CR-2021-Q3-1-ICRA-Life Insurance

INDIAN LIFE INSURANCE
INDUSTRY REPORT
Profitability of life insurance players

impacted in Q1 FY2022 due to pandemic;
NBP growth to resume in 9M FY2022
NOVEMBER 2021
Karthik Srinivasan Sahil Udani

+91 22 6114 3444 +91 22 6114 3429
karthiks@icraindia.com Sahil.udani@craindia.com
Neha Parikh
+91 22 6114 3426
Neha.parikh@icraindia.com
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Table of Contents
EXECUTIVE SUMMARY ......................................................................................................................................................................................................................... 6
Summary ............................................................................................................................................................................................................................................. 7
ICRA’s rated universe ........................................................................................................................................................................................................................... 8
ICRA’s rated universe ...................................................................................................................................................................................................................................................................... 9
Industry Performance Analysis and Outlook ........................................................................................................................................................................................10
Industry new business growth continues in 5MFY2022 Though impacted by lockdowns in q1 .................................................................................................................................................. 11
Penetration and density well below those in advanced economies ............................................................................................................................................................................................ 12
Individual business sees a strong traction in 5MFY2022, aided by private sector growth ........................................................................................................................................................... 13
Industry’s reliance on single premium collections remains high primarily due to LIC ................................................................................................................................................................. 14
Share of group business increases for private players ................................................................................................................................................................................................................. 15
Individual premium growth tapers; group business growth picks up for private players and LIC ............................................................................................................................................... 16
Relaxation of regulatory norms led to healthy addition of agents; LIC increases its agent strength at a faster pace ................................................................................................................. 17
Sum assured on new business sees gradual increase for private players .................................................................................................................................................................................... 18
New Business premium growth to resume in FY2022, and FY2023 ............................................................................................................................................................................................. 19
Important regulatory/industry announcements .......................................................................................................................................................................................................................... 20
FINANCIAL PERFORMANCE & ANALYSIS ...............................................................................................................................................................................................21
increase in Single Premium policies drives the growth ................................................................................................................................................................................................................ 22
Non Single Premium products remain subdued impacting the APE ............................................................................................................................................................................................ 23
Cost structures for private players deteriorate with increasing commission expenses ............................................................................................................................................................... 24
Profitability metrics impacted in Q1FY2022 ................................................................................................................................................................................................................................. 25
Investment income improves for Select Private Players in FY2021.............................................................................................................................................................................................. 26
Investment profile (excluding linked portfolio) indicates lower equity composition for Select Private Players .......................................................................................................................... 27
Debt securities by tenor ............................................................................................................................................................................................................................................................... 28
Stressed investment exposure remains low ................................................................................................................................................................................................................................. 29
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Persistency performance improves private players ..................................................................................................................................................................................................................... 30
Private players increase the Direct Originations .......................................................................................................................................................................................................................... 31
Liquidity levels remain comfortable across the industry .............................................................................................................................................................................................................. 32
Comfortable capitalisation profile supported by internal accruals .............................................................................................................................................................................................. 33
COMPANY FINANCIALS .......................................................................................................................................................................................................................34
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Table of Exhibits
EXHIBIT 1: Rating spread ..................................................................................................................................................................................................................................................................... 9
EXHIBIT 2: ICRA’s rated universe ........................................................................................................................................................................................................................................................ 9
EXHIBIT 3: APE of Private players...................................................................................................................................................................................................................................................... 11
EXHIBIT 4: APE of LIC ......................................................................................................................................................................................................................................................................... 11
EXHIBIT 5: Life Insurance Penetration and Density .......................................................................................................................................................................................................................... 12
EXHIBIT 6: Savings as %age of gross National Disposable Income .................................................................................................................................................................................................... 12
EXHIBIT 7: Growth rate for private players ....................................................................................................................................................................................................................................... 13
EXHIBIT 8: Growth rate for LIC .......................................................................................................................................................................................................................................................... 13
EXHIBIT 9: Premium mix for Private players ..................................................................................................................................................................................................................................... 14
EXHIBIT 10: Premium mix for LIC ...................................................................................................................................................................................................................................................... 14
EXHIBIT 11: Individual/group business of private players ................................................................................................................................................................................................................ 15
EXHIBIT 12: Individual/group business of LIC ................................................................................................................................................................................................................................... 15
EXHIBIT 13: Individual retail and group single trend for Private ....................................................................................................................................................................................................... 16
EXHIBIT 14: Individual retail and group single trend for LIC ............................................................................................................................................................................................................. 16
