Life Insurance
Monthly Update
March 9, 2021 FY21 likely to end with positive growth
Life insurance new business for Feb’21 on APE basis for the industry was strong at 19% YoY led by private insurers with growth of 24% YoY. Drivers of APE and Market share data this growth were largely a lower base and continued outperformance of FY21 YTD YoY APE, Rs bn FY20 certain players. Month-on-Month growth was slow (despite slower Jan’21 as YTD chg. chg. Industry Total 757 -6.4% 885.6 10.1% well) at -2% YoY with private insurers growing at ~2%. Importantly YTD private LIC 358 -12.3% 440.7 15.8% insurers saw flattish growth, while last Mar’20 saw decline in growth due to Private 399 -0.4% 444.9 5.0% lockdown and should favour further growth to end FY21 with positive single LIC - mkt share 47.3% -3.2% 49.8% 2.4% digit growth. HDLI continued its growth trajectory with 18% YoY APE growth Private - mkt share 52.7% 3.2% 50.2% -2.4% (32% YoY in Feb’20), while SBLI & Max Life improved on base effect and Source: Life Insurance Council, PL growth of 54% YoY & 33% YoY respectively. IPru Life showcased 7% YoY growth first in 13 months now. Overall Ind APE remains negative Industry to end FY21 on positive note as base effect plays out and led by Individual APE Growth (%) private insurers
60% HDFCLI new business APE grew by 18% YoY, while Individual APE grew by 40% . 16% and has maintained FYTD21 growth of 11% on both overall APE & on 20% individual basis too. Market share on individual business remained at 9.5% on 0%
-20% YTD basis.
-40% . SBILI grew by 54% YoY, though on a base of -5% YoY in Feb’20 but seems to -60% have caught up as showcased with good growth of 31% YoY (flattish FYTD21).
SBILI has bridged gap with de-growth of -2% FYTD21 and -4% FYTD21 on
Oct-19
Oct-20
Apr-19
Apr-20
Jun-19
Jun-20
Feb-19
Feb-20
Feb-21
Dec-19
Dec-20
Aug-19 Aug-20 individual basis and could see ending at flattish to lower single digit in FY21. Source: Life Insurance Council, PL . IPru Life posted a 7% YoY growth on overall APE and 6% on individual APE, a first positive growth in 13 months. On FYTD21 new business de-grew -27% and is likely to end in negative growth for second consecutive year. IPru Life
has been managing some of the growth on back of higher ticket size which is
indicatively up by 19% YoY.
. Max Life continues to display strong trends with growth of 33% YoY/14% MoM in Feb’21 partially also benefitted on base with 1% YoY in Feb’20. FYTD21
growth was at 14% YoY. It gained market share of 100bps MoM to 6.7% in
overall APE and has gained 90bps FYTD21 to 5.3%.
. Mid-sized players showcase a mixed growth momentum with TATA AIA delivering soft growth of 3% YoY, slowed down post Nov’20 and had strong
Q4FY20. BALIC grew by 45% continuing its strong trend from last few months
leading to 16% YTD growth, while Kotak caught up with growth of 29% YoY in Feb’21 but is at -1% on YTD basis.
From our channel checks, growth has been led by partly recovery in ULIP business, Pritesh Bumb while non-Par savings continues to be in flavor. Protection growth has tapered [email protected] | 91-22-66322232 slightly with demand back to pre-COVID (was sharp in lockdown). March remains Aashi Rara a strong month and with negative base across the industry helping to see better [email protected] | growth in FY21. We watch how large insurers grow business in FY22 as growth
trends remain mixed. Prefer SBILI.
