Insurance

Sector Update

September 14, 2018

New Business momentum improving led by mid-
sized players
APE (Rs. mn) and Market share Life Insurance industry’s new business APE in August 2018 grew by 13% YoY
FY19 YTD YoY led from private sector growth of 19% YoY. Individual NB APE for industry
APE, Rs mn FY18
YTD chg. chg.
Industry Total 260,083 6.4% 7,33,130 16.5%
grew by 15% YoY led by both private and LIC, while Group NB APE grew by
only 6% YoY. Mid-sized players like ABSunLife, TATA AIA and Bajaj Allianz
LIC 132,306 7.1% 3,59,984 11.1%
continued to see stellar business growth and gained market share over larger
Private 127,777 5.6% 3,73,146 22.1%
LIC - mkt peers like HDFC Life & IPru Life which witnessed slower growth of 7-8% YoY.
50.9% -1.4% 49.1% 2.4%
share Amongst large players SBI Life stood out and grew in-line with industry
Private - mkt
49.1% 1.4% 50.9% 2.4% growth holding on its market share.
share
Source: Life Insurance Council, PL
 Mid-sized and select emerging players saw strong growth trends in Aug’18.
ABSLI grew by 90% YoY in overall APE and 86% YoY in Individual APE, while
TATA AIA grew by strong 74% YoY in overall APE and 80% YoY in individual
APE. ABSLI gained market share by 40bps YoY to 2.1% in overall APE and
150bps YoY to 4.1% amongst the private players, while TATA AIA gained
market share by 100bps YoY to 2.5% in overall APE and 170bps YoY to 4.1%
amongst private players. Both these players are driven by deeper penetration
from banca relationships.

 Amongst listed players, SBI Life saw APE decent growth of 14% YoY & 10%
YoY in individual APE keeping its overall market share stable, while Max Life
has been delivering good growth (YTD 22% YoY) as it rebalances its share
from traditional products to ULIPs. HDFC Life and ICICI Pru Life saw slower
growth at 8% YoY & 7% YoY respectively in overall APE growth, while saw
much slower growth in individual APE as both have been focusing on
protection business and annuity in case of HDFC Life leading to lower business
momentum.

 Industry saw total 7 net product additions in Aug’18 with 8 from private players
and all product additions have been in Individual segment. In last 2 months,
industry on net basis saw 13 product additions. HDFC Life continues to have
maximum offerings of total 46 products in both Individual (35) & Group
segments followed by Kotak Life (41) & SBI Life (40) in overall products and
TATA AIA (32) & Edelweiss (31) in Individual segment.

 Protection remains the key area of focus for players and are also trying to
rebalance product mix. We continue to like HDFC SL structurally due to its
diversified product portfolio, strong distribution reach and superior margins but
valuations still remain on higher side and hence we retain our ACCUMULATE
rating with TP of Rs500 (4.3x FY20 EV), while SBI Life has been more
preferred as growth profile has been strong along with maintained product mix
and improving metrics, hence maintain BUY with TP of Rs700 (3.2x FY20 EV).

Pritesh Bumb
priteshbumb@plindia.com | 91-22-66322232

September 14, 2018 1

 Insurance

New Business APE Growth for Aug’18

APE - Aug 18 (Rs bn) YoY gr. (RHS)

19%
65 20%
18%
55 16%
13% 14%
45
12%
8% 10%
35
8%
25 6%

64 31 32 4%
15 2%
Industry LIC Private

Source: Life Insurance Council, PL

New business premium – APE and YoY growth for key players

APE - Aug 18 (Rs bn) YoY gr. (RHS)

