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08 September 2023 India | Equity Research | Sector Update

Life Insurance

Strong volumes, increase in NOP are surprising positively; margin story could be different

Private insurers’ individual retail APE growth of 21%/13% in Aug/FY24TD and growth in the number of policies
(17.5%/9.2% in Aug/FY24TD) have started indicating a positive surprise in volumes in FY24, basis 5 months’ numbers.
However, margin story could be different. As seen in Q1FY24, margins could be impacted by rising ULIP mix led by
strong capital markets while rising protection can aid margins. Noted trends among listed players include: (1) Strong
performance by Max Life with total APE growth of 22.7% in FY24TD, (2) strong 41.7% MoM growth by HDFC Life in
Aug’23 and (3) two successive strong months for SBI Life (reported 19.3% APE growth in FY24TD).

Total APE growth of 13% for life private insurers in Aug’23 Ansuman Deb
In terms of total APE, private life insurers clocked 13% YoY growth in Aug’23 [email protected]
+91 22 6807 7312
with SBI Life/Max Life showing strong 32.3%/51.3% YoY, respectively. Tata Ravin Kurwa
AIA (9.2% YoY), Kotak Life (38.2% YoY) and BALIC (30.2% YoY) also showed [email protected]
strong YoY growth in Aug’23. HDFC Life witnessed 15% YoY increase in APE Sanil Desai
[email protected]
in Aug’23 vs a 4% decline in Jul’23, which translates to strong 41.7% MoM
growth for the company. IPRU Life reported APE growth of 6.2% YoY – APE of
parent bank was down 6.7% YoY while that of other channels was up 8.8%
YoY in Aug’23. FY24TD outperformers in terms of total APE are Max Life
(+22.7% YoY) and Kotak Life (25.2% YoY), while HDFC Life/SBI Life/IPRU Life
stood at 9.5/19.3/0.6%, respectively.

Individual APE growth was strong 21% YoY for private insurers
in Aug’23
The leaders in growth were Max Life (48.5% YoY), Bajaj Life (33.5% YoY) and
SBI Life (34.1% YoY) while HDFC Life/IPRU Life clocked growth of 15.9/12.2%.
Two consecutive strong months for SBI Life is notable while MoM growth of
47.0% for HDFC Life is also significant.

Muted volumes for LIC but margin may improve with rising
non-par mix
LIC reported a decline of 11.8% YoY in total APE vs 11.9% YoY growth reported
by private insurers in FY24TD. In Aug’23, LIC’s total APE declined 11% YoY to
INR 4.4bn. However, individual APE growth is flat for FY24TD.

Growth in the number of policies is encouraging at 17% YoY for

private insurers in Aug’23
Number of policy (NOP) growth is a key monitorable. Aug’23 outperformers
include Max Life (60% YoY) and BALIC (30% YoY). LIC saw MoM increase of
3% in policies. YTD outperformers include BAGIC (25%), Birla SunLife (21%)
and Max Life (20%). HDFC Life/IPRU Life/ SBI Life reported 10.4/0.1/7.1%
growth in NOP FY24YTD.

