Markets
Chart Beat: For the life insurance sector, there could be a hitch in March
Summary
- Considering the sector's high base, it is improbable that the current month's growth rates will deliver any positive surprises
In February, the life insurance sector witnessed a surge in its overall annualized premium equivalent (APE), growing 25% year-on-year, marking the highest growth rate observed in at least the past 13 months. This increase was predominantly led by the private sector, which posted a growth rate of 22%, with significant contributions from leading companies such as HDFC Life Insurance Co Ltd, ICICI Prudential Life Insurance Co Ltd, Max Life, and SBI Life Insurance Co Ltd. Meanwhile, the Life Insurance Corp of India (LIC) outpaced the private sector by registering an APE growth of 32%.
Over the past three months, LIC has shown commendable performance, with its APE growth fluctuating between 14% and 32%, a stark improvement from the –25% to 3% range recorded in the initial eight months of fiscal year 2024 (FY24). This indicates a likely stronger second half for FY24 for LIC. Still, growth for FY24 is expected to be muted. For instance, Kotak Institutional Equities expects LIC’s overall APE growth in FY24 at 2% year-on-year.
Considering the sector's high base, it is improbable that the current month's growth rates will deliver any positive surprises. Recall that the growth in March 2023 was driven by higher ticket size policies ahead of the new tax norms applicable from 1 April of that year. In March 2023, overall APE grew 23% on year.
