Home >Markets >Mark To Market >LIC loses market share again, while ICICI Pru sees first signs of growth

Private sector life insurers have been eating into the market share of Life Insurance Corp. of India (LIC) for years now. Despite the blow from the pandemic, private life insurers have continued to corner market share as the latest data from the insurance regulator shows.

On an annualized premium equivalent (APE) basis, LIC lost 200 basis points month-on-month in market share to private sector peers in February, pointed out analysts at Nomura Financial Advisory and Securities (India) Pvt. Ltd. One basis point is one-hundredth of a percentage point.

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What’s more is that the insurance behemoth’s share has been falling faster in retail products. Its share in retail APE was down to 35.9% in February from 38.6% in January.

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LIC relies on the heft of its large agency network to push products while nimble private insurers have been aggressive with online sales. It has lost share, as digital sales of private players have climbed, while it has struggled here.

Interestingly, within private players, the top life insurers lost market share to their peers in February. SBI Life Insurance Company Ltd saw its market share erode to 20.9% in February from 26.6% in January, but it was still higher than 16.7% a year ago. HDFC Life Insurance Company Ltd too saw its market share erode but by a smaller margin. Nevertheless, these insurers reported stellar growth numbers, helped by a low base. SBI Life reported a sharp 53% growth in its retail APE, while HDFC Life saw its business grow 16.1%.

ICICI Prudential Life Insurance Co. Ltd emerged as the dark horse by improving its market share significantly. The insurer reported its first monthly growth in retail APE for FY21. Its retail APE grew by 6% year-on-year. “We expect growth trajectory to continue improving for IPRU Life into FY22 on lower base, better environment for ULIPs, traction from new banca partnerships and pickup in credit protect on improving disbursals," wrote analysts at Jefferies India Pvt. Ltd in a note.

What about the full year performance? The trend here is similar but there are some differences. For FY21 so far, LIC’s business contracted 15% on retail weighted received premium (RWRP) basis. RWRP is the actual first year premium received from retail customers by the insurer. LIC’s market share dropped to 40.3%, from 42.8% in FY20, according to Motilal Oswal Financial Services Ltd.

LIC’s market share loss comes at a time when India’s largest life insurer is preparing for a public listing. The government has said the insurer’s initial public offer will be launched in FY22. The decline in business that the insurer has seen in the past year will have a bearing on its IPO prospects, especially when it comes to valuations. Even so, it still retains the status of the most awaited IPO, given its size and the prevailing bullish sentiment for the insurance sector.

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