LIC’s individual annual premium equivalent decline 13 percent in May

10 Jun , 2021 By : Kanchan Joshi

NEW DELHI: Life Insurance Corporation (LIC) reported a 13?cline in individual annual premium equivalent (APE) in May. While the company had reported a 3?cline in its premium collection in May last year, better than the 33?cline reported by private players, it lost out to them last month with a 22?cline, according to a report issued by Kotak Institutional Equities.

As per the report, private life insurers reported weak individual APE growth at 5% year-on-year (YoY) in May, which, however, comes on low base. Two-year individual APE CAGR decline at 16% is similar to trends observed in April 2021, a result of the impact of lockdown-related disruptions.

"ICICI Prudential Life (up 28% YoY in individual business), Bajaj (up 32%) and HDFC Life (up 17%, 22% on an overall basis) were strong, Max Life was up 12% and SBI Life was down 6%," as per the report.

ICICI Prudential Life’s individual APE growth at 28% YoY was significantly higher than 5% average rise for private players; overall growth was lower at 15% due to a 43?cline in group business. A normalised base and strong growth from new bancassurance partnerships were the likely drivers.

On a 2-year CAGR basis, individual APE was down 22%. "We expect strong growth trends incrementally, reflecting channel and product mix diversification," said the report.

HDFC Life reported 17% YoY growth in the individual business and 22% growth in overall APE, as the group was up 120%. Two-year individual APE saw a 12% compounded decline, better than the 16?cline for private players. HDFC Life’s ability to toggle between product classes and continued focus on product innovation, however, helped it outpace most of its private-sector peers over FY2017-21.

SBI Life reported a 6% YoY decline in individual APE in May 2021, again on a low base. The company was down 29% on a 2-year CAGR basis versus a private sector decline of 16%. The impact of lockdown-related disruptions on SBI Life’s business was higher in April 2020 - two-year individual APE CAGR decline of 36% compared to 16% for private players.

"We would like to highlight that SBI Life had a 0.5-5% lower market share in May for individual APE in any year compared to the annual market share (since FY2010)," as per the report.