Somrup Bose Ray

Quarterly Competition Track Vol 19 (FY11Q3) Competition Track www.indiainsuranceresearch.com Allons Insurance Research & Consultants Pvt Ltd 1 Quarterly Competition Track Vol 19 (FY11Q3) Industry managed 28% growth during 9MFY11 backed by strong performance by LIC New Business Premium growth driven by strong performance by LIC …. The Indian life insurance industry has registered 28% growth in new business premium during 9MFY11 when compared with 9MFY10 backed by a strong performance by LIC. The public sector major managed to grow by 40% during the above mentioned period. The private insurers on the other managed to grow by only 7%. Around 7 private insurers have registered de‐growth in new business premium during 9MFY11. Q3FY11 sales impacted by ULIP regulations …. New ULIP regulations have negatively impacted the growth in Q3FY11 The industry has recorded de‐growth by 15% during Q3FY11 as sales of unit linked policies have been impacted by the new regulations. Exhibit 1: Growth in New Business Premium each quarter Rs bn 400 FY10 FY- 243 285 368 246 255 145 100 0 Q1 Q2 Q3 Source: IRDA, Allons research The industry has witnessed 7% de‐growth during the first 4 months post the introduction of new ULIP regulation from September 2010. Among the top ten insurers 8 have recorded a decline in new business premium collection during Sept‐Dec FY11 when compared with same period last financial year. Exhibit 2: Decline in New Business Premium during Sep – Dec 2010 Rs bn Insurers Sep‐Dec FY11 LIC 233.7 SBI Life 26.9 ICICI Prudential 21.1 HDFC Standard 11.1 Bajaj Allianz 14.0 Reliance Life 12.2 Max New York 6.7 Birla Sun Life 11.8 Tata AIG 4.3 Kotak Life 4.3 Industry 365.2 Source: IRDA, Allons research Sep‐Dec FY10 Growth - ‐3% ‐14% ‐2% 8% ‐21% ‐35% 7% ‐55% ‐9% ‐34% ‐7% Among the top private insurers, HDFC Life has witnessed a strong growth during 9MFY11 with new business premium of Rs 25.7 bn as against Rs 20 bn during 9MFY10. The company has moved up to the 3rd position from 5th position during 9MFY10 in terms of new business premium. Allons Insurance Research & Consultants Pvt Ltd 2 Quarterly Competition Track Vol 19 (FY11Q3) Changes in market dynamism Post the new ULIP regulation the market has witnessed the following: • • • • Decline in sales of ULIPs Growth in sales of single premium policies Marginal drop in commission expense ratio Drop in sales of pension products Change in product mix …… Unit linked policies accounted for majority of the sales for most insurers. The share of unit linked policies used to be in the range of 85% to 95% in terms of new business premium. Max New York Life has sold 15% policies on ULIP platform during Sept‐Dec FY11. Companies like Birla Sun Life, Bajaj Allianz and Reliance also witnessed a decline in ULIP sales. The table shows the share of ULIP in total business pre and post the new guidelines. Exhibit 3: Share of ULIP Business Pre & Post September 2010 85% 65% Tata AIG Birla Sun Life Max New York Reliance Life Bajaj Allianz 15% 50% 40% 53% 65% 60% 75% 62% 70% 85% 85% HDFC Standard Oct‐Dec FY11 68% 88% 85% ICICI Prudential Apr‐Sep FY11 SBI Life 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: IRDA, Allons research Changing share of product mix... Share of ULIP is going down. Focus shifted towards traditional products to bridge the operating expense gap. The industry has also witnessed a flurry of products launched on the traditional platform. As on December 2010 various insurers have launched around 48 products on the traditional platform. The key reasons why insurers are going back to the good old days of selling traditional products is to bring down their operating expense gap. Traditional products come with higher allowance for managing the cost of tied channel and also