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Life Insurance Tracker
Dec-10: Volumes recovering, margins still a concern
Dec-10 volumes improve but y/y contraction continues: Premium
collections in Dec-10 improved sequentially ~42% for the private
insurers, as volumes are gradually picking up post the new ULIP
guidelines and also as a result of December being a seasonally strong
month. Year-over-year contractions continue for private insurers, with
industry volumes contracting by ~18% in Dec-10 and private insurers’
volume contracting by ~44% y/y.
• YTD premium contraction higher than expected: YTD premium
contraction for private insurers is ~11% in 9M11 (April-Dec) and with
~40% y/y contraction after the new ULIP guidelines. We believe
contractions could be higher than our expectation at 6% for FY11.
• HDFC/ICICI gaining share, SBI/Birla/Bajaj losing: LIC has
improved market share by 16% with ~72% YTD growth. Among
private insurers, SBI/Birla/Bajaj have seen >25% YTD contractions in
volumes and lost >200bps of market share, with ICICI/HDFC gaining.
• More reliance on single premium policies: Though weighted
premiums have contracted by >11% YTD for private insurers,
unweighted premiums have grown ~5% YTD, indicating an increasing
reliance on single premium policies. Share of single premium policies
has increased to ~40% in Dec-10 vs. ~10% in FY10. Managements do
indicate that as product mix is still stabilizing post introduction of new
policies, companies are relying more on single-premium products to
maintain volumes and also NBAP margins.
• Margins under pressure, remain cautious: Our cautious stance on
the sector continues. Volume contraction for private insurers has been
higher than our expectations and hence we see downside to our
premium volumes for the private insurers. NBAP margins should
remain under pressure, with significant cost rationalization required to
maintain 14-15% NBAP margins
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Life Insurance Tracker
Dec-10: Volumes recovering, margins still a concern
Dec-10 volumes improve but y/y contraction continues: Premium
collections in Dec-10 improved sequentially ~42% for the private
insurers, as volumes are gradually picking up post the new ULIP
guidelines and also as a result of December being a seasonally strong
month. Year-over-year contractions continue for private insurers, with
industry volumes contracting by ~18% in Dec-10 and private insurers’
volume contracting by ~44% y/y.
• YTD premium contraction higher than expected: YTD premium
contraction for private insurers is ~11% in 9M11 (April-Dec) and with
~40% y/y contraction after the new ULIP guidelines. We believe
contractions could be higher than our expectation at 6% for FY11.
• HDFC/ICICI gaining share, SBI/Birla/Bajaj losing: LIC has
improved market share by 16% with ~72% YTD growth. Among
private insurers, SBI/Birla/Bajaj have seen >25% YTD contractions in
volumes and lost >200bps of market share, with ICICI/HDFC gaining.
• More reliance on single premium policies: Though weighted
premiums have contracted by >11% YTD for private insurers,
unweighted premiums have grown ~5% YTD, indicating an increasing
reliance on single premium policies. Share of single premium policies
has increased to ~40% in Dec-10 vs. ~10% in FY10. Managements do
indicate that as product mix is still stabilizing post introduction of new
policies, companies are relying more on single-premium products to
maintain volumes and also NBAP margins.
• Margins under pressure, remain cautious: Our cautious stance on
the sector continues. Volume contraction for private insurers has been
higher than our expectations and hence we see downside to our
premium volumes for the private insurers. NBAP margins should
remain under pressure, with significant cost rationalization required to
maintain 14-15% NBAP margins
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