8.0 95%
7.0 85%
75%
6.0
65%
5.0 55%
4.0 45%
3.0 35%
25%
2.0
15%
1.0 5%
0.0 -5%

Kotak Life
Bajaj Allianz

PNB Met
ICICI Pru

HDFC Life

Canara
Tata AIA
SBI Life

Max Life

Birla SL

HSBC
Source: Life insurance Council, PL

Trend in APE premium growth – Improving for Private

Private Players LIC Industry

80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
May-16

May-17
Jan-16

Jun-16

Jan-17

Jun-17

May-18
Jun-18
Jan-18
Mar-16

Mar-17

Mar-18
Feb-17

Feb-18
Feb-16

Oct-16

Apr-17

Oct-17

Apr-18
Apr-16

Jul-16

Jul-18
Jul-17
Aug-16
Sep-16

Aug-17

Aug-18
Sep-17
Nov-16
Dec-16

Dec-17
Nov-17

Source: Life Insurance Council, PL

September 14, 2018 2

 Insurance

New business sales numbers (APE) and growth

YoY MoM YTD YTD YoY
Life Insurer (Rs in million) Aug-18 FY18
chg. chg. FY19 chg. chg.
Industry Total 63,741 13.2% 1.2% 260,083 7.7% 733,130 16.5%
LIC 31,244 7.9% -4.8% 132,306 4.7% 359,984 11.1%
Total Private 32,497 18.9% 7.8% 127,777 10.9% 373,146 22.1%
SBI Life 7,674 13.8% 5.2% 27,738 11.2% 80,252 27.3%
ICICI Prulife 6,463 7.3% 5.1% 25,570 -10.0% 74,951 15.4%
HDFC SL 3,974 8.1% 2.2% 17,371 15.0% 52,837 29.3%
Max Life 2,650 22.2% 12.1% 10,334 21.7% 32,455 21.3%
Tata AIA 1,617 81.1% 19.7% 5,642 51.1% 14,059 33.2%
Bajaj Allianz 1,519 53.9% 23.8% 6,060 19.3% 16,576 34.5%
Birla Sunlife 1,325 89.9% 23.4% 5,045 54.8% 12,031 11.5%
Kotak Life 1,047 -0.9% 0.5% 4,393 5.9% 16,545 23.1%
PNB Met Life 979 24.1% 0.1% 4,231 16.9% 12,350 20.3%
Canara HSBC OBC 827 16.6% 31.5% 2,921 11.4% 8,537 31.7%
Reliance Life 807 51.8% 45.0% 3,097 25.7% 7,414 2.4%
IndiaFirst Life 583 24.0% 16.0% 2,371 14.4% 6,572 24.4%
Bharti Axa Life 483 62.0% -2.7% 2,072 65.0% 4,653 13.6%
Exide Life 453 16.8% 5.2% 2,188 16.6% 6,285 1.9%
DLF Pramerica 404 39.1% 9.3% 1,781 30.0% 4,002 62.1%
Star Union Dai-ichi 378 -3.4% -10.8% 1,441 -7.0% 5,791 -5.3%
IDBI Federal Life 367 8.9% -8.0% 1,447 -8.0% 4,568 5.8%
Shriram Life 340 -2.1% -21.4% 1,636 7.6% 4,590 12.9%
Future Generali 246 24.6% 21.8% 890 24.0% 2,875 43.3%
Edelweiss Tokio 241 74.0% 16.6% 937 83.0% 2,573 51.6%
Aviva Life 89 -17.4% -28.6% 520 6.5% 1,915 21.1%
Aegon Religare 85 -10.6% 9.0% 334 -13.0% 1,326 49.0%
Source: Life Insurance Council, PL

Market share on APE basis for overall market

YTD YoY
Life Insurer Aug-18 YoY chg. MoM chg. FY19 FY18
chg. chg.
LIC 48.9 -2.5 -3.1 50.8 -1.4 49.1 2.4
Total Private 51.1 2.5 3.1 49.2 1.4 50.9 2.4
SBI Life 12.0 0.1 0.5 10.7 0.3 10.9 0.9
ICICI Prulife 10.1 -0.6 0.4 9.8 -1.9 10.2 -0.1
HDFC SL 6.2 -0.3 0.1 6.7 0.4 7.2 0.7
Max Life 4.2 0.3 0.4 4.0 0.5 4.4 0.2
Tata AIA 2.5 1.0 0.4 2.2 0.6 1.9 0.2
Bajaj Allianz 2.4 0.6 0.4 2.3 0.2 2.3 0.3
Birla Sunlife 2.1 0.8 0.4 1.9 0.6 1.6 -0.1
Kotak Life 1.6 -0.2 0.0 1.7 0.0 2.3 0.1
PNB Met Life 1.5 0.1 0.0 1.6 0.1 1.7 0.1
Canara HSBC OBC 1.3 0.0 0.3 1.1 0.0 1.2 0.1
Reliance Life 1.3 0.3 0.4 1.2 0.2 1.0 -0.1
Source: Life Insurance Council, PL