provide for higher remuneration. Sales of single premium policies picked up …. Private life insurers are selling more single premium policies to manage persistency risk and top‐ line growth. For private players the share of single premium has gone up to 32% during Sep‐Dec FY11 from 8% during the same period in FY10. With decline in compensation for regular premium policies distributors are finding better value by selling single premium policies. Selling single premium policies do away with persistency risk. The table below show the share of single premium polices. Allons Insurance Research & Consultants Pvt Ltd 3 Quarterly Competition Track Vol 19 (FY11Q3) 15% 2% 11% 11% 2% 4% 10% 36% 31% 22% 3% 20% 6% 11% 30% Sep‐Dec FY11 9% 55% 40% 11% 50% Sep‐Dec FY10 39% 60% 47% 70% 60% Exhibit 4: Share of Single Premium Business Pre & Post September 2010 Tata AIG Birla Sun Life Max New York Reliance Life Bajaj Allianz HDFC Standard ICICI Prudential SBI Life LIC 0% Source: IRDA, Allons research Negligible impact on commission expense ….. Marginal impact on commission expense ratio Although there has been a decline in the commission rates offered by unit linked products under the new regime, there has been a marginal decline in commission expense ratio as insurers are selling more traditional policies with higher commission and single pay policies. Most insurers are launching traditional products to provide a higher remuneration to their distributors. Till the end of December 2010 insurers have launched around 48 traditional products as against around 100 unit linked products. Higher commission for traditional products together with increasing share in the product mix have had only marginal on the commission expense. Exhibit 5: Commission Expense Ratio during H1 & 9M during FY11 Insurers H1FY11 9MFY11 SBI Life 6% ICICI Prudential 3.8% HDFC Standard 6.2% Bajaj Allianz 8% Reliance Life 10% Max New York 9% Birla Sun Life 7.6% Tata AIG 6.8% Kotak Life 5.2% Source: Company reports, Allons research 6% 3.5% 5.6% 7.1% 9% 9% 7.2% 6.6% 5% Sale of pension product plummets …… Sale of unit linked pension products have declined Unit linked pension products have recorded a 6% de‐growth during 9MFY11 at Rs 181 bn as against Rs 192 bn during 9MFY10. Most insurers have withdrawn their unit linked pension products under the new regime as most of them are unable to offer the minimum guarantees prescribed. The new guideline has prescribed a minimum guarantee of 4.5% return on gross premium during FY11. The future guarantee rates will be 50 basis points above the repo rates. Allons Insurance Research & Consultants Pvt Ltd 4 Quarterly Competition Track Vol 19 (FY11Q3) Some insurers have launched single premium unit linked pension products. Single premium policies accounted for 73% of the new business premium during 9MFY11. Changing product mix … IRDA is planning to come out with a revised guideline for pension products by May 2011 Sale of traditional life and pension products has gone up. The table below shows the growth of various product segments. Exhibit 6: New Business Premium & Growth by Product Segment In bn Segment 9MFY10 9MFY11 Growth Life-% Pension 194 184 ‐5% Health 2 1 ‐43% Annuity 6 11 83% Source: Life Insurance Council, IRDA, Allons research Exhibit 7: Share New Business Premium by Product Segment Traditional ULIP Segment 9MFY10 9MFY11 9MFY10 9MFY11 Life 29% 32% 30% 40% Pension 0% 1% 39% 37% Health 0% 0% 0% 0% Annuity 1% 2% 0% 0% Source: Life Insurance Council, IRDA, Allons research Focus shifts to improve profitability …. Most insurers have shifted their focus on improving their bottom line through distribution rationalisation, customer retention & cost management The life insurance industry is characterised with high expense overrun, poor persistency, low