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Insurance: Business traction remains weak
` Private sector remains in red
` Insurance companies with banking partners have fared well
` FY2012E APE significantly weaker than expected
Insurance
India
Business traction remains weak. Private insurance companies reported 2% decline in
APE collections for February 2012. LIC reported high (99%) yoy growth due to a low
base. ICICI Pru Life and HDFC SL reported yoy growth among the larger players; Birla SL
and Bajaj Allianz continued to report decline. APE for FY2012E will be below initial
estimates for almost all private players. We believe that private players will need to
improve APE collections in order to maintain/improve expense ratio – seems challenging
at the current juncture.


Private sector remains in red
Private insurance companies reported 2% decline in APE collections for February 2012. LIC
reported high (99%) yoy growth though largely due to a low base. On an mom basis, LIC was
almost stable while private players were up 8%.
Insurance companies with banking partners have fared well
ICICI Pru Life and HDFC SL reported yoy growth among the larger players. Birla SL and Bajaj Allianz
continued to report decline. Max NY Life, though reported better trends in 1HFY12, was down
7% in February 2012. SBI Life and LIC significantly increased focus on the single premium business,
consequently the share of single premium in total premium for the industry increased to 37%
from 27% in January 2012.
FY2012E APE significantly weaker than expected
APE for FY2012E will be below initial estimates for almost all private players; this is more visible for
Bajaj Allianz, SBI, ICICI Pru Life and Reliance Life. Low commission rates do not incentivize
distributors to push unit-linked business and traction in non-linked business (which was the new
focus area) is lower than expected, depressing growth estimates. Private players will need to
improve APE collections in order to maintain/ improve expense ratio – this  seems to be
challenging at the current juncture.