ICICI Prudential Life, HDFC Life, Max Finance, Tata AIA, Bajaj Allianz, Birla Sun Life - Private players' Individual WRP grows 3%

Motilal Oswal highlights that Individual weighted received premium (WRP) for private players (ICICI Prudential Life, HDFC Life, Max Finance, Tata AIA, Bajaj Allianz, Birla Sun Life) in Insurance space grew 3% YoY in Dec’20 (v/s a 7.1% YoY decline in Nov’20), in line with the industry, which posted a growth of 3.4% YoY (v/s a 33% YoY dip of in Nov’20). The industry continues to display a positive trajectory after witnessing a decline due to COVID-19, led by a focus on Protection and Non-PAR segments. For FY21 YTD, Individual WRP for private players declined 5.8% YoY while for the industry dropped by 7.9% YoY.

Among listed players, Max Finance reported a strong growth (18% YoY), followed by SBI Life/HDFC Life at 7%/4% YoY. On the other hand, ICICI Prudential Life continues to witness pressure and reported a 24% YoY decline. Mid-sized players reported strong growth, with Bajaj Allianz/Birla Sun Life/Tata AIA reporting a growth of 41%/20%/9% YoY, while Kotak Life reported a decrease of 13%. LIC reported a growth of 4.1% YoY (v/s a 54.3% YoY dip in Nov’20) in Individual WRP. During FY21 YTD, its Individual WRP declined 10.7% YoY.

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Growth in the Protection business moderates:

After reporting robust growth in the Protection business over the first half of FY21, the pace of growth has moderated over the past few months. However, the trend still remains healthy. For private insurers, while Individual un-weighted non-single premium grew 2.2% YoY in Dec’20, Individual sum assured declined 14.3% YoY. Even for a total un-weighted single premium, growth in sum assured at 36.8% YoY was lower than the 46.1% YoY growth in premium. For the industry as a whole, sum assured grew -11.1%/45.3% YoY in Dec’20 v/s a growth of 2.1%/50% in total un-weighted Individual non-single premium/single premium. LIC too reported similar trends. Even the ratio of Individual non-single sum assured to Individual non-single premium has declined over the past few months, indicating moderation in Protection growth.
Performance of key private players:

The combined market share of listed players – SBI Life, ICICI Prudential Life, HDFC Life, Max Finance – on an Individual WRP basis stood at 63.6% as of Dec’20 (v/s 62.9% in FY20). Among large private insurers, Tata AIA, Bajaj Allianz, and Birla Sun Life are getting firmly positioned in the fifth to seventh slot, based on Individual WRP.
Operating metrics to stay resilient even as premium growth remains tepid:

Motilal Oswal expects premium growth to normalize from Q4 FY21, while a low base of Mar’20 (due to the COVID-19 lockdown) would provide a likely boost. Motilal Oswal expects HDFC Life to witness a gradual recovery in new business premium (NBP) and APE growth of 14% in FY21E. The same for SBI Life is estimated at 5% YoY. On the other hand, ICICI Prudential Life would continue to reflect tepid trends and is likely to report an APE decline of 13% for FY21E.