Page 17 - Insurance Times August 2020

Managing Director and CEO, HDFC Life Market watchers say this buying has riod a year ago. It was, largely driven
Insurance, said: "We continue to ex- provided boost to the market at a time by private insurers' performance.
hibit resilient performance even in the when foreign portfolio investor (FPI) Private insurers, 23 in total, amassed
current scenario. Our market share in flows have been choppy and MF invest- NBP to the tune of Rs. 7,815 crore in
terms of individual weighted received ments have moderated owing to a July, up 26 per cent from Rs. 6,197
premium has increased by 100 basis slowdown in investor flows into equity crore in the same period last year. LIC
points from 17.5 per cent to 18.5 per schemes. was still in the red, with 0.92 per cent
cent." Domestic insurers, mainly LIC, stepped drop in NBP to Rs. 15,170.95 crore in
up their equity purchases during March July 2020, compared to Rs. 15,311.87
SBI Life Insurance net and April, taking advantage of the at- crore.
profit up 5% tractive valuations amid the Covid-19- NBP is the premium acquired from
induced market plunge.
SBI Life Insurance reported a 5.1 per new policies for a particular year. Life
cent jump in net profit at Rs. 390.89 The DII pie also includes other local insurers had seen their NBP decline
crore in the first quarter of FY21 institutions such as pension funds, but 32.6 per cent and 25.4 per cent in April
against Rs. 371.90 crore a year ago. Its MFS and insurance companies make and May, respectively. And in June,
net premium income increased by 14 the bulk of the purchases. NBP of life insurers was down 10.5 per
per cent in the quarter ended June 30 As in the past, LIC, the country's larg- cent.
to Rs. 7,588.09 crore when compared est life insurer, may have been instru- While July saw life insurance sector's
to Rs. 6,655.02 crore in the same pe- mental in cushioning the market fall NBP post positive growth, however,
riod a year ago. "Increase in gross this year as well. The insurer says it has the April-July period saw premiums
written premium by 14 per cent to Rs. pumped in about Rs. 20,000 crore this decline 12 per cent to Rs. 72,321 crore
7,640 crore in the first quarter of the financial year, mostly in blue-chip compared to Rs. 82,146.5 crore in the
fiscal was mainly due to strong growth stocks. same period last year.
in renewal premium by 30 per cent to "LIC, being a long-term investor, is usu-
Rs. 4,580 crore in the first quarter of ally sector-agnostic and focuses on di- Similarly, private insurers NBP in the
the fiscal," it said in a statement. April-July period was down 6.44 per
versified investment. However, due to cent to Rs. 20,620.56 crore compared
It also noted that it has achieved mar- the current pandemic, the focus was to Rs. 22,039.81 crore in the same
ket leadership in total new business on large caps, and the sectors badly period last year. LIC also followed a
premium at Rs. 3,060 crore, with 23.9 affected were avoided," LIC Managing similar trend and witnessed a drop of
per cent private market share in the Director T C Suseel Kumar had told 14 per cent to Rs. 72,321.53 crore
first quarter of the fiscal. The value of earlier. compared to Rs. 82,146.46 crore. Ex-
new business decreased by 29 per cent Insurers are known to be contra-play- perts believe that growth in the sec-
to Rs. 240 crore in the April to June ers - they buy when sentiment is bear- tor could potentially return in Q2 or Q3
quarter 2020. Its 13th month persis-
tency stood at 81.55 per cent in the ish and sell when there is euphoria. and distribution channels could see sig-
first quarter this fiscal when compared "Insurers this year have got consistent nificant realignment, with digital sales
rising at the cost of individual agents
to 84.46 per cent a year ago. The sol- inflows in both ULIPS (unit-linked insur-
vency ratio as on June 30 was at 2.39 ance plans) and traditional plans, some and bancassurance.
against the regulatory requirement of of which has found its way into the Motilal Oswal Institutional Equities
1.50. equity market. The lower share prices, said, "We expect business growth to
after the correction in March, may remain under pressure over the near
Insurers turn net buyers of also have dictated flows," said Mihir term, especially for the savings busi-
equity after 8 years Vora, director and chief investment ness, given the reduced economic ac-
officer at Max Life Insurance. tivity and consumption slowdown.
Insurance companies have turned net
buyers of Indian equities after eight Life insurers' new business High volatility in the capital markets,
years. So far this year, domestic insti- in an uncertain environment and lower
tutional investors (DIIS) have pur- premium rises 7% in July earnings visibility, should lead to tepid
chased stocks worth Rs. 80,000 crore, New business premium (NBP) of life demand for unit-linked products. On
of which mutual funds (MFS) account insurers grew 6.86 per cent in July to the other hand, protection and annu-
for Rs. 33,700 crore, implying net buy- Rs. 22,986 crore, compared to Rs. ity businesses are likely to do well, it
ing by insurers. 21,509 crore in the corresponding pe- added. T

The Insurance Times, August 2020 17