productivity of distribution channel and product mix skewed towards unit linked policies. The life insurance industry is capitalised at Rs 308 bn as on 31st December 2010. Q3FY11 witnessed close to Rs 4bn of capital infusion. Exhibit 8: Capital Deployed by the Life Industry Rs bn 9MFY11 308 FY10 289 FY09 250 FY08 167 FY07 95 FY06 63 0 50 100 150 200 250 300 350 Source: Life Insurance Council, IRDA, Allons research Allons Insurance Research & Consultants Pvt Ltd 5 Quarterly Competition Track Vol 19 (FY11Q3) In the last 5 years, most insurers went on large scale branch expansion and agent recruitment without actively focussing on expense management and productivity. The operating expense ratio for insurers although reducing is still very high. The operating expense for the industry is at Rs 208 bn as on 31st December 2010 as against Rs 119 bn as on 30th September 2010. The total commission expense is at Rs 110 bn as against Rs 68 bn during the above mentioned period. With accumulating losses mounting profitability is still a distant phenomenon. Insurers have adopted distribution rationalisation through closure of branches and termination of non performing agents. During Q3FY11 insurers have closed down 181 branches and terminated more than 50,000 individual agents. Exhibit 9: Profit of top life insurers Rs bn Insurers ICICI Prudential SBI Life Bajaj Allianz Reliance Life Birla Sun Life HDFC Standard Max New York Kotak Life 9MFY10 ‐- ‐1.75 ‐3.81 ‐1.53 ‐1.58 0.12 9MFY- ‐1.40 1.56 ‐0.12 ‐1.39 0.06 Source: Company websites, Allons research AUM continues to grow …… The total asset managed by the industry as on 31st December 2010 is at Rs 14668 bn up by Rs 316 bn during Q3FY11. Exhibit 10: Asset under Management by top private life insurers Rs bn 700 663 - Rs bn 400 369 300 259 192 200 - 100 Kotak Life Max New York Reliance Lif e Birla Sunlif e HDFC Standard SBI Lif e Bajaj Allianz ICICI Prudential 0 Source: Company websites, Allons research Allons Insurance Research & Consultants Pvt Ltd 6 Quarterly Competition Track Vol 19 (FY11Q3) Rationalising distribution to reduce cost and improve productivity … Agency still contributes the maximum followed by bancassurance partners Individual agency channel continued to contribute the maximum to the new business during 9MFY11. As per the data published by the life council, the total no of agents as on 31st Dec 2010 is at 27,10,301 across all insurers declined by 50478 agents as on 30th Sep 2010. Insurers are launching traditional products which have higher allowance to manage their expense gap. Most insurers have incurred fixed cost in setting up their agency channel by expanding branch network and recruiting sales personnel. Exhibit 11: Number of Individual Agents In lakhs 9MFY11 27 FY10 29 FY09 29 FY08 25 FY07 20 FY06 14 0 5 10 15 20 25 30 35 Source: Life Insurance Council, IRDA, Allons research Exhibit 12: New Business Premium through Various Channels (9MFY11) Channels Individual Agents CA – Banks CA – Others Brokers Micro Agents Direct Business Referrals Total ICICI Prudential 46% 33% 5% 8% 0% 3% 3% 100% SBI Life Bajaj Allianz 55% 41% 2% 2% 0% 0% 0% 100% 52% 3% 23% 1% 0% 12% 10% 100% Reliance Life HDFC Standard 53% 0% 27% 5% 0% 5% 9% 100% 34% 59% 3% 1% 0% 3% 0% 100% Max New York 58% 17% 20% 2% 0% 2% 1% 100% Kotak Life Tata AIG Birla Sun Life 47% 19% 8% 16% 0% 10% 0% 100% 69% 9% 5% 11% 0% 2% 4% 100% 66% 18% 7% 5% 0% 4% 0% 100% Kotak Life Tata AIG Birla Sun Life 49% 7% 9% 11% 13% 7% 4% 100% 47% 3% 42% 4% 0% 3% 1% 100% Exhibit 13: Number of Policies through Various Channels (9MFY11) Channels Individual Agents CA – Banks CA – Others Brokers Micro Agents Direct Business Referrals Total ICICI Prudential SBI Life 48% 13% 4% 7% 20% 3% 5% 100% Bajaj Allianz Reliance Life 58% 43% 34% 36% 1% 