Insurance India: Getting into the new regime.Kotak Sec

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Insurance
India
Getting into the new regime. Private insurance companies reported a sharp 40% yoy
decline in APE during October 2010. Notably, insurance companies have withdrawn all
their previous unit-linked products to comply with the new regulatory framework;
October was the first complete month in the new regime. We believe yoy trends should
pick up hereon as distributors get more familiar with the new policies. Insurance
companies had launched just two unit-linked policies each in October 2010 and are
now growing their product portfolio.




Private sector reports sharp decline
Private insurance companies reported 40% yoy decline in APE during October 2010. LIC reported
1% yoy growth, thereby cushioning industry-wide APE decline to 21%. YTD growth for private
players is now about 7% as compared to 17% reported in September 2010. We believe that the
growth trends will improve hereon as distributors get familiar with new products. Buoyancy in
equity markets will also likely support business in 2HFY11E.

Private players focus on group business
�� Most players in the private sector were down 30-60%. Max NY Life and HDFC SL reported
relatively better trends.
�� HDFC SL was the only private player that held on to its share in the individual business.
�� Private players focused on group business, thereby gaining about 12% share from LIC in this
segment. Bajaj Allianz, ICICI Pru Life and SBI Life were the key players that increased group
business during the month.
�� Private players have focused on single premium over last six months—the share of single
individual premium increased to 17% from 7% in first seven months of the previous year.