1% decline in overall new business premium whereas LIC reported a decline of 35.5% to Rs 12,092.66 crore in overall new business premium. New business premiums of private insurers rose 27% in November last year, while Life Insurer Corp’s jumped 104%, led by growth in non-single premiums.
  2. Categories like individual single premium and individual non-single premium saw negative new business premium at 11.04% and 33.73%, respectively. Even all the categories in the group insurance segment witnessed a fall in its new business premium in November.
  3. The individual annualised premium equivalent, based on November’s released IRDA data is as follows:

4. HDFC Life has reported 20% YoY growth in individual APE in Nov’20 (versus 43-45% in Sep’20/Oct’20) on the back of higher ticket sizes as policies sold declined by 3.3% YoY.

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Based on number of policies:

5. In APE, SBI Life occupied the number one position in the private space with a 24% market share; it was flat YoY. On the other hand, HDFC Life gained market share (up 250bps YoY) and took the second position.

6. In NBP, SBI Life was number one with a 21.6% market share, and gained ~170bps YoY. HDFC Life, with a 21.2% market share, held second position, but lost 130bps YoY.

The coronavirus pandemic has triggered many structural changes in various sectors. The insurance industry is no exception. Given the run-up in equity prices in the recent months, we think that ULIPs could see better traction compared to earlier months. Although people have been reluctant till now in terms of committing large sums of capital but given the sequential improvement (QoQ in 2QFY21) in the ULIP business consumer confidence around market linked products seems to be improving.

Source: IRDA

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Adroit Financial

Adroit Financial

SEBI Registered PMS Advisor - INP000005349
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