0% 3% 45% 52% 3% 1% 4% 0% 0% 0% 0% 9% 5% 0% 1% 4% 100% 100% 100% Source: Company websites, Allons research; Note: CA – Corporate Agents Allons Insurance Research & Consultants Pvt Ltd HDFC Standard 60% 36% 0% 1% 0% 3% 0% 100% Max New York 57% 10% 27% 3% 0% 1% 1% 100% 48% 9% 11% 17% 0% 15% 0% 100% 7 Quarterly Competition Track Vol 19 (FY11Q3) Branch expansion on hold …. Most insurers have kept their branch expansion on hold or have reduced their branch strength by closing down non performing branches. During Q3FY11 the industry has closed down 181 branches taking the total branch strength to 11,656 branches as against 11,837 branches as on Q2FY11. Insurers have taken measures to increase efficiencies across distribution channels and areas of operation by • Closing down non performing branches • Lowering the agency force • Rationalisation of sales overheads This has resulted in lower capital infusion in the industry. The above measures have resulted in decline in the number of people employed in the industry. As on December 31st 2010 the number of direct employees is at 2,49,635 down from 2,67,940 during FY10. Exhibit 14: Branch Expansion by Life Insurers 14,000 11,656 FY09 FY10 9MFY11 8,737 8,000 11,927 10,000 11,720 12,000 2,000 3,816 4,000 5,456 6,000 0 FY06 FY07 FY08 Source: Life Insurance Council, IRDA, Allons research Exhibit 15 & 16: Number of Direct Employees & Individual Agents 100000 249635 187403 150000 152499 200000 267940 254332 250000 285244 300000 50000 0 FY06 FY07 FY08 FY09 FY10 9MFY11 66647 50000 70000 100000 145000 168395 187000 150000 200000 200000 215000 250000 SBI Life Max New York 0 Reliance HDFC Life Standard Allons Insurance Research & Consultants Pvt Ltd Bajaj ICICI Allianz Prudential Birla Sunlife 8 Quarterly Competition Track Vol 19 (FY11Q3) Q3FY11 Performance Shift towards single premium policies to manage persistency risk Managing expense through lower distribution payouts, rationalisation of infrastructure & lowering fixed expense Increased focus on bancassurance Moving towards customer centric products & aligning to need based selling ICICI Prudential Life Insurance ICICI Prudential has reported a profit of Rs 6.14 bn during Q3FY11 as against a loss of Rs 0.068 bn during Q3FY10. The company has reported a profit of Rs 5.13 bn during 9MFY11 (Rs 0.98 bn 9MFY10). The company has registered 8% growth in total premium to Rs 113.23 bn during Q3FY11 as against Rs 105.07 bn during Q3FY10. The renewal premium collection remained same at 66.73 bn during Q3FY11 (Rs 66.74 bn during Q3FY10). The new business premium recorded a decline of 4% at Rs 16.35 bn during Q3FY11 as against Rs 17.04 bn during Q3FY10. The Company has not increased any further capital during Q1FY11. Till date the company has infused Rs 47.8 bn. The asset under management went up by 25% at Rs 663.34 bn as on December 31st, 2010. Bajaj Allianz Life Insurance Move towards a balanced product portfolio Share of ULIP business has gone down Focus on cost control by controlling acquisitions & management costs Improve agency productivity Improve performance of ULIP & traditional funds Bajaj Allianz has reported a net profit of Rs 0.40 bn during Q3FY11 as against Rs 0.02 bn loss during Q3FY10. The company has registered 18% decline in total premium to Rs 22.56 bn during Q3FY11 as against Rs 27.55 bn during Q3FY10. The company has also recorded a 14% dip in renewal premium to 14.30 bn during Q3FY11 against Rs 16.68 bn during Q3FY10. During 9MFY11 the company has reported a decline of 12% at Rs 64 bn as compared to Rs 72.76 bn during 9MFY10. The new business premium recorded 24% de‐growth to Rs 8.26 bn during Q3FY11 as against Rs 10.88 bn during Q3FY10 due to decline in sales of ULIP policies. During the 9MFY11 the new business premium recorded 