India’s life insurance coverage business registered sturdy volumes in Mar-21, largely aided by a beneficial base (-40% y-o-y in Mar-20) with 56-120% y-o-y development for prime non-public insurers (non-public insurers +89% y-o-y). Flows have been sturdy in March throughout insurers and AMCs reported optimistic internet flows as properly. On a 2-yr CAGR foundation, Mar-21/Q4FY21 development was 7%/9% for personal insurers with: (i) momentum choosing up for SBI Life following a weak H1FY21, (+12.6%/13%) and (ii) HDFC Life continued to ship properly with 13%/ 16% development whereas Max Life delivered 0/ 8% development with some moderation seen in Mar-21. IPRU additionally noticed a pick-up in development off a weak base, however remained decrease than FY19 ranges, a -3% CAGR over Q4FY19.
For FY21, the business noticed a 5% CAGR, with non-public gamers delivering 6% CAGR (10% excluding IPRU). On a 2-yr CAGR foundation, HDFC Life delivered sturdy 18% development; Max Life additionally carried out properly, delivering 12% development; SBI Life delivered a comparatively muted 7% CAGR whereas IPRU noticed a 12% CAGR decline over two years. With this, HDFC Life and Max Life gained 130-110bp market share in FY21, whereas SBI Life and IPRU misplaced 60bp/ 370bp market share.
Our view: With a decrease base impact taking part in out now (from March) over H1FY22, development will optically look higher; thus we discover the 2-yr CAGRs to be a extra applicable metric to gauge the business’s efficiency. Life insurers delivered comparatively strong development in a pandemic yr (10% 2-yr CAGR ex IPRU for the non-public gamers). Margins tendencies have additionally been sturdy for corporations below our protection. We proceed to observe the impression of a second COVID-19 wave on development.
SBI Life (SBILIFE IN, Purchase) – sturdy momentum: SBI Life delivered particular person APE of +119% y-o-y in Mar-21. On a 2-yr CAGR foundation, Q4FY21 APE was 13.1%. We stay optimistic given the inventory’s cheap valuation for a powerful distribution, strong pick-up in development, enchancment in margins and low-cost franchise.
HDFC Life (HDFCLIFE IN, Impartial) – sturdy efficiency: HDFC Life noticed +75% y-o-y in particular person APE in Mar-21. This means a 13%/16% 2-yr CAGR for Mar’21/Q4FY21 (strongest amongst friends).
Max Life (MAXF IN, Purchase) – comparatively mushy: Max Life’s Particular person new enterprise APE was +56% y-o-y. This means a flattish 2-yr CAGR for Mar-21 and seven.5% 2-yr CAGR for Q4FY21. We stay optimistic on Max, given its regular development, wholesome structural margins and constant RoEVs.
IPRU Life (IPRU IN, Purchase) getting again on its toes: IPRU delivered 98% y-y development on a weak 50% y-o-y decline base. On a 2-yr CAGR foundation – Mar’21/Q4FY21 volumes have been flat/down 3%. Mar’21 quantity efficiency offers us confidence that development has bottomed out. We flip incrementally optimistic on inventory given low-cost valuations and development exhibiting preliminary indicators of restoration.