New business premium of life insurance companies rises 30% in November

Private insurers' APE growth rebounds after lagging behind for three months

Life insurance companies reported a 30 per cent year-on-year (YoY) growth in new business premiums (NBP) in November due to a stellar show by state-owned Life Insurance Corporation (LIC), even as private insurers saw their premium growth moderating.

Data released by the Insurance Regulatory and Development Authority of India reveals the life insurance industry’s NBP was to the tune of Rs 35,458 crore in November, up 30 per cent YoY.

While private sector insurers reported marginal growth of 2 per cent YoY to Rs 11,426 crore, LIC’s NBP soared 51 per cent YoY to Rs 24,032 crore during the same period.

LIC’s growth in NBP was mostly driven by group single premiums, which were up almost 70 per cent YoY in November. 

LIC is the largest player in the group single premium market. 

NBP is the premium acquired from new policies for a particular year. It is the sum of the first-year premium and single premium, reflecting the total premiums received from the new business written.

However, on an annualised premium equivalent (APE) basis, private sector life insurance companies grew 21 per cent, following a 3-11 per cent growth over the past three months. 

Likewise, LIC’s premium on an APE basis was up 30 per cent YoY in November, as opposed to 11-15 per cent in the past three months. Analysts said increased activity after a slowdown in business in October due to the festival season could be the reason for higher growth in November.

APE is the sum of the total value of regular or recurring premiums plus 10 per cent of any new single premium written for the financial year.

Among listed private players, HDFC Life reported a 41 per cent YoY jump in NBP in November, aided by a robust rise in group single premiums, individual single premiums, and individual non-single premiums. 

Max Life posted a decent 11 per cent YoY growth in NBP during this period, on the back of individual single premiums. 

ICICI Prudential Life Insurance, on the other hand, reported a flat growth of 1 per cent in NBP as its non-single premium declined 28 per cent.

Surprisingly, SBI Life posted a 32 per cent drop in NBP in November as its group single premium segment declined 75 per cent during this period.

However, on an individual APE basis, HDFC Life reported 45 per cent growth and SBI Life 30 per cent growth (overall APE grew 11.5 per cent as group APE was down 73 per cent).

According to a Kotak Institutional Equities (KIE) report, ICICI Prudential Life remained weak, largely due to the slowdown faced by the parent bank, with a 1 per cent decline in the overall APE. 

Bajaj Allianz reported 26 per cent growth, almost similar to the past two months.

Tata AIA Life was the strongest at 57 per cent growth YoY.

In 2022-23 (FY23) so far, life insurers have reported a 34 per cent YoY increase in NBP to Rs 2.42 trillion, with LIC’s premium witnessing 43.26 per cent growth and private insurers growing 18.17 per cent YoY.

“We remain positive on medium-term growth prospects, even as we do not rule out some weakness due to rising deposit rates in the near term,” said KIE in its report.

According to analysts at Emkay Research, a slightly difficult external macroeconomic environment means that the rest of FY23 remains crucial to growth.

“With a host of reforms by the regulator and the government on the anvil, growth volatility in the sector and the individual company-specific, non-operating issues would mean that stocks will remain volatile in the near term,” they observed.