7.6% decline at Rs 23.37 bn as against Rs 25.29 bn during 9MFY10. The share of ULIP has come down to 53% during Q3FY11 as against 82% during Q3FY10. The asset under management is at Rs 391.76 bn as on December 31st, 2010. The paid up capital is at Rs 12.11 bn. The company has not infused any capital during the financial year. The company has a network of 1,164 offices. Reliance Life Insurance Capital requirement came down due to efficient cost control measures Reflected in decrease in operating expense ratio Target to achieve breakeven during FY11 Reliance Life has reported a net loss of Rs 1.4 bn during 9MFY11 as against a loss of Rs 1.75 during 9MFY10. The company has registered 9.7% de‐ growth in total premium to Rs 14.51 bn during Q3FY11 as against Rs 16.07 bn during Q3FY10. The renewal premium has gone up by 25% during Q3FY11 to Rs 8.6 bn as against Rs 6.9 bn in Q3FY10. In terms of new business premium the company has registered 36% decline at Rs 5.94 bn during Q3FY11 as against Rs 9.21 bn during Q3FY10. st The asset under management is at Rs 175 bn as on December 31 , 2010 recording 54% growth. The company has 1248 offices and 2,15,952 advisors. Total capital infused as on 31st December 2010 is at Rs 31 bn. Max New York Life Insurance Target long term savings market & protection needs of mass affluent Product mix shifted towards additional products Focus on to lower management expense and cost of agency channel The company has recorded a loss of Rs 0.74 bn during Q3FY11 as against a loss of Rs 0.17 bn during Q3FY10. The company has recorded 15% growth in total premium to Rs 14.65 bn during Q3FY11 as against Rs 12.72 bn during Q3FY10. The renewal premium has gone up by 26.4% during Q3FY11 to Rs 9.52 bn as against Rs 7.53 bn in Q3FY10. In terms of new business premium the company has registered 1.3% de‐growth at Rs 5.13 bn during Q3FY11 as against Rs 5.20 bn during Q3FY10. The Company’s assets under management stood at Rs 130 bn as on December 31st 2010 with total capital base currently stands at Rs 19.73 bn. Allons Insurance Research & Consultants Pvt Ltd 9 Quarterly Competition Track Vol 19 (FY11Q3) Q3FY11 Performance To continue strong focus on persistency Building balance mix of linked and non linked products To review operating model in view of the new ULIP guidelines Birla Sun Life Insurance The Company has reported a profit of Rs 1.27 bn during Q3FY11 as against a loss of Rs 1.43 bn during Q3FY10. The company has registered 16% de‐growth in total premium to Rs 12.77 bn during Q3FY11 as against Rs 15.22 bn during Q3FY10. The renewal premium collected during Q3FY11 is at Rs 8.93 bn against Rs 5.76 bn during Q3FY10 up by 55%. The company has recorded 59% drop in new business premium during Q3FY11 at Rs 3.85 bn as compared to Rs 9.47 bn during Q3FY10. Sales growth was impacted during the quarter post implementation of new guidelines for ULIP products. The Company has not infused fresh capital during the quarter. The total capital infused as on December 31st is at Rs 24.5 bn. The asset under management went up by 30% at st Rs 192 bn as on December 31 , 2010. SBI Life Insurance Reported impressive profit due to strong growth Ranked no 1 amongst private insurer in terms of new business premium Product mix to shift to non ULIP products The company has reported a net profit of Rs 0.84 bn during Q3FY11 as against a profit of Rs 0.83 bn during Q3FY10. The profit for 9MFY11 is at Rs 3.01 bn as against Rs 1.99 bn during 9MFY10. The company has registered 9.8% growth in total premium to Rs 29.41 bn during Q3FY11 as against Rs 26.80 bn during Q3FY10 backed by 112% growth in renewal premium. The renewal premium collected during Q3FY11 is at Rs 14.15 bn against Rs 6.67 bn during Q3FY10. The company has recorded 28% growth in total