March 9, 2021 1 Life Insurance
Overall New Business APE has been steady
APE - Feb 21 (Rs bn) YoY gr. (RHS) 24% 45,000 25% 40,000 19% 35,000 20% 30,000 12% 15% 25,000 20,000 10% 15,000
10,000 5% 5,000 82,982 34,261 48,721 0 0% Industry LIC Private
Source: Life Insurance Council, PL
New biz. APE – Private players showed better growth than public; mid-sized players growing well
APE - Feb 21 (Rs bn) YoY gr. (RHS) 54% 12,000 60% 10,000 45% 50% 33% 8,000 29% 40% 6,000 18% 30% 4,000 12% 20% 7% 7% 7% 2,000 3% 10%
0 0%
BALIC
RN Life RN
SBI Life SBI
Max Life Max
Tata AIA Tata
ABS Life ABS
ICICI Pru ICICI
Kotak Life Kotak HDFC Life HDFC
PNB Met Life Met PNB Source: Life insurance Council, PL
Sequential recovery continues but growth remains negative
Private Players LIC Industry 130% 110% 90% 70% 50% 30% 10% -10% -30% -50%
-70%
Apr-19
Oct-19
Apr-20
Oct-20
Jun-19
Jun-20
Feb-19
Feb-20
Feb-21
Dec-18
Dec-19
Dec-20
Aug-19 Aug-20
Source: Life Insurance Council, PL
March 9, 2021 2 Life Insurance
New biz. sales numbers (APE) and growth – Private players witnessed better growth MoM Life Insurer (Rs in million) Feb-21 YoY gr. MoM gr. FY21 YTD YTD gr. FY20 YoY gr. Industry Total 82,982 18.7% -1.9% 756,962 -6.4% 885,562 10.1% LIC 34,261 12.3% -7.4% 358,280 -12.3% 440,668 15.8% Total Private 48,721 23.6% 2.4% 398,682 -0.4% 444,894 5.0% Aditya Birla Sun Life 1,830 6.8% 1.0% 18,037 9.9% 18,793 -0.9% Aegon Life 12 -79.3% -20.4% 333 -48.3% 711 -29.7% Ageas Federal Life 367 57.5% 7.4% 2,471 -7.4% 2,974 -35.7% Aviva Life 235 80.6% 84.3% 1,164 12.3% 1,160 -31.3% Bajaj Allianz Life 3,085 45.2% 16.3% 22,704 15.9% 22,272 9.6% Bharti Axa Life 579 8.1% 2.1% 4,748 -14.5% 6,130 0.4% Canara HSBC OBC Life 98 -89.0% 3.5% 6,466 -29.1% 10,098 5.4% Pramerica Life 1,373 897.1% 25.1% 3,365 95.3% 1,857 -47.7% Edelweiss Tokio Life 414 9.6% 17.9% 3,245 10.5% 3,270 -6.3% Exide Life 605 -12.2% 14.5% 4,687 -16.8% 6,395 -4.9% Future Generali Life 375 -11.1% 28.5% 2,561 -21.2% 3,748 -1.9% HDFC Life 7,178 18.3% -7.9% 67,751 11.3% 68,085 19.2% ICICI Prudential Life 6,534 7.1% 8.7% 46,918 -26.2% 68,582 -5.1% IndiaFirst Life 1,236 7.7% 58.5% 8,157 -0.7% 9,404 15.1% Kotak Mahindra Life 2,364 29.0% 29.8% 14,650 -1.2% 17,618 0.0% Max Life 5,554 32.7% 14.4% 40,476 13.8% 41,110 5.1% PNB MetLife Life 1,488 12.3% 7.1% 11,799 -1.9% 13,374 -4.2% Reliance Nippon Life 885 7.3% 8.7% 7,641 -4.1% 8,981 0.9% SBI Life 10,014 53.8% -19.4% 94,265 -1.5% 102,857 9.9% Shriram Life 469 7.7% 8.6% 4,209 0.8% 4,809 -0.5% Star Union Dai-Ichi Life 869 42.5% 49.6% 5,910 15.7% 5,613 -1.4% Tata AIA Life 3,156 3.3% 12.6% 27,123 14.3% 27,054 20.6% Source: Life Insurance Council, PL;
