INSURANCE: Business traction improves in last month of FY2012.

Business traction improves in last month of FY2012. Private insurance companies reported 6% growth in APE collections for March 2012 on the back of subdued performance for the past several months. Most large insurance companies (except Birla SL and Reliance Life) reported positive yoy APE trend. Bajaj Allianz (up 26% yoy) was the major surprise. We believe that private players will need to sustain APE growth trends order to maintain/improve expense ratio.



Higher APE growth last month
Private insurance companies reported 6% growth in APE collections for March 2012 after subdued performance for the past several months. LIC’s APE for the past two months of FY2011 was distorted and hence we don’t read much in its 16% yoy growth for March 2012.


Most companies fared well
Most large insurance companies (except Birla SL and Reliance Life) reported yoy growth in APE. Bajaj Allianz (up 26% yoy), Max NY (up 20% yoy) and HDFC SL (up 16% yoy) were the key fastgrowing players. ICICI Pru Life reported marginal yoy growth but 50% mom growth; Birla SL also reported almost 170% mom growth.
FY2012E APE significantly weaker than expected


APE for FY2012E was down 22% for private players; Bajaj Allianz, Birla SL, ICICI Pru Life, Reliance Life and SBI Life reported over 20% decline. LIC reported 12% positive growth. Base effect of the new IRDA regime pulled down APE by 44% for private players in 1HFY12. In 2HFY12, HDFC SL was the only large player to report yoy growth (up 8% yoy); other companies reported yoy decline in 2HFY12: Bajaj Allianz (down 10%), Reliance Life (down 21%), Birla SL (down 9%), SBI Life (down 8% yoy), Max (down 6% yoy).


RISH TRADER