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INSURANCE DETAILED NEWS
Information about Life insurance companies new business premium income down yet again in April available for investment.
Life insurance companies new business premium income down yet again in April
12-May-20   09:37 Hrs IST


Continuing the trend from March, the new business premium of the life insurers contracted for the second consecutive month, in April by 32.6% to Rs 6,728 crore from Rs 9,928 crore in the same period a year ago.

Life insurers' saw nearly all key financial parameters take a hit in the month of April as a nationwide lockdown throughout the month to stop the spread of the deadly coronavirus pandemic impacted distribution channels, and risk averse customers avoided investment and savings products.

State owned insurance behemoth, Life Insurance Corporation, saw its new business premium decline 32% to Rs 3,582 crore from Rs 5,268 crore a year ago.

Private insurers witnessed a decline of 33.3% in new business premium for the month of April 2020 at Rs 3,146 crore as opposed to Rs 4,714 crore in April 2019.

Among large private insurers, HDFC Life's new business premium (NBP) declined 53% to Rs 669 crore while ICICI Prudential Life Insurance saw its NBP decline almost 60% to Rs 256 crore. But SBI Life saw a marginal increase of 0.5% to Rs 917.43 crore.

Industry experts, however, pointed out that while the key metrics were done, companies performed better than the initial expectations of a complete washout in business due to the lockdown.

"While the month of April 2020 is expected to be a washout for many segments of the economy, life insurance companies were able to deliver 60% of April 2019 individual APE. This is better than our expectation of 90-95% decline for large players," said Kotak Institutional Equities in a report. "Demand for protection policies and spillover from year-end pipeline were the likely drivers."

Industry experts also pointed out that an emphasis on end to end distribution channels through investments in digital and higher demand for protection covers due to the pandemic may continue to contribute to the near-term growth trends of the industry.

A market meltdown and wavering confidence in equity products such as ULIPs, which forms a major business mix for large players, also likely contributed to decline in new businesses for life insurers.

Data from AMFI showed that inflows to equity-oriented mutual funds more than halved in April 2020 as compared to previous two months.

Performance on APE also remained a cause of concern for several large private insurers as they reported 40% decline in individual APE in April against last year. The annual premium equivalent is the sum of the total value of regular-or recurring-premiums plus 10% of any new single premiums written for the fiscal year.

While ICICI Prudential was down 55% and SBI Life down 73% in individual APE, HDFC and Max Life were down 29% and 20%, respectively, data from IRDAI showed. LIC, on the other hand reported APE decline of 21% against corresponding period last year to Rs1500 crore in April.

"In addition, interestingly, growth in group insurance premium for LIC and SBIL has remained healthy; however, the trend in individual premium receipts continued to remain weak," as per an Emkay report.

Furthermore, the overall sum assured declined by 16.4% to Rs 2.27 lakh crore in April 2020 whereas the number of polices sold came down by 67% in the reporting period to 4.16 lakh.

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