APE Growth trends for select private players – SBIL seeing improving trends, MAXL strong growth continued APE YoY Growth May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Trends Aditya Birla Sun Life 6% 33% 8% -4% 30% 12% -22% 26% 12% 7% Bajaj Allianz Life -24% -3% 41% 9% 6% 16% -14% 46% 27% 45% HDFC Life -36% -2% 18% 20% 45% 48% 11% 8% 24% 18% ICICI Prudential Life -54% -44% -37% -27% -23% -21% -29% -22% -7% 7% Kotak Mahindra Life -5% 15% -3% -2% -6% -4% -21% -12% 7% 29% Max Life -20% 13% -2% 11% 16% 49% 8% 19% 15% 33% SBI Life -44% -2% -7% -9% -1% 13% -5% 7% 2% 54% Tata AIA Life 3% 18% 18% 34% 24% -38% -1% 9% 4% 3% Source: Company, PL
March 9, 2021 3 Life Insurance
Individual APE and growth details – Weakness continues with select companies doing good Individual APE (Rs. mn) Feb-21 YoY gr. MoM gr. YTD21 YoY gr. FY20 YoY gr. Industry Total 71,242 18% -3% 624,274 -7% 734,533 6% LIC 25,436 9% -10% 251,705 -15% 314,572 8% Total Private 45,806 23% 1% 372,568 -1% 419,962 5% Aditya Birla Sun Life 1,655 13% -5% 15,959 7% 17,018 0% Aegon Life 12 -79% -20% 328 -49% 710 -30% Ageas Federal Life 349 59% 14% 2,367 -7% 2,820 -37% Aviva Life 234 80% 83% 1,161 12% 1,156 -31% Bajaj Allianz Life 2,679 43% 11% 19,878 18% 19,268 11% Bharti Axa Life 562 8% 1% 4,635 -14% 5,936 2% Canara HSBC OBC Life 85 -90% 4% 5,850 -33% 9,749 7% Primerica Life 1,344 1032% 24% 3,276 125% 1,585 -47% Edelweiss Tokio Life 412 10% 18% 3,230 11% 3,229 -5% Exide Life 605 -10% 15% 4,673 -17% 6,356 -5% Future Generali Life 360 -13% 28% 2,497 -21% 3,671 -2% HDFC Life 6,189 16% -13% 59,389 11% 59,646 19% ICICI Prudential Life 6,246 6% 8% 45,065 -27% 66,427 -6% IndiaFirst Life 1,171 5% 65% 7,205 -2% 8,499 25% Kotak Mahindra Life 2,218 29% 30% 13,837 0% 16,454 -1% Max Life 5,486 32% 14% 40,094 14% 40,785 5% PNB MetLife Life 1,432 12% 7% 11,492 -2% 12,964 -5% Reliance Nippon Life 875 7% 9% 7,535 -5% 8,931 2% SBI Life 9,465 53% -21% 87,217 -4% 97,711 9% Shriram Life 431 4% 5% 4,056 1% 4,608 1% Star Union Dai-Ichi Life 846 42% 50% 5,777 15% 5,520 -2% Tata AIA Life 3,148 4% 13% 27,049 15% 26,918 21% Source: Life Insurance Council, PL
Private player market share has been improving Ind. APE Market Share Feb-21 YoY gr. MoM gr. YTD21 YoY gr. FY20 YoY gr. LIC 35.7% -2.73% -2.69% 40.3% -3.6% 42.8% 0.8% Total Private 64.3% 2.73% 2.69% 59.7% 3.6% 57.2% -0.8% SBI Life 13.3% 3.08% -2.95% 14.0% 0.5% 13.3% 0.4% HDFC Life 8.7% -0.13% -0.92% 9.5% 1.6% 8.1% 0.9% ICICI Prudential Life 8.8% -0.94% 0.94% 7.2% -1.9% 9.0% -1.2% Max Life 7.7% 0.84% 1.20% 6.4% 