After two months of muted growth, the insurance industry’s March weighted new received premium (WNRP) grew 1.5 times sequentially to Rs12,640 crore, assisted by a strong 1.8 times sequential increase to Rs6,920 crore for Life Insurance Corp. of India (LIC). For private firms, March WNRP grew 1.2 times to Rs5,720 crore sequentially.
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On a favourable base, on a year-on-year (y-o-y) basis, WNRP grew by approximately 42% to Rs12,640 crore. LIC reported WNRP growth of 55% and private companies reported WNRP growth of 28% y-o-y. In FY10, the industry WNRP grew 18% y-o-y to Rs57,800 crore led by 31% y-o-y growth of LIC to Rs28,300 crore.
In March, private insurers reported strong WNRP growth on a y-o-y and sequential basis led by strong growth by large insurers, such as ICICI Prudential Life Insurance Co. Ltd, SBI Life Insurance Co. Ltd, Reliance Life Insurance Co. Ltd and HDFC Standard Life Insurance Co. Ltd. In FY10, WNRP for SBI Life Insurance grew significantly (approximately 37%) against private companies’ growth of approximately 8%. Reliance Life Insurance grew in line with private insurers. HDFC Standard Life grew marginally higher than private firms. Other large private companies’ growth was flat to negative at 20%.
Due to a strong growth by LIC, private insurers’ market share declined to 51% from 56% a year ago. In FY10, ICICI Prudential Life Insurance’s market share declined to 17.7% (19.3%), Bajaj Allianz’s market share declined to 11.1% (13.9%) and Birla Sun Life Insurance Co. Ltd’s share declined to 7.8% (9%). SBI Life Insurance increased its share to 14.4%. Reliance Life Insurance and HDFC Standard Life improved their market shares marginally to 10.9% and 8.7%, respectively.
Private insurers’ FY10 WNRP growth of 7.8% was marginally higher than our estimates of 5%. We continue to maintain our estimate of 15% y-o-y WNRP growth for private firms in FY11 and FY12. We value life insurance companies by ascribing a 15 times multiple estimated FY12 new business achieved profit. The life insurance business’s valuation contributes 5-10% of sum-of-the-parts values for companies under our coverage.
Graphic by Paras Jain/Mint