Page 17 - Insurance Times September 2020

This was enhanced to Rs. 100 crore ery with 14% growth in individual an- Shares of SBI Life and ICICI Prudential
after the 2011 amendment to the LIC nualized premium equivalent (APE). Life Insurance are still 15% down from
Act. HDFC Life has been able to push its their peaks this year, while that of
products more than peers and the HDFC Life are down around 5%. LIC's
Though the government has not dis-
closed how much of its shareholding HDFC Life Sanchay Plus insurance plan market share gains, meanwhile, may
will be offloaded through the IPO, it is has helped. augur well for its proposed initial pub-
lic offering (IPO).
expected to be 10 per cent. Once For the first five months of FY21, the
listed, an entity is required to have at life insurer's retail APE shrank 5.2%,
least 25 per cent of public shareholding the lowest among top private insurers. LIC sees recovery soon,
- shares owned by those other than Peers SBI Life Insurance and ICICI Pru- posts renewal growth
promoters - within three years. dential Life Insurance saw contractions
LIC has witnessed a 4% growth in re-
of 25% and 41%, respectively.
The Budget documents show that the newal premium transactions and 13%
government has set a disinvestment In all this, the surprise has been state- jump in renewal income during this
target of Rs. 2.1-lakh crore, of which owned Life Insurance Corporation of pandemic-hit fiscal till September 12
Rs. 90,000 crore would come from the India (LIC). LIC saw its new business pre- compared to the year-ago period. The
sale of stakes in IDBI Bank and LIC. mium grow 15% in August. For the first
life insurance behemoth is hoping to
LIC reported a 12.42 per cent increase five months of FY21, LIC's retail APE come back to normal shortly, feels its
in total premium income in 2019-20 to shrank by just 3.1%, far lower than most managing director Raj Kumar.
of its private peers. Analysts said that
Rs. 3.79-lakh crore against Rs. 3.37- Kumar also feels that the life insurers
lakh crore in 201819. for FY21, private insurers may show a should now look for more 'less capital
contraction in terms of market share.
intensive' products in the new normal
While private insurers re- "Market share of private players is
because solvency margin would be an
cover, LIC gains market likely to contract in FY21, but we ex- issue for which the regulator may not
pect a resumption of the trend of pri-
share ahead of its IPO vate players gaining share from FY22 relax. He was at a webinar 'Indian In-
surance Post Covid Challenges' with the
India's life insurers have shown a smart onwards," wrote analysts at Jefferies members of MCCI.
recovery from the covid-19 pandemic India Pvt. Ltd.
that hit businesses in the first quarter But LIC's market share gain may not Kumar pointed out that the renewal
of FY21. But for their shares to reflect be based on an increase in business, premium in the first five months of
this, investors would prefer to wait for but more because of a heavy loss of 2020-21 till
a few more months. business for private insurers. Indeed, September 12 was Rs 87,000 crore
Latest data from the sector regulator LIC's growth in August was largely be- compared to Rs 77,000 crore during
shows that private life insurers saw cause of a low share of market-linked the same period of last fiscal. He ex-
their new business premium collection products in its portfolio. plained that growth of premium in-
growing by 13.7% year-on-year (y-o-y) "LIC's strong growth was likely driven come was more than the growth of
in August, much better than around 6% by traction in endowment and annuity- transactions because renewal was
rise in July. based products," a Kotak Institutional more for big-ticket premiums com-
For the June quarter, private life insur- Equities report said. pared to small-ticket ones. "High
networth individuals (HNI) have re-
ers had seen a sharp contraction in While the life insurance industry has
new business premium. The improve- bounced back, analysts are still cau- newed while the smaller one I think
ment in July and August augurs well for tious. Staggered lockdowns across sev- would do it later," he added.
insurers, but the key will be to sustain eral districts of the country could con- Elaborating on reduction of solvency
the numbers. The management com- tinue to pose a challenge for insurers. margin for life insurers, Kumar added
mentary that followed June quarter Moreover, the margin-friendly protec- that it is unlikely to be done by the
results has been positive in terms of tion business has moderated from its regulator. "The life companies have to
recovery. Within private players, HDFC peak levels, according to analysts at see how to resolve the issue. One may
Life Insurance showed a sharp recov- Kotak. look at a lower number of guaranteed

14 The Insurance Times, September 2020