Premium income of Indian life insurers contracted in September as performance of private insurers moderated.
The individual annual premium equivalent—sum of annualised first-year premiums on regular policies and 10 percent on single premiums—contracted by 3 percent year-on-year last month, according to data compiled by BloombergQuint from the Insurance Regulatory and Development Authority of India. That compares with 8 percent growth in September 2018 and 14 percent growth in August 2019.
The APE of private insurers grew 3 percent in September compared with 11 percent in August. That, according to Emkay Global Financial Services Ltd., is due to India's slowing economic growth—which fell to a six-year low in April-June—finally hurting the insurance sector with a lag.
Private Players Premium Growth
The top two private insurers weren't immune from the slowdown, with the APE of HDFC Standard Life Insurance Co. Ltd. and ICICI Prudential Life Insurance Co. Ltd. contracting 20 percent and 7 percent, respectively.
SBI Life Insurance Co. Ltd.'s APE, however, grew 11 percent last month, though it came at a lower pace than 14 percent in August.
Continued stress in sales of unit-linked insurance policies may have led to the situation for ICICI Prudential and HDFC Standard Life, according to Emkay Global. The brokerage said growth at SBI Life was driven by large fund flows from the group portfolio, which is a low-margin business.
The APEs of other private unlisted players like IndiaFirst Life, Future Generali Life, Star Union Dai-ichi and TATA AIA grew in September.
The big drag on premium income growth came from Life Insurance Corporation where September APE contracted 11 percent versus an 18 percent increase in August.
Morgan Stanley expects premium growth of private insurers to range in mid-teens over the next two years compared with 9 percent in 2018-19. A better macro situation, improving financial inclusion and a stabilising regulatory environment may help, it said in a note last month.
The industry's APE may grow at an annualised rate of 16 percent over financial years 2019-2021, JM Financial said in a note last month, driven by investments into online/direct distribution channels and lower competition among other saving products on the back of a fall in interest rates.
Market Share
The share of private life insurers by total premium rose in September at the cost of LIC, India's largest insurer. Private insurers had around 63 percent market share last month while LIC's share fell from 44 percent in August to 37 percent.
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