Business growth moderates for four listed private life insurance players

Life insurance stocks have outperformed the broader markets in the last three months amid strong business growth and a robust outlook. The BS life insurance stock index is up 16 per cent in the last three months, while the BSE Sensex is down by about 6 per cent. Though growth potential remains strong, the recent premium data highlights that growth for private players may be moderating.

While the pace of growth for the four listed life insurers has come down, HDFC Life and Max Life fared better. While they registered growth of 28-35 per cent in individual annual premium equivalent (APE, a common sales metric for life insurers), those for SBI Life was lower at 14.3 per cent in August. ICICI Prudential Life continued to be a laggard and witnessed a 10 per cent decline in individual APE due to stress in unit-linked insurance or ULIP. With over 80 per cent share in total APE, individual APE (retail) drives overall APE (including group policies) of private players.

ICICI Life’s premium growth would likely remain weaker than peers due to change in product mix away from high-ticket ULIP. However, the focus on higher-margin protection products should help improve profitability and thus earnings visibility for the insurer.