Despite poor show in Oct, life insurers do see silver lining in the cloud

Maybe due to full of festive holidays, October was a weak month for most life insurance companies. Still, the industry has pinned its hope of coming back with a bang during the remaining part of current financial year.

Bajaj Allianz, Birla SL, Tata AIA, India First and Star Union Daichi were the only key players to deliver double-digit growth, while HDFC Life, ICICI Life and Max Life were negative and SBI Life was moderately up. The first month of the quarter tends to be a lean month and we need to see, says a Kotak study, how this develops towards the end of the quarter.

Top four listed players reported weak performance in October. It is not clear if this is on account of loss of market share to smaller players or focus of banking partners to deposit gathering over insurance distribution - it is probably a combination of both.

HDFC Life was down 9 per cent YoY in overall premium with 13 per cent decline in the individual segment. On three-year CAGR basis, the company was up 17 per cent. On YTD basis, the company clocked 6.7 per cent growth, mostly due to high growth in Q1.

ICICI Prudential Life remained weak with 26 per cent decline in individual business, driving 19 per cent decline in overall premium. Three-year CAGR was down as well with 7 per cent decline.

Max Life, up 14 per cent on three-year basis, fared better than the above two players with one per cent decline in individual as well as overall APE. However, on YTD basis, its growth remains low at 0.8 per cent.

SBI Life was up 6 per cent and 7 per cent, respectively in individual and overall businesses, better than the other three players. This is, however, much lower than the overall momentum of the company - up 82 per cent in Q1 and 21 per cent in per cent H1.

The industry, especially the private industry, grew exceptionally well in the first quarter by 40 per cent (FTQ) on total new business, which was driven by both group and individual business.

There was some degree of normalisation expected in the growth as the year progressed. Though, the growth results for October across the industry are mixed; as a whole new business grew by 15 per cent for the month and 35 per cent for the year. The highest impact was observed in the individual business growth – especially in case of a few insurers.

Further, as commented by a Shriram Life Insurance spokesperson, macro-economic factors such an inflation cannot be ignored and should be looked at more closely.

Whatever be the case, H2, the Q4 in particular, has always been a face saver for the industry thanks to the rush among taxpayers to park their money in tax saving financial instrument and investing in LI comes as a preferred choice.