September 14, 2018 3

 Insurance

Market share on APE basis amongst private players

YoY MoM YTD YoY
Life Insurer Aug-18 FY19 FY18
chg. chg. chg. chg.
SBI Life 23.6 -1.1 -0.6 21.7 0.0 21.5 0.9
ICICI Prulife 19.9 -2.1 -0.5 20.0 -4.6 20.1 -1.2
HDFC SL 12.2 -1.2 -0.7 13.6 0.5 14.2 0.8
Max Life 8.2 0.2 0.3 8.1 0.7 8.7 -0.1
Tata AIA 5. 1.7 0.5 4.4 1.2 3.8 0.3
Bajaj Allianz 4.7 1.1 0.6 4.7 0.3 4.4 0.4
Birla Sunlife 4.1 1.5 0.5 3.9 1.1 3.2 -0.3
Kotak Life 3.2 -0.6 -0.2 3.4 -0.2 4.4 0.0
PNB Met Life 3.0 0.1 -0.2 3.3 0.2 3.3 -0.1
Canara HSBC OBC 2.5 0.0 0.5 2.3 0.0 2.3 0.2
Reliance Life 2.5 0.5 0.6 2.4 0.3 2.0 -0.4
IndiaFirst Life 1.8 0.1 0.1 1.9 0.1 1.8 0.0
Bharti Axa Life 1.5 0.4 -0.2 1.6 0.5 1.2 -0.1
Source: Life Insurance Council, PL

Market share trend between private players and LIC

Private LIC

70%
65%
60%
55%
50%
45%
40%
35%
30%
Jun-16

Jun-17
Jun-15

Jun-18
Feb-16

Feb-17

Feb-18
Feb-15
Oct-14

Apr-15

Apr-16

Oct-16

Oct-17

Apr-18
Oct-15

Apr-17
Aug-14

Aug-15

Aug-16

Aug-17

Aug-18
Dec-14

Dec-15

Dec-17
Dec-16

Source: Life Insurance Council, PL

Total Individual business on APE basis (Rs mn) and growth

Life Insurer Aug-18 YoY chg. MoM chg. FY19 YTD chg. FY18 YoY chg.
Industry Total 53,466 15.0% 7.1% 216,682 8.4% 634,731 19.3%
LIC 22,571 12.4% 4.9% 96,215 6.8% 278,018 13.4%
Total Private 30,896 16.9% 8.7% 120,467 9.6% 356,713 24.3%
SBI Life 7,339 10.4% 7.9% 26,178 8.4% 77,873 31.1%
ICICI Prulife 6,371 6.0% 5.0% 25,260 -10.5% 74,606 16.4%
HDFC SL 3,532 6.6% 6.6% 14,961 11.7% 47,536 30.8%
Max Life 2,623 22.2% 12.1% 10,220 22.0% 32,145 21.8%
Tata AIA 1,606 80.6% 19.1% 5,605 50.8% 13,974 33.4%
Bajaj Allianz 1,246 39.2% 18.0% 5,258 16.0% 14,000 38.6%
Birla Sunlife 1,176 86.4% 20.0% 4,428 57.2% 10,590 14.9%
Kotak Life 973 -3.2% 0.6% 4,016 6.0% 15,745 31.0%
PNB Met Life 967 24.1% 0.0% 4,178 17.0% 12,211 20.3%
Reliance Life 804 54.1% 45.4% 3,065 27.0% 7,272 5.4%
Source: Life Insurance Council, PL

