>INDIA INSURANCE: Growth remains modest (CLSA)

During Feb-10, sector’s annualised new business premiums (NBP) grew by 28% YoY led by 41% YoY growth of LIC. NBP of the private sector grew by 18% YoY in spite of a lower base (Feb-09 NBP was down 27% YoY). ICICI’s sales fell 7% YoY due to lower group premiums, but HDFC and Reliance Life’s strong collections were boosted by group businesses. In spite of being late entrants, the life insurance JVs of PSU banks have scaled-up quite fast and are now larger than many of their older peers.

Sector growth led by LIC
■ In Feb-10, NBP for the sector grew by 28% YoY, led by 41% growth in NBP of LIC. LIC continues to dominate the sector with +46% market share; up 60bps MoM.
■ The NBP of the private insurers grew by 18% YoY, in spite of lower base of Feb-09 when premiums had declined by 27% YoY.
■ The strong growth in premiums of LIC was also supported by the launch of single premium high-assured returns scheme ‘Jeevan Nischay’.
■ On YTD basis, sector premiums have grown by 13% YoY led by LIC (25%), but private sector has grown by just 5%.

Strong growth for HDFC and Reliance
■ During Feb-10, ICICI’s premiums declined by 7% YoY, second consecutive month of YoY drop in NBP. The fall in premiums is largely due to lower group premiums (down 64% YoY; this is a volatile business), while individual premiums were up 9%. ICICI has retained its #1 position among private insurers.
■ SBI’s premium growth also moderated during Feb-10 to 24% YoY (up 60% YoY in Jan-10). Due to higher share of group business, SBI’s premiums have been volatile.
■ HDFC Standard Life reported strong growth of 96% YoY (47% MoM) led by large group premium collections.

■ While Reliance and Bajaj reported growth of 21% and 11% respectively, Birla and Max’s NBP declined by 21% and 2% YoY, respectively.

Newly formed insurance JVs of PSU banks are scaling-up well
■ Over the past 6-12 months, the newly launched life insurance JVs of PSU banks- (Canara, OBC, HSBC); (BoB, Andhra Bank, Legal and General); and (BoI, Union Bank and Da-ichi) have grown to collectively garner 2-3% share in total NBP and 4-5% share within the private sector.
■ As a result, these JVs are now much larger than many private sector players that have been in operation for a longer period.
■ A large branch network of the promoter banks and huge customer base are the key drivers of such a fast ramp-up by these companies.
■ Our industry interaction also suggests that to some extent these JVs are also taking away market share from LIC, especially in the smaller towns and cities.

To read the full report: INDIA INSURANCE