After difficult first half, remaining year may be better for life insurers

LIC's weak performance pulls down industry APE growth, while mid-sized private insurers like Axis Max and HDFC Life expand market share

August 2025 saw the life insurance industry reporting very low growth. The individual annual premium equivalent (APE) growth for private life insurers was just 1.3 per cent year-on-year (Y-o-Y). LIC saw a drop of 5.1 per cent Y-o-Y.

 

The number of individual policies sold in August declined 10.3 per cent, with 14 per cent fall seen in LIC and 2 per cent slump in the private sector.

 

The retail APE declined 0.6 per cent due to LIC’s poor performance. For FY26 year-to-date (YTD), private insurers’ market share for individual APE rose to 70.4 per cent, a gain of 216 basis points (bps) Y-o-Y.

 

The gains were highest for Axis Max (up 85 bps) and HDFC Life (up 74 bps).

 

Some buyers paused, waiting for goods and services tax (GST) cuts. The continued impact of new surrender regulations was also felt while floods may have impacted business.

 

The insurance market may be seeing a shift in share towards mid-sized insurers. August data suggests unit-linked insurance plans (Ulips), which had a high base, are being substituted by non-linked savings products.

 

As this substitution is playing out, it is resulting in higher value of new business (VNB) margin for insurers.

 

The retail weighted received premium (RWRP) saw a slowdown, indicating weak retail participation with industry RWRP dropping 1 per cent Y-o-Y.

 

Large private companies saw a decline of 4 per cent, while mid-sized insurers reported growth of 8 per cent. And, small insurers grew at 5 per cent.

 

In the long run, GST exemptions on individual policies will support demand. But companies will need to rework pricing and decide whether to absorb or pass on the hit to margin caused by the non-availability of input tax credit (ITC).

 

HDFC Life’s individual APE growth came in flat at 0.7 per cent while group APE jumped 19 per cent leading to total APE growth of 2.7 per cent.

 

For FY26 YTD, individual APE market share improved 74 bps to 12.1 per cent. HDFC Life’s 4-year individual APE compound annual growth rate (CAGR) (FY22–26 YTD) is around 17.7 per cent. 

 

The stock is trading at an expected FY26 price/ embedded value (EV) of 2.5X.

 

ICICI Prudential Life (IPRU) saw a drop in individual APE of 14.7 per cent for August and the RWRP fell 13.1 per cent. The total APE declined 9.4 per cent, as group APE expanded 12.9 per cent.

 

For FY26 YTD, IPRU’s individual RWRP market share fell 107 bps to 6.1 per cent. IPRU has a 4-year individual APE CAGR (FY22–26 YTD) of 7.3 per cent and it is trading at around 1.6X price/ embedded value for expected FY26 EV.

 

Axis Max Life’s (AMLI) total APE grew at 17 per cent, with individual APE growth of 15.9 per cent. For FY26 YTD, individual APE market share was 7 per cent (up 85 bps). The individual APE 4-year CAGR (FY22–26TD) was 16.5 per cent and Max Financial is at P/EV of 2.3x for FY26 EV.

 

SBI Life reported a decline in individual APE of 4.1 per cent in August. Individual APE market share improved 5 bps to 15.9 per cent in FY26 YTD. It is trading at P/EV of 2.2x for expected EV for FY26.

 

Bajaj Life’s individual APE decreased 5.6 per cent while group APE jumped 1.9x leading to total APE growth of 3.9 per cent. It has an individual APE 4-year CAGR of 21.7 per cent.

 

On a 2-year basis, the industry saw CAGR of 4.7 per cent. The retail APE for the private sector grew 7.8 per cent and LIC saw 2.1 per cent decline.

 

In FY26 YTD, industrial retail APE grew 4.8 per cent. Axis Max Life clocked 16 per cent retail APE growth. Industry group APE was up a strong 29 per cent growth over 2 years with the private sector up 79 per cent and LIC down 6 per cent.

 

The total APE has grown 8.8 per cent FY26 YTD, with the private sector up 13.3 per cent while LIC managed 2.2 per cent growth. Since H1FY26 had a high base, and there was a GST-related pause, and upcoming festival season, growth may only pick up in November. Retail APE growth across industry in FY26 would require mid-teens private sector growth and LIC achieving some acceleration in H2FY26.