September 14, 2018 4

 Insurance

Total Group business on APE basis (Rs mn) and growth

Life Insurer Aug-18 YoY chg. MoM chg. FY19 YTD chg. FY18 YoY chg.
Industry Total 10,327 5.5% -21.1% 43,644 4.8% 98,428 1.0%
LIC 8,673 -2.4% -23.2% 36,091 -0.7% 81,966 4.0%
Total Private 1,654 83.1% -8.0% 7,553 42.6% 16,462 -11.5%
HDFC SL 442 21.5% -23.0% 2,410 40.6% 5,301 17.9%
SBI Life 335 244.7% -31.8% 1,560 93.2% 2,379 -35.3%
Bajaj Allianz 273 197.2% 59.4% 802 46.6% 2,576 15.8%
Birla Sunlife 149 123.6% 59.1% 618 39.7% 1,441 -8.4%
ICICI Prulife 92 641.5% 15.5% 309 60.3% 346 -60.9%
DLF Pramerica 77 24.7% 5.4% 335 -7.7% 797 20.9%
Kotak Life 74 45.9% -0.5% 377 4.9% 800 -43.4%
IndiaFirst Life 58 113.0% 2.1% 396 116.5% 818 -35.0%
Source: Life Insurance Council, PL

Number of policies sold have been slowly improving

Policies sold - Policies sold - Policies sold – Policies sold -
Aug 18 Aug 17 YTD 19 YTD 18
LIC 1,872,832 1,890,797 7,002,747 7,011,149
YoY chg. -1% 7% 0% 6%
LIC Share 76.4% 78.8% 74.8% 75.9%

Private 576,938 508,764 2,364,165 2,230,093

YoY chg. 13% 10% 6% 8%
Private Share 23.6% 21.2% 25.2% 24.1%
Source: Life Insurance Council, PL

Average ticket size has increased over the years

Premium per Premium per Premium per Premium per
policy (Rs) - Aug policy (Rs) - Aug policy (Rs) - policy (Rs) -
18 17 FY19 YTD FY18 YTD
LIC 16,683 15,318 18,893 18,029
YoY chg. 9% -6% 5% 0%

Private 56,327 53,725 54,047 51,653

YoY chg. 5% 13% 5% 0%

Source: Life Insurance Council, PL

Private players / LIC – trend in policy volumes Private Players / LIC – trend in value per policy

Private - value/policy (Rs) LIC - value/policy (Rs) Private - policies sold LIC - policies sold
60,000 5,000
50,000 4,000
40,000
(in '000)

3,000
30,000
2,000
20,000
10,000 1,000

- -
May-16

May-17

May-18
Jan-17

Jun-17

Jan-18

Jun-18
Jun-16
Mar-16

Mar-17

Mar-18
Feb-17

Feb-18
Apr-16

Oct-16

Apr-17

Oct-17

Apr-18
Jul-16

Jul-18
Jul-17

May-16

May-17

May-18
Jun-16

Jan-17

Jun-17

Jan-18

Jun-18
Aug-16
Sep-16
Nov-16
Dec-16

Aug-17
Sep-17
Nov-17
Dec-17

Aug-18

Mar-16

Mar-17

Mar-18
Feb-17

Feb-18
Apr-16

Oct-16

Apr-17

Oct-17

Apr-18
Jul-16

Jul-17

Jul-18
Aug-16
Sep-16
Nov-16
Dec-16

Aug-17
Sep-17
Nov-17
Dec-17

Aug-18

Source: Life Insurance Council, PL Source: Life Insurance Council, PL

September 14, 2018 5

 Insurance

Single premium as a proportion of Total un-weighted premium

Life Insurer Aug 18 FY19 YTD FY18
Industry Total 75% 71% 67%
LIC 86% 82% 80%
Total Private 45% 45% 37%
HDFC SL 72% 70% 59%
DLF Pramerica 72% 71% 73%
Bajaj Allianz 64% 62% 65%
IndiaFirst Life 57% 67% 60%
Canara HSBC OBC 53% 41% 31%
Birla Sunlife 50% 58% 54%
Kotak Life 49% 55% 39%
SBI Life 45% 41% 26%
Shriram Life 40% 43% 43%
Bharti Axa Life 36% 40% 40%
IDBI Federal Life 32% 41% 50%
Max Life 28% 30% 27%
Future Generali 26% 23% 18%
ICICI Prulife 21% 23% 16%
Star Union Dai-ichi 19% 21% 17%
Source: Life Insurance Council, PL

