Life insurance companies' new business premiums hint at industry’s revival

MUMBAI: Life insurers saw new business premiums (NBP) climb more than a fourth in September, pointing to a quick revival in an industry that’s crucial for helping finance long-gestation and capital-intensive assets.In September, NBP of life insurers saw a robust 26.5% increase at Rs 25,366.32 crore against the same period last year, led by strong performance from LIC and select private insurers such as SBI Life, HDFC Life, Bajaj Allianz Life and Max Life, latest data released by the Life Insurance Council showed.LIC’s NBP rose 30% to Rs 16,602.84 crore and private insurers – 23 in total – saw their NBP rise 20% to Rs 8,763.48 crore. Among private players, SBI Life exhibited the highest monthly growth among listed insurers in terms of individual and total annual premium equivalent (APE).“September witnessed strong growth for private life insurers (+13% YoY and 28% MoM in terms of total APE) with powerful performance by HDFC Life, Max Life, Tata AIA and Bajaj Life, in that order,” ICICI Securities said in a note. “SBI Life exhibited highest month-on-month growth amongst large insurers in terms of individual as well as total APE,” it said.Insurance penetration remains low in India, where weighted average capital costs for companies remain high compared with their peers in the West. Life insurance premiums, which ensure steady cash inflows for insurers, often find their way into the financing of capital-intensive assets that need long-term and milestone-linked financing. For the second quarter between July and September, NBP for insurers rose 16% largely on the back of demand for single premium-based protection products whereas the demand for investment-led ULIP products continued to be low. For the first quarter of FY21, the slump in NBP was of the tune of nearly 18%, the data showed.

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