Private insurers pip LIC in FY16 APE growth

Life Insurance Corporation of India (LIC) continued to see its annual premium equivalent (APE) grow below private players in the current financial year. According to the Kotak Institutional Equities Research, private players reported a growth of 16% y-o-y at Rs 12,556.30 crore in APE while LIC saw meagre 4% increase at Rs 15,045.6 crore for the April-November period.

Officials in the insurance sector say that key reason for below average performance of LIC can be attributed to big drop in individual single premium policies and falling number of individual agents. “Strong performance by private players in October had abated concerns of a slowdown visible in September 2015. However, the trends in November now confirm weakness in the underlying environment, thus posing risk to our industry growth,” says the report.
Pick-up in both  Ulips and traditional plans has boosted the APE to 22% year-on-year at Rs 1,657.8 crore for private players in October. However, private life insurance players reported 6% growth in APE during November 2015, lowest in the past 12 months.

According to the Kotak Institutional Equities Research, “Individual APE growth for private players crashed in September 2015 to 4.9% from 15-25% in the preceding ten months. However, as growth picked up in October 2015 (22%), we considered weakness in September as a blip. However, sluggish growth (4.8%) in November now confirms our concerns on weakness over the next few months. Second half, typically drives 60-65% of the annual business, thus slowdown during this period will pull down annual growth rates and poses risk.”

Players like Reliance Life, ICICI Prudential Life Insurance, Aviva and Max Life among others saw negative APE in November. While others players like HDFC Life, SBI Life, Kotak Life Insurance and TATA AIA continued to see its APE growth in positive. “If we look at the overall industry, new business premium growth was 17% y-o-y in the month of November. However LIC saw its growth below the private players which is a concern for the industry,” said a top official of a leading insurance firm.