Individual premium APE as a proportion of total premium APE

Life Insurer Aug-18 FY19 YTD FY18
Industry Total 79.3% 83.3% 86.6%
LIC 65.6% 72.7% 77.2%
Total Private 94.2% 94.3% 95.6%
Aegon Religare 100.0% 99.4% 99.3%
Tata AIA 99.8% 99.4% 99.4%
Aviva Life 99.6% 99.4% 99.0%
Reliance Life 99.4% 99.0% 98.1%
Max Life 99.0% 98.9% 99.0%
PNB Met Life 98.8% 98.7% 98.9%
ICICI Prulife 98.7% 98.8% 99.5%
Star Union Dai-ichi 98.6% 98.6% 99.2%
IDBI Federal Life 98.2% 97.6% 97.9%
Exide Life 98.1% 98.8% 98.5%
Edelweiss Tokio 97.8% 97.8% 97.4%
Future Generali 96.9% 97.3% 97.1%
Bharti Axa Life 95.1% 94.6% 94.4%
Shriram Life 94.7% 94.2% 93.6%
SBI Life 93.3% 94.4% 97.0%
Kotak Life 92.9% 91.4% 95.2%
Birla Sunlife 91.3% 87.8% 88.0%
Canara HSBC OBC 90.1% 94.0% 95.8%
IndiaFirst Life 88.8% 83.3% 87.5%
Bajaj Allianz 86.0% 86.8% 84.5%
HDFC SL 85.2% 86.1% 90.0%
DLF Pramerica 80.2% 81.2% 80.1%
Source: Life Insurance Council, PL

September 14, 2018 6

 Insurance

Group premium as % of total premium - APE

Gro up prem. as % o f to tal APE - Private Gro up prem. as % o f to tal APE - LIC

Gro up prem. as % o f to tal APE - Indu stry

40%
35%
30%
25%
20%
15%
10%
5%
0%

May-16

May-17

May-18
Jun-16

Jan-17

Jun-17

Jan-18
Mar-16

Jun-18
Feb-17

Feb-18
Mar-17

Mar-18
Jul-16

Jul-18
Oct-16

Apr-17

Jul-17

Oct-17

Apr-18
Apr-16

Nov-16

Dec-17
Sep-16

Dec-16

Aug-17
Sep-17

Nov-17

Aug-18
Aug-16
Source: Life Insurance Council, PL

Trend in composition of group and individual premium of industry

Group prem. as % of total APE Indv. prem. as % of total APE

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
May-16

May-17
Jun-16

Jan-17

Jun-17

May-18
Jan-18

Jun-18
Feb-17

Feb-18
Mar-17

Mar-18
Mar-16

Jul-17

Jul-18
Apr-16

Jul-16

Oct-16

Oct-17

Apr-18
Apr-17
Aug-16
Sep-16

Aug-17

Aug-18
Sep-17
Nov-16

Nov-17
Dec-17
Dec-16

Source: Life Insurance Council, PL

Trend of Individual regular premium as % of total industry APE

Total Industry APE (Rs bn) % share of Individual Regular premium (RHS)

140 100%
120 90%
100 80%
80 70%
60 60%
40 50%
20 40%
- 30%
May-15

May-17
Jun-15

Jan-16

May-16

Jan-17

Jun-17

Jan-18

May-18
Jun-16

Jun-18
Feb-16

Feb-17

Feb-18
Mar-16

Mar-17

Mar-18
Jul-15

Apr-17

Jul-17
Oct-15

Apr-16

Jul-16

Oct-16

Oct-17

Apr-18

Jul-18
Aug-15
Sep-15

Aug-17
Sep-17
Aug-16
Sep-16

Aug-18
Nov-15
Dec-15

Nov-16
Dec-16

Nov-17
Dec-17

Source: Life Insurance Council, PL

September 14, 2018 7

September 14, 2018
-
20
40
60
80
100
120

May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Source: Life Insurance Council, PL

Jul-16
Aug-16
Sep-16
Oct-16
Individual Premiums APE (Rs bn)

Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Trend in total individual APE as % of total APE

Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Insurance

% share of individual premiums (RHS)

8
60%
85%
90%
95%

65%
70%
75%
80%
 Insurance
PL’s Recommendation Nomenclature (Absolute Performance)
Buy : > 15%
Accumulate : 5% to 15%
Hold : +5% to -5%
Reduce : -5% to -15%
Sell : < -15%
Not Rated (NR) : No specific call on the stock
Under Review (UR) : Rating likely to change shortly

September 14, 2018 9

 Insurance

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recommendation or views expressed in this research report.

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