The insurance sector has released insurance data for the month of December. The life insurance industry as a whole has grown by 37 percent and LIC’s overall December premium has grown by 53.4 percent. HDFC Life’s Individual Annual Premium Equivalent has grown by 46.20 percent, while that by ICICI Pru Life grew by 7.90 percent and Max Life by 22.90 percent.

Meanwhile, the private insurers in 2019 have lost market share by about 4.26 percent.

Discussing the data and outlook in detail, Avinash Singh of SBICAP Securities, said it was a strong show by the overall life insurance industry that continued in December. “Last time we highlighted that given the change in the product filing and new product or re-filing of the existing product by the life insurers, there will be a lot of push by the distribution channel to sell more product and that is what reflects in very strong growth in the month of November and also continued strong growth in the month of December.”

“However, we have to take the monthly number with a pinch of salt because life insurance is just not about a month. In a month there could be certain changes to the regulatory landscape, certain product launches and that could push the growth number a bit here and there. So, it is more about looking at the direction of structural growth and how the product profile or margin profile is changing,” he added.

So, when you look at the product profile or margin profile, the top 4-5 private players are in a very solid position, said Singh. These players have the brand, distribution and product bouquet to grow strongly, he added.

When asked about the impact of the data on margin performance of these companies Life, Singh said, “You have to look at the kind of product performance that these players have got. HDFC Life continues to have a more diversified product profile and it has been a leader for quite some time. This year they had blockbuster product, Jeevan Sanchay Plus, which is a non-participating (non-par) guarantee product and lately they have also launched the par version."

"So, in terms of overall margin profile, they should be able to hold up or see some bit of decline from where they were in the first half because a par product will have a slightly lower margin than your non-par or protection," he said. "Overall, the gap between margins of HDFC Life and ICICI Pru may sustain but may not widen because ICICI Pru is also growing strongly on protection side, which will bring in lot of margins," he added.

However, the main difference is on the saving product, where ICICI Pru is dependent on unit link, which has thin margins, whereas HDFC Life has balanced portfolio of par, non-par and unit link, said Singh.