India Life Insurance tracker May-11: Weak volumes continue:: JPMorgan

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 May-11:  Weak  volumes  continue:  Individual  premium  collections
continue to contract with ~41% y/y contraction in May-11  for private
insurers.  YTD  premium  collections  over  Apr-May  11  for  private
insurers  have  contracted  by  ~41%  y/y  and  given  weak  volume  trend
continuing, we see risks to our flat volume growth for FY12.
 41%  contraction  for  private  insurers  :Weak  volumes  continues
across the board. ICICI Pru volume contraction continues at ~60% y/y
due to  a  high  base impact. Bajaj  and Reliance Life  continue to  loose
market share  with higher than system  contraction in volumes. Among
FY11  market  share  gainers,  HDFC  standard  has  seen  contraction  in
volumes  (38%  contraction  YTD  v/s  18%  growth  in  FY11  but  Max
continues  to  report  relatively  strong  numbers  with  <20%  y/y
contraction YTD.
 Product mix: Dependence on single premium ULIP products continue
to  increase  with  single  ULIPs  now  contributing  ~8%  of  WRP
premiums  v/s  ~1%  pre  Sep-10.  SBI’s  dependence  on  single  premium
seems  to  be  increaing  with  single  prmeiums  contributing  ~22%  of
WRP premiums v/s 11% in FY11.
 Draft IPO guidelines released: The draft IPO guidelines released last
week was in line with  expectations and we  expect most large insurers
to  meet  the  financial  requirements  by  FY12.  Post  finalization  of  the
guidelines,  we  see  increase  in  FDI  to  49%  from  26%  as  the  biggest
impediment  for  public  issue.  Volumes  continue  to  remain  weak  for
the  sector  but  we  believe  regulatory  headwinds  are  behind  us.
RCAPT remains the purest play on insurance  sector. HDFC/  ICICI
with 6-8% SOP contribution from insurance are other plays.