Please refer to important disclosures at the end of this report

Life Insurance | Sector Update | 08 September 2023

Life insurance companies’ performance in Aug’23

YoY MoM YTD
Aug'23 (INR
Aug'23/Aug'22 Aug'23 / Jul'23 FY24
mn)
HDFC Life
Individual APE (weighted) 9,971 15.9% 47.0% 8.9%
Total APE (weighted) 11,555 14.8% 41.7% 9.5%
NBP 26,992 24.9% 33.8% 16.6%
NOP 95,237 17.0% 15.2% 10.4%
SBI Life
Individual APE (weighted) 15,323 34.1% 12.1% 16.8%
Total APE (weighted) 17,530 32.3% 7.2% 19.3%
NBP 31,246 15.7% -23.2% 26.2%
NOP 1,96,821 17.1% 8.7% 7.1%
ICICI Prudential
Individual APE (reported) 5,262 12.3% 8.4% 2.6%
Total APE (reported) 7,621 -16.4% -31.4% 0.0%
NBP 13,436 -5.4% -18.0% 1.4%
NOP 49,037 6.0% 1.0% 0.1%
Bajaj Allianz
Individual APE (weighted) 4,851 33.5% 13.3% 22.7%
Total APE (weighted) 5,444 30.2% 13.8% 14.1%
NBP 9,264 38.5% 24.3% -14.6%
NOP 58,270 30.2% 1.6% 24.6%
Max Life
Individual APE (weighted) 5,364 48.5% 25.2% 17.6%
Total APE (weighted) 5,657 51.3% 21.7% 22.7%
NBP 8,191 35.6% 12.8% 27.2%
NOP 64,585 59.7% 37.2% 19.75%
Tata AIA
Individual APE (weighted) 5,399 6.9% 2.9% 16.8%
Total APE (weighted) 5,760 9.2% 5.6% 18.2%
NBP 6,703 13.1% 4.4% 22.3%
NOP 55,081 13.5% -7.7% 12.8%
Kotak Life
Individual APE (weighted) 1,848 15.7% 14.5% 4.2%
Total APE (weighted) 3,921 38.2% 44.0% 25.2%
NBP 6,866 24.1% 23.6% 18.0%
NOP 24,498 14.5% 5.1% -5.3%
LIC
Individual APE (weighted) 27,895 3.0% -6.5% 0.1%
Total APE (weighted) 43,780 -11.0% -0.4% -11.8%
NBP 1,42,925 -34.7% -7.1% -24.88%
NOP 17,09,472 3.4% 3.2% -6.5%
Private Total
Individual APE (weighted) 59,059 20.7% 15.6% 12.7%
Total APE (weighted) 70,812 12.9% 6.0% 11.9%
NBP 1,24,960 13.9% 0.1% 14.5%
NOP 7,15,628 17.5% 7.7% 9.2%
Total
Individual APE (weighted) 86,954 14.4% 7.4% 8.0%
Total APE (weighted) 1,14,591 2.4% 3.4% 1.0%
NBP 2,67,886 -18.5% -3.9% -12.3%
NOP 24,25,100 7.2% 4.5% -2.1%
Source: I-Sec research, Company data