premium during 9MFY11 at Rs 77.71 bn as compared to Rs 60.87 bn during 9MFY10. The Company has not infused fresh capital during the quarter. The total capital infused st as on December 31 is at Rs 10 bn. The asset under management is at Rs 369 bn as on st December 31 2010. Kotak Life Insurance Capital efficiency & expense management to be the key drivers Focus to drive renewal business No plan to infuse fresh capital during FY11 and new branches The company has recorded a loss of Rs 0.043 bn during Q3FY11 as against a profit of Rs 0.032 bn during Q3FY10. The company has registered 14% de‐growth in total premium to Rs 6.11 bn during Q3FY11 as against Rs 7.12 bn during Q3FY10. The renewal premium has gone up by 13.3% during Q3FY11 to Rs 4.21 bn as against Rs 3.72 bn in Q3FY10. In terms of new business premium the company has registered 44% de‐ growth at Rs 1.89 bn during Q3FY11 as against Rs 3.4 bn during Q3FY10. The Company has not infused any capital during FY10. It capital base is at Rs 5.6 bn. The asset under management is at Rs 78 bn as on December 31st, 2010. The total branch strength is at 203. HDFC Standard Life Insurance Focus on persistency lead to increase in renewal premium Single premium policies gaining momentum Manage to lower first year commission paid The company has recorded a profit of Rs 0.52 bn during Q3FY11 as against a loss of Rs 1.1.2 bn during Q3FY10. The company has registered 29% de‐growth in total premium to Rs 12.67 bn during Q3FY11 as against Rs 17.80 bn during Q3FY10. The renewal premium has gone up by 43% during Q3FY11 to Rs 12.39 bn as against Rs 8.67 bn in Q3FY10. In terms of new business premium the company has registered 1.6% growth at Rs 9.28 bn during Q3FY11 as against Rs 9.13 bn during Q3FY10. The total capital base is at Rs 20.4 bn. The asset under management is at Rs 259bn as on December 31st 2010. The company has not opened any new branches during the quarter to take the total branch strength to 568 and 200,000 advisors. Allons Insurance Research & Consultants Pvt Ltd 10 Quarterly Competition Track Vol 19 (FY11Q3) Individual New Business Records Growth Individual new business premium grew 17.2 % in 9MFY11 compared to 9MFY10 backed by surge in LIC business. LIC posted 26.4% increase while private insurers recorded just 2.5 % rise. Among private players HDFC Life and ICICI Prudential life recorded growth of 33.6% and 19.3% respectively. LIC’s Market share declined by 3.8% while private players’ market share was up by 4.8% Table 11: New Business (Rs mn) ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Reliance Life Birla Sun Life Max New York Aviva Tata AIG Kotak Life ING Life Met Life Shriram Life Sahara Life Bharti Axa Life Future Generali IDBI Federal Canara HSBC DLF Pramerica Star Union Dai ichi Aegon Religare India First Life Private Total LIC Industry Total 9MFY11 38,-,-,-,-,-,-,958.44 4,306.84 7,794.93 5,589.86 4,159.09 4,376.90 3,-,474.97 2,595.64 2,965.34 4,-,414.75 1,465.83 3,-,-,-,485.03 9MFY10 31,-,-,-,-,-,-,010.88 4,611.99 7,141.49 6,216.38 4,337.06 5,902.76 2,-,391.28 2,672.02 2,195.70 4,-,-,-,-,609.25 Growth 19.3% ‐15.5% 3.9% 33.6% ‐6.2% ‐27.0% 7.3% ‐6.6% 9.2% ‐10.1% ‐4.1% ‐25.9% 40.8% ‐12.9% 3.5% ‐2.9% 35.1% 18.2% 171.3% 23.1% 96.8% 1249.6% 2.5% 26.4% 17.2% Market Share (%) 9MFY- 9MFY- Source: IRDA, Allons research Most private companies now seem to focus on single‐premium products. The life industry saw a growth of 48% in single premium new business in 9MFY11 as compared to 9MFY10 with private companies at whopping 192%. This has helped them to reduce the persistency risk and also distributers seem to prefer selling single premium products as the commission differential between regular premium and single premium plans is narrowing down at least for ULIPs. Table 12: ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Reliance Life Birla Sun Life Max New York Aviva Tata AIG Kotak Life ING Life Met Life Shriram Life Sahara Life Bharti Axa Life Future Generali IDBI Federal Canara HSBC DLF Pramerica Star Union Dai ichi Aegon Religare India First Life Private Total LIC Industry Total Single Premium New Business (Rs mn) Growt h Market Share in Total business (%) 9MFY- 880% 137% 208% 173% 155% ‐33% 5% ‐5% 999% ‐31% 18% 1239% 285% 10% ‐22% 161% 87% ‐24% 2567% 44% 309% 2538% 192% 35% 48% 9MFY- 9MFY- 9MFY- Non Single Premium New Business (Rs mn) 9MFY- 9MFY- Growth ‐8% ‐34% ‐22% 24% ‐19% ‐27% 8% ‐7% ‐9% ‐8% ‐4% ‐43% ‐35% ‐26% 4% ‐6% 15% 19% 167% 3% 94% 883% ‐10% 17% 1% Market Share in Total business (%) 9MFY- 9MFY- Source: IRDA, Allons research Allons Insurance Research & Consultants Pvt Ltd 11 Quarterly Competition Track Vol 19 (FY11Q3) Group New Business Group new business also recorded handsome increase of 57% in 9MFY11 compared to that in the corresponding period last fiscal. In this segment LIC posted 68% growth while private players witnessed 16% increase. Among private players, new entrants showed better growth. Table 13: New Business (Rs mn) 9MFY- ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Reliance Life Birla Sun Life Max New York Aviva Tata AIG Kotak Life ING Life Met Life Shriram Life Sahara Life Bharti Axa Life Future Generali IDBI Federal Canara HSBC India First Life Aegon Religare Star Union Dai ichi DLF Pramerica Private Total LIC Industry Total 9MFY- Growth 31.7% 47.6% 12.9% ‐2.9% ‐26.2% ‐39.9% 36.8% 38.1% 7.3% 72.9% ‐5.5% ‐25.8% 253.4% ‐ ‐22.4% 20.6% ‐ 2639.2% ‐ ‐ 400.0% ‐ 15.5% 67.6% 56.8% Market Share (%) 9MFY- 9MFY- Source: IRDA, Allons research The share of non single group business has gone up to 38% backed by entry of LIC into group regular premium business during the year. The non single group business rose by 287% during 9MFY11 as compared to the corresponding period last fiscal. The Group single business, however, showed a moderate rise of 11.5% mainly led by private players. Table 14: ICICI Prudential Bajaj Allianz SBI Life HDFC Standard Reliance Life Birla Sun Life Max New York Aviva Tata AIG Kotak Life ING Life Met Life Shriram Life Sahara Life Bharti Axa Life Future Generali IDBI Federal Canara HSBC India First Life Aegon Religare Star Union Dai ichi DLF Pramerica Private Total LIC Industry Total Group Single Premium New Business (Rs mn) 9MFY11 9MFY10 1,779 1,502 13,-,880 147,805 167,686 1,-,650 2,-,963 142,385 150,348 Growth Market Share (%) Group Non Single Premium New Business (Rs mn) 9MFY11 9MFY10 9MFY11 9MFY10 - 288.3% - 149.7% 3.8% 11.5% - - 6,584 3,230 3,184 2,-,-,188 90,810 113,998 5,164 2,802 13,-,-,432 0 29,432 50.0% 271.8% 725.7% ‐98.1% ‐75.1% 7883.6% 529.3% 41.2% 119.2% ‐5.4% ‐68.3% 240.1% ‐22.4% 276.5% 428.8% 0.0 91.7 Growth 27.5% 15.3% ‐76.0% 882.6% 32.6% ‐41.0% 0.7% 36.7% 0.3% 46.3% ‐8.1% 24.2% 696.0% 20.3% 1627.9% ‐21.2% 287.3% Market Share (%) 9MFY11 9MFY10 - - - - 100.0 8.3 Source: IRDA, Allons research Allons Insurance Research & Consultants Pvt Ltd 12 Quarterly Competition Track Vol 19 (FY11Q3) Number of Policies Due to increasing ticket size for ULIPs post the new regulations, the number of policies decreased by 9%. For private sector the fall was 20% while for LIC the decline was lower at 4.8%. Few players i.e. Future Generali, Canara HSBC, IDBI Federal, Aegon Religare recorded positive growth in number of policies. Table 15: No of policies/schemes Reliance Life Bajaj Allianz ICICI Prudential Birla Sun Life SBI Life Max New York HDFC Standard Tata AIG Kotak Life Future Generali ING Life Met Life Aviva Bharti Axa Life Shriram Life Star Union Dai‐Ichi Canara HSBC IDBI Federal Sahara Life Aegon Religare India First DLF Pramerica Private Total