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Private life insurers grow 10% in May, LIC shrinks 6%

Following a flat April, private life insurance businesses experienced a 10% annual premium equivalent (APE) gain in May, despite a 6% fall at Life Insurance Corporation (LIC). SBI Life and HDFC Life experienced the most gain in absolute terms.

The high base effect, which saw insurance businesses achieve 101% growth in May 2022 as the economy began to recover from the Covid epidemic, has been cited as one of the causes of the downturn last month. While Max Life’s performance remained subpar, individual insurers ICICI Prudential Life, HDFC Life, and SBI Life all displayed comparable growth rates of 8–10%.

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LIC at loss?

“In May 2023, private life insurers produced 10% APE growth. APE growth was 3% overall, but LIC had a 6% fall. Due to the strong momentum in March, business momentum decreased in April (0. 5%). Since then, the business momentum appears to have gradually increased, according to a research analysis from Kotak Institutional Equities. In May 2023, private sector APE growth remained low at 12%, identical to April 2023, on a four-year CAGR basis. Private players’ individual new business amount assured increased by 25% in May 2023 and 26% in April 2023, exceeding their respective individual APE growth rates of 10% and 1%.

This pattern suggests a likely increase in retail protection, which had been relatively moderate in the previous fiscal year (FY23), together with the muted growth in average ticket size over the first two months, ranging from -2% to +4%. Newer players in the field displayed stronger performances. Bajaj Life saw a significant 18% increase in individual APE, but group business fell by 58%. Birla, Aditya Both Tata AIA and Sun Life Insurance reported individual APE growth of 33% and 21%, respectively.

For the first two months of the current fiscal year, the life insurance sector reported total premiums of Rs 36,043 crore, a 15% decrease from the prior year. A sharp increase in growth during the previous quarter of FY23 was the cause of the decline.

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