India | Equity Research 2

Life Insurance | Sector Update | 08 September 2023

Number of Policies Trend

Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 MoM YoY

Bajaj Allianz 44,754 48,854 42,911 47,192 61,608 55,464 55,885 93,202 35,126 50,304 58,240 57,378 58,270 1.6% 30%
Reliance Life 11,825 12,613 10,106 11,531 14,838 11,082 12,849 14,952 15,957 9,881 14,138 15,941 14,540 -8.8% 23%
SBI Life 1,68,101 1,84,912 1,56,360 1,92,587 2,89,359 1,81,724 1,58,026 2,90,185 1,14,033 1,43,296 1,61,403 1,80,994 1,96,821 8.7% 17%
Tata AIA 48,541 52,854 43,196 52,210 70,138 52,977 50,364 1,07,456 40,964 43,678 51,586 59,651 55,081 -7.7% 13%
HDFC Life 81,397 86,197 68,043 87,545 1,11,017 91,327 91,374 1,70,017 50,581 72,875 83,399 82,653 95,237 15.2% 17%
ICICI Prudential 46,245 53,783 40,361 43,937 54,852 49,314 51,074 96,310 30,486 37,552 46,620 48,547 49,037 1.0% 6%
Birla Sunlife 19,159 20,471 15,756 21,569 26,100 19,322 19,326 41,082 15,883 17,863 21,460 19,683 21,611 9.8% 13%
Aviva 2,375 2,421 1,698 2,365 3,239 2,609 2,758 5,172 1,365 2,094 2,902 2,353 2,310 -1.8% -3%
Kotak Life 21,402 25,236 18,646 24,808 34,394 29,104 32,266 82,639 11,772 14,575 22,756 23,300 24,498 5.1% 14%
Max Life 40,450 47,895 33,897 45,922 62,164 45,574 52,395 1,16,408 27,625 40,428 51,270 47,076 64,585 37.2% 60%
PNB MetLife 24,161 26,714 19,675 22,687 29,018 25,855 24,321 40,360 15,061 19,075 24,089 22,404 22,527 0.5% -7%
Shriram Life 22,873 28,915 20,209 23,856 26,226 20,827 20,900 46,824 10,489 18,953 27,051 24,901 28,398 14.0% 24%
Bharti Axa Life 7,574 9,158 6,548 8,052 10,947 8,305 10,571 16,151 6,290 6,624 7,471 6,173 7,281 17.9% -4%
Future Generali Life 3,438 3,671 2,714 3,078 4,428 3,217 3,486 8,210 1,110 2,224 2,747 2,949 2,736 -7.2% -20%
IDBI Federal 3,860 3,663 4,063 3,844 4,883 4,272 3,653 6,677 1,892 3,325 4,284 4,715 5,340 13.3% 38%
Canara HSBC OBC Life 14,530 18,441 10,029 14,773 19,879 13,926 19,141 32,526 4,872 8,027 13,730 13,984 15,197 8.7% 5%
Aegon Religare 574 60 24 60 104 191 415 874 1,072 1,031 1,348 1,561 2,105 34.8% 267%
DHFL Pramerica 2,801 2,948 2,150 2,613 3,896 2,518 2,767 4,853 1,694 1,919 2,926 2,757 2,791 1.2% 0%
Star Union Dai-ichi 16,834 22,107 13,122 20,233 21,248 14,227 20,374 22,196 4,683 11,826 14,569 16,027 17,420 8.7% 3%
IndiaFirst 24,769 27,178 25,139 27,004 33,172 26,332 28,872 37,444 14,958 19,156 21,899 26,937 25,735 -4.5% 4%
Edelweiss Tokio 3,633 4,810 3,293 3,519 2,061 4,240 8,009 11,443 1,847 3,167 3,900 4,481 4,108 -8.3% 13%
Private Total 6,09,296 6,82,901 5,37,940 6,59,385 8,83,571 6,62,407 6,68,826 12,44,981 4,07,760 5,27,873 6,37,788 6,64,465 7,15,628 7.7% 17%
LIC 16,53,403 13,19,747 11,76,244 14,89,070 18,66,500 18,72,314 16,13,178 40,52,602 7,83,509 11,31,012 13,01,780 16,56,709 17,09,472 3.2% 3%
Total 22,62,699 20,02,648 17,14,184 21,48,455 27,50,071 25,34,721 22,82,004 52,97,583 11,91,269 16,58,885 19,39,568 23,21,174 24,25,100 4.5% 7%

Source: I-Sec research, Company data

Price charts
HDFC Life SBI Life ICICI Prudential LIC

800 1500 750 1000

750 700
1300 900
700 650
650 800
1100 600
600 700
550
550 900
500 600
500
(INR)
(INR)

(INR)

(INR)

450 700 450

500
400 400
500 400
350 350
300 300 300 300
Sep-22
May-22

Sep-23
Mar-23

Jul-23
Aug-22

Nov-22
Jun-22

Apr-23
Jun-23
Dec-22
Jan-23
Sep-20

Sep-23
Sep-21

Sep-22
Mar-21

Mar-22

Mar-23

Mar-21

Mar-22

Mar-23

Mar-21

Mar-22

Mar-23
Sep-20

Sep-20
Sep-21

Sep-22

Sep-23

Sep-21

Sep-22

Sep-23

Source: Bloomberg

India | Equity Research 3

Life Insurance | Sector Update | 08 September 2023

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New I-Sec investment ratings (all ratings based on absolute return; All ratings and target price refers to 12-month performance horizon, unless mentioned otherwise)
BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return

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Life Insurance | Sector Update | 08 September 2023

India | Equity Research 5

Life Insurance | Sector Update | 08 September 2023

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