1.2% 5.6% -0.1% Tata AIA Life 4.4% -0.61% 0.62% 4.3% 0.8% 3.7% 0.4% Bajaj Allianz Life 3.8% 0.67% 0.49% 3.2% 0.7% 2.6% 0.1% Aditya Birla Sun Life 2.3% -0.09% -0.04% 2.6% 0.3% 2.3% -0.1% Kotak Mahindra Life 3.1% 0.27% 0.80% 2.2% 0.2% 2.2% -0.2% PNB Metlife 2.0% -0.11% 0.20% 1.8% 0.1% 1.8% -0.2% Reliance Nippon Life 1.2% -0.12% 0.14% 1.2% 0.0% 1.2% -0.1% Source: Life Insurance Council, PL
March 9, 2021 4 Life Insurance
Max life share grew steadily; SBIL degrew but remained at the top
Individual APE overall market share trend
SBILI HDFCLI IPRULI MAXLI 25%
20%
15%
10%
5%
0%
Jul-19
Jul-20
Apr-19
Oct-19
Apr-20
Oct-20
Jun-19
Jan-20
Jun-20
Jan-21
Mar-19
Feb-20
Mar-20
Feb-21
Aug-19
Sep-19
Nov-19
Dec-19
Aug-20
Sep-20
Nov-20
Dec-20 May-19 May-20 Source: Life Insurance Council, PL
Market share within the private – SBILI stood at top spot Ind. APE Market Share Feb-21 YoY gr. MoM gr. YTD21 YoY gr. FY20 YoY gr. within Private SBI Life 20.66% 4.09% -5.69% 23.4% -0.6% 23.3% 0.9% ICICI Prudential Life 13.64% -2.13% 0.94% 12.1% -4.2% 15.8% -1.9% HDFC Life 13.51% -0.80% -2.08% 15.9% 1.8% 14.2% 1.7% Max Life 11.98% 0.83% 1.42% 10.8% 1.4% 9.7% 0.0% Tata AIA Life 6.87% -1.29% 0.71% 7.3% 1.0% 6.4% 0.8% Bajaj Allianz Life 5.85% 0.83% 0.53% 5.3% 0.9% 4.6% 0.2% Kotak Mahindra Life 4.84% 0.22% 1.09% 3.7% 0.1% 3.9% -0.2% Aditya Birla Sun Life 3.61% -0.31% -0.22% 4.3% 0.3% 4.1% -0.2% PNB MetLife Life 3.13% -0.32% 0.18% 3.1% 0.0% 3.1% -0.3% DHFL Pramerica Life 2.94% 2.62% 0.55% 0.9% 0.5% 0.4% -0.4% Source: Life Insurance Council, PL
Individual APE market share –
Individual APE market share trend amongst Private players
HDFCLI IPRULI MAXLI SBILI 35% 30% 25% 20% 15% 10% 5%
0%
Jul-19
Jul-20
Apr-19
Oct-19
Apr-20
Oct-20
Jun-19
Jan-20
Jun-20
Jan-21
Mar-19
Feb-20 Mar-20
Feb-21
Aug-19
Sep-19
Nov-19 Dec-19
Aug-20
Sep-20
Nov-20 Dec-20 May-19 May-20 Source: Life Insurance Council, PL
March 9, 2021 5 Life Insurance
Premium per policy based on retail APE Ticket Size based on Individual APE Feb-21 YoY gr. MoM gr. YTD21 YoY gr. FY20 YoY gr. Industry Total 24,526 -28% 6% 27,704 11% 25,471 5% LIC 11,357 -44% 2% 15,199 6% 14,366 6% Total Private 68,871 17% -2% 62,379 3% 60,499 9% Aditya Birla Sun Life 80,140 21% -3% 73,618 15% 64,999 9% Aegon Life 15,245 -59% -18% 23,959 33% 19,001 0% Ageas Federal Life 74,236 18% -1% 67,469 15% 59,356 35% Aviva Life 78,642 34% 0% 61,251 10% 55,741 7% Bajaj Allianz Life 67,840 14% 3% 54,744 -11% 61,873 10% Bharti Axa Life 55,365 50% -3% 49,220 76% 28,593 -18% Canara HSBC OBC Life 29,277 -57% -7% 54,465 -15% 65,056 -8% DHFL Pramerica Life 74,002 132% -1% 