Mumbai: The all pervasive economic slowdown is finally hurting the life insurance sector with a lag. The individual new business premium measured in terms of annualized premium equivalent (APE) for life insurance companies declined by 3 per cent YoY in September to Rs 5,820 crore compared to 11 to 27 per cent YoY growth witnessed during April to August 2019.
The FY20 had started on a strong note with private players registering APE growth of 30.5 per cent in 1QFY20 as per the IRDA data. APE is an international formula that gives 100 per cent weightage to regular premium while takes into account 10 per cent of single premium.
ICICI Prudential Life Insurance reported APE growth of 5.2 per cent YoY to Rs 700 crore on a received premium basis in Sept.
The APE reported a negative growth of 5.7 per cent YoY to Rs 625 crore. APE on an accrued basis for Q2FY20 came in at Rs 1,900 crore (-4.3 per cent YoY). The retail APE at Rs 580 crore declined 6.6 per cent YoY. Sales of ULIP policies remained under stress, though the restart of the sale of par products and continued traction in the protection segment could support its margins. Policies sold fell 7.1 per cent YoY in Sept’19, while the retail APE ticket size remained flat (+0.4 per cent YoY). Even the high-growing HDFC declined after five months of consistent high growth. SBI and Max continued to moderate for the second consecutive month.
HDFC Life Insurance reported 23 per cent and 20 per cent decline in new business premium and APE to Rs 590 and 430 crore. The growth comes off an extremely high base as Sept. 18 NBP/APE growth was at 47/20 per cent respectively. “For Q2FY20, APE at Rs 1,720 crore (+19 per cent YoY), was 8.8 per cent below our estimates for HDFC Life,” said Neeraj Toshniwal, Research Analyst at Emkay Global Financial Services.
Policies sold by HDFC Life decreased by 13.9 per cent, while retail APE ticket size was reduced by 6.1 per cent YoY in Sept. reflecting the stress in the ULIP segment, leading to a disappointment in overall growth.