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• Nov-10- Low volumes continue: Premium collections post the new
ULIP guidelines continue to remain low in Nov-10 with ~34% y/y
contraction in premium collections for the private sector and ~12% y/y
contraction for the industry. M/M volumes also have improved just
marginally by 5% and managements believe that volumes would take
longer than Mar-11 to stabilise.
• Product mix still evolving: Insurers have been adding to new
products post IRDA approval and thus expect marginal pick up in the
coming months. From Sep-10, share of single premium policies
increased but with new regular product approvals, share of regular
products is expected to increase over next few months.LIC and HDFC
Standard with higher traditional products mix have been relatively
better placed over the last few months.
• YTD premiumgrowth now negative for private insurers : With
~35% y/y contraction in Nov-10, YTD premium growth have turned
negative for the private insurers. With ~83% y/y growth for LIC, YTD
market share for LIC has moved up by ~1500bps to 60%.Among
private insurance companies, ICICI and HDFC Std have seen increase
in YTD market share with SBI/Bajaj/Birla losing market share.
• Margins under pressure, remain cautious: NBAP margins for the
sector would be under pressure from here post the implementation of
new ULIP guidelines. Our interactions with various managements
indicate that costs and persistency would need to closely monitored to
achieve ~14-15% NBAP margins with further risks from higher taxes
(DTC). We continue to maintain our cautious stance on the sector.
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