50,454 29% 39,783 -2% Edelweiss Tokio Life 47,727 23% 4% 46,759 17% 40,410 -4% Exide Life 46,326 14% 7% 37,815 9% 35,593 7% Future Generali Life 68,659 15% 3% 57,981 8% 56,236 7% HDFC Life 74,753 17% -9% 70,025 5% 66,543 32% ICICI Prudential Life 95,137 19% 0% 79,768 -9% 86,810 9% IndiaFirst Life 48,034 -17% 6% 44,272 1% 45,235 18% Kotak Mahindra Life 65,687 18% 11% 51,072 2% 52,179 8% Max Life 92,605 25% 9% 74,275 10% 68,370 14% PNB MetLife Life 63,598 -10% 5% 55,641 -16% 66,783 3% Reliance Nippon Life 50,720 10% 4% 46,300 8% 43,598 12% SBI Life 62,595 17% -8% 62,896 -1% 62,992 7% Shriram Life 15,792 1% 7% 17,767 6% 16,772 -2% Star Union Dai-Ichi Life 66,893 -14% 6% 71,861 2% 71,127 21% Tata AIA Life 75,767 46% -7% 72,783 32% 56,322 -12% Source: Life Insurance Council, PL
Ticket size for LIC are improving to pre-covid levels
LIC - Prem/Policy (Rs) Private - Prem/Policy (Rs) 75,793
70,000
50,000
30,000 15,292
10,000
Jul-19 Jul-20
Apr-19 Apr-20 Oct-20 Oct-19
Jun-19 Jan-20 Jun-20 Jan-21
Feb-19 Mar-19 Feb-20 Mar-20 Feb-21
Aug-19 Aug-20 Sep-20 Sep-19 Nov-19 Dec-19 Nov-20 Dec-20
May-19 May-20
Source: Life Insurance Council, PL
March 9, 2021 6 Life Insurance
Insurance valuation and comparison parameters HDFC Life SBI Life ICICI Pru Life Max Fin Services Price 724 924 479 915 Mcap (Rs bn) 1463 924 688 316 Target Price 650 1080 476 995 Upside -10.2% 16.9% -0.6% 8.7% Rating REDUCE BUY REDUCE ACCUMULATE
Valuation FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E P/EV 7.1 5.6 4.7 4.0 3.5 2.9 2.5 2.2 3.0 2.5 2.2 1.9 3.2 2.6 2.2 1.9 P/EVOP 44.1 36.7 29.8 25.1 20.1 21.1 17.8 15.0 20.9 19.9 16.4 14.7 17.4 14.8 12.8 10.9 P/BV 20.3 18.1 16.3 15.0 9.5 8.6 7.7 6.7 8.8 7.6 6.9 6.2 12.4 11.1 9.8 8.7
Key Parameters (Rs bn) FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E APE 74.1 80.3 95.6 110.1 107.4 107.9 127.5 153.4 73.8 57.1 68.3 74.1 42.4 46.5 53.4 62.2 VNB 19.2 21.1 25.8 30.6 20.1 21.5 25.9 32.2 16.1 15.0 17.9 19.5 9.0 12.2 14.2 16.6 EVOP 33.2 39.9 49.2 58.2 45.9 43.8 51.8 61.6 32.9 34.5 42.1 47.0 18.1 21.4 24.8 28.9 EV 206.5 261.4 310.2 368.6 262.9 313.6 366.7 428.0 230.3 275.9 317.6 364.3 99.8 122.7 144.2 169.9 Networth 71.9 80.8 89.7 97.8 97.3 107.3 120.4 138.6 78.4 90.7 99.2 111.0 25.5 28.5 32.1 36.3 VIF 134.6 180.5 220.5 270.8 165.6 206.3 246.3 289.5 151.9 185.1 218.4 253.3 74.3 83.5 94.1 106.3 PAT 74.1 80.3 95.6 110.1 107.4 107.9 127.5 153.4 73.8 57.1 68.3 74.1 42.4 46.5 53.4 62.2
