Disclaimer:I am market making in the shares of ICICI Pru Life
The stock market boom has breathed new life into a few large life insurance companies, thanks mainly to unit-linked insurance plans (Ulips).
Top private life insurers like ICICI Prudential Life, HDFC Life Insurance, Max Life Insurance and a couple of smaller players with a significant number of Ulips in their product baskets have been able to register double-digit growth in individual new business premium during April-August.
On the other hand, PSU behemoth Life Insurance Corporation of India (LIC) has witnessed negative growth in individual business for the same period. According to data available with Financial Chronicle, individual adjusted first-year premium calculated (as per international norms) by taking into account 10 per cent of single premium and 100 per cent of regular premium during April-August was Rs 1,347 crore for ICICI Prudential Life Insurance, up 34 per cent.
During this period, ICICI Prudential Life’s market share increased by 410 basis points. One basis point is one-100th of a per cent. More than 70 per cent of ICICI Prudential Life’s premium comes from Ulips and the rest from traditional products.
Similarly, HDFC Life Insurance had individual new business premium of Rs 855 crore during April-August, a growth of 31 per cent, which improved its market share by 228 basis points to 15.1 per cent. Max Life Insurance clocked a 15 per cent growth in individual first-year premium at Rs 614 crore during this period.
A top official with a large life insurance company said, “A bull run is supporting higher Ulip sales, which could be one reason. The other reason is that people are moving away from gold to financial products. Financial savings ratio as a percentage to GDP has now started to increase. But we need to wait, as these are early days as 60-70 per cent of actual sales of the life insurance industry happen in the second half of FY15.”-from MyDigital
