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India Equity Research Reports, IPO and Stock News
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• Mar-11: Volume contraction continues: Premium collections in
Mar-11 contracted by ~44% y/y for private insurers. Contraction in
individual WRP premiums was ~20% y/y, in line with our expectation,
with HDFC surprising but ICICI/Reliance missing on volumes.
• HDFC, Max continue to do well: HDFC and Max New York
continue to report better-than-industry-average volumes. Individual
volumes for ICICI/Reliance contracted by ~70% y/y in Mar-11, though
group business aided overall volumes for ICICI. Overall, HDFC/Max
improved market share in FY11 with Reliance/ICICI/Birla/SBI losing
market share. We note that market share gains in FY11 were mainly
due to a 25-35% increase in ticket size for Max and HDFC.
• Flat volumes in FY12E: We are factoring in flat volumes for private
insurers in FY12. We see FY12 as a year of two halves, with
contraction in 1H and growth in 2H. The base effect would impact
premiums in 1H but turn favourable in 2H, leading to positive premium
growth in 2H, by our estimates.
• Product mix: The share of single-premium ULIP products increased
after the new ULIP guidelines. Single ULIPs now contribute ~6% of
WRP (post Sep-10) volumes vs ~1% earlier (pre-Sep-10). We expect
the share of single-premium ULIPs and traditional policies to rise.
• The worst appears to be over: Although volume contraction is likely
to continue for the next six months, we believe the worst is over for the
industry. Negative regulatory news flows is largely done, in our view,
and a favorable base impact should aid volume growth in 2H FY12.
Reliance Capital has the highest exposure to the insurance sector, while
HDFC and ICICI Bank, with 6-8% SOP contribution from insurance,
are other potential ways to invest in the sector.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Mar-11: Volume contraction continues: Premium collections in
Mar-11 contracted by ~44% y/y for private insurers. Contraction in
individual WRP premiums was ~20% y/y, in line with our expectation,
with HDFC surprising but ICICI/Reliance missing on volumes.
• HDFC, Max continue to do well: HDFC and Max New York
continue to report better-than-industry-average volumes. Individual
volumes for ICICI/Reliance contracted by ~70% y/y in Mar-11, though
group business aided overall volumes for ICICI. Overall, HDFC/Max
improved market share in FY11 with Reliance/ICICI/Birla/SBI losing
market share. We note that market share gains in FY11 were mainly
due to a 25-35% increase in ticket size for Max and HDFC.
• Flat volumes in FY12E: We are factoring in flat volumes for private
insurers in FY12. We see FY12 as a year of two halves, with
contraction in 1H and growth in 2H. The base effect would impact
premiums in 1H but turn favourable in 2H, leading to positive premium
growth in 2H, by our estimates.
• Product mix: The share of single-premium ULIP products increased
after the new ULIP guidelines. Single ULIPs now contribute ~6% of
WRP (post Sep-10) volumes vs ~1% earlier (pre-Sep-10). We expect
the share of single-premium ULIPs and traditional policies to rise.
• The worst appears to be over: Although volume contraction is likely
to continue for the next six months, we believe the worst is over for the
industry. Negative regulatory news flows is largely done, in our view,
and a favorable base impact should aid volume growth in 2H FY12.
Reliance Capital has the highest exposure to the insurance sector, while
HDFC and ICICI Bank, with 6-8% SOP contribution from insurance,
are other potential ways to invest in the sector.
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