Growth YoY FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E APE 18.3% 8.4% 19.0% 19.0% 8.3% 2.7% 18.1% 20.3% 0.1% -5.4% -22.6% 19.6% 5.9% 9.8% 14.7% 14.7% VNB 20.0% 24.6% 10.2% 22.0% 17.0% 7.0% 20.1% 24.5% 3.3% 20.9% -6.3% 18.8% 25.6% 4.7% 41.3% 16.1% EVOP 14.1% 8.3% 20.3% 23.3% 38.3% -4.7% 18.3% 19.0% 3.3% -13.5% 5.0% 21.7% 21.1% 10.1% 17.9% 15.9% EV 20.3% 12.8% 26.6% 18.7% 17.4% 19.3% 16.9% 16.7% 15.1% 6.5% 19.8% 15.1% 19.0% 11.6% 23.0% 17.5% Networth 21.0% 22.4% 12.4% 11.0% 13.6% 10.2% 12.3% 15.0% 4.7% 6.6% 15.7% 9.4% -3.3% 6.1% 12.1% 12.4% VIF 19.9% 8.3% 29.6% 28.2% 19.7% 24.6% 19.4% 17.5% 21.3% 6.4% 21.9% 18.0% 30.1% 13.6% 12.3% 12.7% PAT 18.3% 8.4% 19.0% 19.0% 8.3% 2.7% 18.1% 20.3% 0.1% -5.4% -22.6% 19.6% 5.9% 9.8% 14.7% 14.7%
Operating Parameters FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E VNB Margin 25.9% 26.3% 27.0% 27.8% 18.7% 19.9% 20.3% 21.0% 21.7% 26.3% 26.1% 26.3% 21.6% 26.2% 26.5% 26.8% OP RoEV 18.1% 19.3% 18.8% 18.8% 20.5% 16.7% 16.5% 16.8% 15.2% 15.0% 15.2% 14.8% 20.3% 21.4% 20.2% 20.0% RoEV 12.6% 27.5% 19.6% 19.6% 17.4% 19.3% 16.9% 16.7% 6.5% 19.8% 15.1% 14.7% 16.7% 27.4% 21.3% 21.0%
Per Share Values FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E FY20 FY21E FY22E FY23E VNB per share 9.5 10.5 12.8 15.2 20.1 21.5 25.9 32.2 11.2 10.5 12.4 13.6 26.0 35.3 41.0 48.2 EVOP per share 16.4 19.7 24.3 28.8 45.9 43.8 51.8 61.6 22.9 24.1 29.3 32.7 52.5 61.9 71.8 83.6 EV per share 102.2 129.3 153.5 182.4 262.9 313.6 366.7 428.0 160.4 192.1 221.2 253.7 289.1 355.7 417.9 492.3 BV per share 35.6 40.0 44.4 48.4 97.3 107.3 120.4 138.5 54.6 63.2 69.1 77.3 73.7 82.7 92.9 105.2 VIF per share 66.6 89.3 109.1 134.0 165.6 206.3 246.3 289.5 105.8 128.9 152.1 176.4 215.4 241.9 272.7 308.1 Earnings per share 9.5 10.5 12.8 15.2 20.1 21.5 25.9 32.2 11.2 10.5 12.4 13.6 26.0 35.3 41.0 48.2 Source: Company, PL
March 9, 2021 7 Life Insurance
Analyst Coverage Universe
Sr. No. Company Name Rating TP (Rs) Share Price (Rs) 1 Axis Bank Accumulate 725 632 2 Bank of Baroda BUY 82 74 3 Federal Bank Accumulate 88 77 4 HDFC Bank BUY 1,690 1,467 5 HDFC Life Insurance Company Reduce 650 687 6 ICICI Bank BUY 630 537 7 IDFC First Bank Sell 32 47 8 IndusInd Bank BUY 1,195 1,058 9 Kotak Mahindra Bank Hold 1,912 1,794 10 Max Financial Services Accumulate 995 853 11 Punjab National Bank Accumulate 43 38 12 SBI Life Insurance Company BUY 1,080 858 13 South Indian Bank BUY 10 9 14 State Bank of India BUY 445 355
PL’s Recommendation Nomenclature Buy : > 15% Accumulate : 5% to 15% Hold : +5% to -5% Reduce : -5% to -15% Sell : < -15% Not Rated (NR) : No specific call on the stock Under Review (UR) : Rating likely to change shortly
March 9, 2021 8 Life Insurance
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