Your Money: Premium collections of private life insurers slow down – The Financial Express

This sharp slowdown is likely explained by Omicron leading to lower business activity and we expect business to pick up in February 2022.

The sharp slowdown to 6.9% year-on-year in January 2022 is likely due to Omicron leading to lower business activity
Individual annualised premium equivalent (APE) growth for private life insurance companies slowed down to 6.9% year-on-year (y-o-y) in January 2022 from about 30% y-o-y during the past two months. This is despite a low base of 7% growth in January 2021, likely reflecting the impact of a slowdown due to Omicron. January tends to be a lean month for select players and we look forward to a more eventful two months even as these have a higher base.

Weak on weak

Overall growth in APE for private life insurers was weak at 7% y-o-y. Better growth in 9MFY22 led to 27% growth in 10MFY22, down from 30% in 9MFY22. Individual APE was weak at 6.9% despite a low base of 7% of January 2021. This sharp slowdown is likely explained by Omicron leading to lower business activity and we expect business to pick up in February 2022. MDRT targets for select insurers lead to higher activity in December and subsequent slowdown in January. Sequentially activity picks up till March, with a high base (90% growth in March 2021) we don’t rule out a y-o-y decline.
Slowdown on a two-year CAGR basis was less stark. Individual APE for the private sector was up 7% in January 2022 (on two-year CAGR) versus 15% in December 2021 and 10% for 9MFY21.

Key highlights

HDFC Life has demonstrated its solid stability during the month with 13% two-year CAGR in individual APE, down from 17% in December 2021—this is the highest growth among the top four listed players. On y-o-y basis, HDFC Life was up just 2.3% versus 31% growth in December 2021; its y-o-y trends have been volatile.

ICICI Prudential Life reported 7.4% y-o-y decline in individual APE. However, on a weighted received premium basis (benefit will accrue over the next few months), the company reported 8% y-o-y growth during the month. With slower momentum in group business, overall APE was down 5% y-o-y.

SBI Life continued to perform better than private players with 8% y-o-y growth in individual APE, about 110 bps ahead. This comes on a low base though (0.8% in January 2021). As such, on a two-year CAGR basis, SBI Life was up only 4%.

Max Life reported a massive decline of 23.3% as compared to 36-40% growth in the past two months. Its performance has anyway been volatile with weakness during August-October 2021 and significant pick up till December.

Edited extracts from Kotak Institutional Equities Research report

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