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Insurance sector– Degrowth continues
During Jul-11, annualised NBP of sector grew by 11% YoY (compared to
39% decline in Jun-11), largely driven by 62% growth in premiums of
LIC that reported a strong bounce-back after 41% fall in Jun-11. Private
players reported a 38% fall in premium due to a combination of tighter
norms on sale of Ulips and relatively higher base- we expect the base to
normalise from Oct-11. During the month, IRDA approved Nippon Life’s
acquisition of 26% stake in Reliance Life and reportedly plans to issue
norms on minimum sum assured on term life insurance.
Sector NBP growth led by LIC’s bounce-back
In Jul-11, NBP for the sector grew by 11% YoY, driven by strong growth in LIC’s
premiums that offset the decline in premiums of private insurers.
38% YoY decline in NBP
of private insurers
While private players continue to report +30% decline, LIC reported a strong
bounce-back by reporting 62% growth after 41% decline in premiums in the
previous month.
YTD, sector premiums are down 14% YoY- private (down 39%) and LIC collections
are up 5%.
Most private insurers report fall in premiums
During Jul-11, most of the leading private insurers reported decline in NBP.
ICICI’s premiums declined by 56% YoY and HDFC Life reported a 20% decline.
Other leading players that reported declined were Reliance Life (66%), Bajaj (43%)
Birla (45%) and SBI (40%).
Private players continue to report a fall in premium due to a combination of tighter
norms on sale of Ulips and relatively higher base- we expect the base to normalise
from Oct-11.
Reliance Life-Nippon Life deal gets IRDA approval
Deal appears to value
Reliance Life at ~3x of
FY11 estimated EV
During the month, the insurance sector regulator (IRDA) granted in-principle
approval to agreement between Reliance Capital and Nippon Life whereby the latter
would acquire 26% stake in Reliance Life (100% subsidiary of Reliance Capital).
In Mar-11, Nippon Life had agreed to buy 26% stake in Reliance Life for Rs31bn.
While we do not cover Reliance Capital, the deal appears to have valued Reliance
Life at ~3x of FY11 estimated Embedded Value.
As per a media report, the IRDA may introduce a minimum death-benefit
requirement for term life insurance policies.
Currently, there is no such requirement for term insurance whereas the Ulips need
to have a minimum sum assured (in case of death) that is equivalent to 10x of
annual premium.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
Insurance sector– Degrowth continues
During Jul-11, annualised NBP of sector grew by 11% YoY (compared to
39% decline in Jun-11), largely driven by 62% growth in premiums of
LIC that reported a strong bounce-back after 41% fall in Jun-11. Private
players reported a 38% fall in premium due to a combination of tighter
norms on sale of Ulips and relatively higher base- we expect the base to
normalise from Oct-11. During the month, IRDA approved Nippon Life’s
acquisition of 26% stake in Reliance Life and reportedly plans to issue
norms on minimum sum assured on term life insurance.
Sector NBP growth led by LIC’s bounce-back
In Jul-11, NBP for the sector grew by 11% YoY, driven by strong growth in LIC’s
premiums that offset the decline in premiums of private insurers.
38% YoY decline in NBP
of private insurers
While private players continue to report +30% decline, LIC reported a strong
bounce-back by reporting 62% growth after 41% decline in premiums in the
previous month.
YTD, sector premiums are down 14% YoY- private (down 39%) and LIC collections
are up 5%.
Most private insurers report fall in premiums
During Jul-11, most of the leading private insurers reported decline in NBP.
ICICI’s premiums declined by 56% YoY and HDFC Life reported a 20% decline.
Other leading players that reported declined were Reliance Life (66%), Bajaj (43%)
Birla (45%) and SBI (40%).
Private players continue to report a fall in premium due to a combination of tighter
norms on sale of Ulips and relatively higher base- we expect the base to normalise
from Oct-11.
Reliance Life-Nippon Life deal gets IRDA approval
Deal appears to value
Reliance Life at ~3x of
FY11 estimated EV
During the month, the insurance sector regulator (IRDA) granted in-principle
approval to agreement between Reliance Capital and Nippon Life whereby the latter
would acquire 26% stake in Reliance Life (100% subsidiary of Reliance Capital).
In Mar-11, Nippon Life had agreed to buy 26% stake in Reliance Life for Rs31bn.
While we do not cover Reliance Capital, the deal appears to have valued Reliance
Life at ~3x of FY11 estimated Embedded Value.
As per a media report, the IRDA may introduce a minimum death-benefit
requirement for term life insurance policies.
Currently, there is no such requirement for term insurance whereas the Ulips need
to have a minimum sum assured (in case of death) that is equivalent to 10x of
annual premium.
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