LIC Industry Total 9MFY11 1,418,844 1,065,894 939,455 821,511 611,256 614,147 597,441 417,717 186,842 235,830 178,500 124,833 134,808 111,986 83,886 13,038 80,955 76,523 43,068 50,980 77,499 24,326 7,956,887 22,728,942 30,685,829 Growth (%) 9MFY10 1,591,238 1,459,814 1,264,402 1,263,800 976,963 732,304 714,468 491,943 215,097 208,365 200,069 192,045 161,718 112,824 98,743 69,666 65,052 56,715 54,947 25,100 13,578 11,646 9,980,497 23,863,865 33,844,362 ‐10.8 ‐27.0 ‐25.7 ‐35.0 ‐37.4 ‐16.1 ‐16.4 ‐15.1 ‐13.1 13.2 ‐10.8 ‐35.0 ‐16.6 ‐0.7 ‐15.0 ‐- ‐- ‐20.3 ‐4.8 ‐9.33 Market Share (%) 9MFY- 9MFY- Source: IRDA, Allons research Table 16: Individual Single Bajaj Allianz Reliance Life Birla Sun Life ICICI Prudential SBI Life HDFC Standard Max New York Tata AIG Future Generali Met Life Kotak Life Aviva ING Life Bharti Axa Life Star Union Dai‐ Ichi Shriram Life IDBI Federal Canara HSBC Sahara Life Aegon Religare India First DLF Pramerica Private Players LIC Grand Total Non Single Group Single 10,879 10,-,296 20,176 51,-,-,-,-,863 105,736 95,455 81,497 97,245 80,758 54,924 92,249 44,435 33,898 11,214 20,527 11,400 27,377 12,979 6,400 - Non Single- 5,019 1,846 ‐-,-,194 302,112 432,306 5,812 6,906 14,855 4,867 8,511 7,401 4,011 824,446 3,069,931 3,894,377 -,053 2,106 - Source: IRDA, Allons research Allons Insurance Research & Consultants Pvt Ltd Total Table 17: Q3FY11 116,711 105,734 82,056 112,551 100,949 106,237 92,541 45,962 34,762 16,394 20,734 12,942 27,800 13,147 9,271 10,833 8,753 14,856 5,677 8,572 8,471 4,011 954,953 3,374,177 4,329,130 Bajaj Allianz Reliance Life Birla Sun Life ICICI Prudential SBI Life HDFC Standard Max New York Tata AIG Future Generali Met Life Kotak Life Aviva ING Life Bharti Axa Life Star Union Dai‐ Ichi Shriram Life IDBI Federal Canara HSBC Sahara Life Aegon Religare India First DLF Pramerica Private Players LIC Grand Total Individual Total Group Single Non Single Single Non Single Q3FY11 - - - - - - - - - - Source: IRDA, Allons research 13 Quarterly Competition Track Vol 19 (FY11Q3) Conclusion: The industry is undergoing a transition and life companies need to align themselves with the changing business and regulatory environment. The underlying demographic and macroeconomic drivers are intact, but the created structural gaps due to undue focus on topline and market share need to be bridged with right product strategy and a robust distribution approach. They will also have to factor in the likely regulatory changes in the near future while working on their business strategy. We need to ponder, why ULIP sales have been impacted despite the new ULIPs being more customer friendly now? It shows the life insurance policies are still not bought but sold. The life companies will have to move to the business model where customers buy the product and this can be done by addressing the customer needs effectively and at a competitive cost. Allons Insurance Research & Consultants Pvt Ltd 14 Quarterly Competition Track Vol 19 (FY11Q3) Visit us at www.indiainsuranceresearch.com for more reports on Indian Life Insurance Industry Contact Details: Please contact the person listed below if you need more information about our services: Somrup Bose Roy Research Executive Allons Insurance Research & Consultants Pvt. Ltd Mob: - Email:-Gopal Kumar CEO & Principal Consultant Phone Number:- Email:- Disclaimer The information in this report is prepared by Allons Insurance Research & Consultants Pvt Ltd. The information herein is believed to be reliable and has been obtained from public sources believed to be reliable by Allons Insurance Research & Consultants Pvt Ltd. Allons Insurance Research & Consultants makes no representation as to the accuracy or completeness of such information. Allons Insurance Research & Consultants Pvt Ltd 15