India Life insurance tracker July-11: Sluggish volumes continue but base impact to turn favorable::JPMorgan,

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 Jul-11:  contraction  continues:  Individual  premium  collections
continue  to  contract  with  ~44%  y/y  contraction  in  Jul-11  for  private
insurers.  YTD  premium  collections  over  Apr-Jul  11  for  private
insurers  have  contracted  by  ~44%.   Base  impact  gets  favorable  after
Sep-11,  but  given  weaker-than-expected  1H12,  we  now  expect  5%
contraction  for  private  insurers  in  FY12  (vs. flat  volumes  earlier),
implying ~12% y/y growth for the rest of  FY12.
 Base  effect  to  get  very  favorable  from  Oct-11:  Spurt  in  insurance
volumes  due  to  last-minute  push  in  Aug-10  could  lead  to  higher
contraction  in  volumes  next  month.  But  base  impact  gets  favorable
after  Aug-10.   Sep-10  did  see  some  spillover  volumes  from  Aug-10
backlog and thus we expect strong y/y growth from Oct-11.
 HDFC/Max continue  to  fare better, base impact most positive  for
ICICI:  Among  private  insurers,  HDFC  and  Max  continue  to  do
relatively  better  with  just  6%  y/y  contraction  for Max  and  ~18%  y/y
contraction for HDFC in Jul-11.  We  believe the  base impact would be
most positive for ICICI Pru as ICICI repored ~40% y/y growth in 1H11,
after which volumes contracted ~60% in 2H12.
 Weak  capital  markets  and  high  base  impact  continue  to  impact
growth.  Though  y/y  growth  is  expected  to  improve,  capital  market
sluggishness may cap a  sharp  rebound in volumes. Reliance Capital
is  the  purest  play  on  insurance  with  ~40%  value  from  insurance.
Our  conservative  valuations  for  Rcap  imply  significant  upside
potential  but  discounts  may  persist  in  the  near term  due  to  weak
sentiment.