EXHIBIT 15: Agency strength of Private players ................................................................................................................................................................................................................................ 17
EXHIBIT 16: Agency strength of LIC ................................................................................................................................................................................................................................................... 17
EXHIBIT 17: Sum assured trend for private players .......................................................................................................................................................................................................................... 18
EXHIBIT 18: Sum assured trend for LIC ............................................................................................................................................................................................................................................. 18
EXHIBIT 19: New business trend for the Life Insurance players ....................................................................................................................................................................................................... 19
EXHIBIT 20: Premium Mix for Select Private Players (Rs. billion) ..................................................................................................................................................................................................... 22
EXHIBIT 21: Premium Mix for LIC (Rs. billion) ................................................................................................................................................................................................................................... 22
EXHIBIT 22: Movement in APE for select Private Players ................................................................................................................................................................................................................. 23
EXHIBIT 23: Movement in APE for LIC ............................................................................................................................................................................................................................................... 23
EXHIBIT 24: Expense breakup of Select Private Players .................................................................................................................................................................................................................... 24
EXHIBIT 25: Expense breakup of LIC ................................................................................................................................................................................................................................................. 24
EXHIBIT 26: Trends in profitability for Select Private Players ........................................................................................................................................................................................................... 25
EXHIBIT 27: Trends in profitability for LIC ......................................................................................................................................................................................................................................... 25
EXHIBIT 28: Investment Income for Select Private Players ............................................................................................................................................................................................................... 26
EXHIBIT 29: Investment Income for LIC ............................................................................................................................................................................................................................................ 26
EXHIBIT 30: Investment profile of Select Private Players.................................................................................................................................................................................................................. 27
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EXHIBIT 31: Investment profile of LIC ............................................................................................................................................................................................................................................... 27
EXHIBIT 32: Select Private Players .................................................................................................................................................................................................................................................... 28
EXHIBIT 33: LIC .................................................................................................................................................................................................................................................................................. 28
EXHIBIT 34: Persistency ratio (Median) performance – Select Private Players ................................................................................................................................................................................ 30
EXHIBIT 35: Persistency ratio performance – LIC .............................................................................................................................................................................................................................. 30
EXHIBIT 36: Distribution channels of Select Private Players – New Business Premium ................................................................................................................................................................... 31
EXHIBIT 37: Distribution channels of LIC – New Business Premium ................................................................................................................................................................................................. 31
EXHIBIT 38: Liquidity levels at Select Private players ........................................................................................................................................................................................................................ 32
EXHIBIT 39: Liquidity levels for LIC .................................................................................................................................................................................................................................................... 32
EXHIBIT 40: Median Solvency levels at Select Private players .......................................................................................................................................................................................................... 33
EXHIBIT 41: Solvency levels for LIC ................................................................................................................................................................................................................................................... 33
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EXECUTIVE SUMMARY
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SUMMARY
Highlights
This ICRA paper analyses the performance of 16 life insurance companies in India, of which one is in the public sector while the rest are
in the private sector. These companies collectively represented over 98% of the new business written in the domestic life insurance
industry during FY2019. The industry performance encompasses all the players in the life insurance industry, while the financial
performance, analysis section and outlook pertains to the 16 entities listed earlier.
Click to Provide Feedback • Business growth resumes after the slowdown in Q1 FY2022: The total New Business Premium (NBP) growth had tapered to 7% (Rs.
2.78 trillion) in FY2021, compared to a 21% growth in FY2020. The growth remained subdued in 5M FY2022 at 2% or Rs. 1.01 trillion
Low insurance density and penetration due to the localised lockdown in Q1 FY2022. Typically, the last quarter is the strongest in terms of growth for the industry. A closer look
to aid growth in the coming years. between the growth rates indicates a sharp decline in the NBP growth for LIC in FY2021. FY2020 had seen a sharp uptick in the group
Increasing focus on protection products non single premium for LIC (predominantly led by high fund/pension management business). Private sector NBP had slowed down in
will lead to a change in product FY2020, but yet showed a positive growth (8% in FY2021 vs. 9% in FY2020), which accelerated in 5M FY2022 (31%) due to strong growth
dynamics and profitability for the in the individual business.
private sector players.
• Gradual increase in individual sum assured over four years: The total sum assured (SA) for both the private sector and LIC had increased
in FY2021 and 5M FY2022 from the year ago periods. The total SA for the private sector was Rs. 4.04 trillion up 1% YoY while for LIC it
had increased 7.5% YoY to Rs. 8.9 trillion. The total SA had increased at a CAGR of 11.2% in the last four years for the private sector.
The average individual SA had marginally increased to Rs. 19.9k in FY2021, while in 5M FY2022 it had declined to Rs. 20k (Rs. 24k in 5M
FY2021). The increase in in individual SA over the years is due to a shift in product mix towards protection products (which has a higher
SA), however, the growth of protection is expected to slow down with the increase in reinsurance rates.
• Moderate growth expectations for FY2022: ICRA estimates the NBP to grow 14% in FY2022 to Rs. 3.18 trillion, as the nominal GDP is
projected to grow by 16%. ICRA expects the NBP growth to accelerate in H2, and Q4 has always been the strongest quarter for life
insurance business growth. The NBP density is expected to increase to Rs. 2,326 from Rs. 2,054 at present. Increasing focus on protection
products should help increase the insurance density in India. The outlook on the sector continues to remain stable.
• LIC IPO to drive global interest in the life insurance segment in India: The proposed IPO of the biggest life insurer in the country is
likely to pave the way for other private life insurers to list themselves on the exchange. With the listing, LIC would be subject to stringent
disclosures thereby providing better insights into the strategies followed by LIC. LIC currently maintains solvency of 1.7x as on June 30,
2021; though higher than the regulatory requirement of 1.5x lower than the other large players in the life insurance segment. With the
listing, the company could look at shoring the solvency levels.
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ICRA’s rated universe
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ICRA’S RATED UNIVERSE
Eight Life Insurance companies rated by ICRA
EXHIBIT 1: Rating spread EXHIBIT 2: ICRA’s rated universe
Company name Rating Instruments

4
Bharti AXA Life Insurance Company Limited [ICRA]AA- (stable) Subordinated debt
3 IndiaFirst Life Insurance Company Limited [ICRA]AA (stable) Subordinated debt
3
[ICRA]AAA
ICICI Prudential Life Insurance Company Limited Subordinated debt
2 2 (stable)
2 [ICRA]AAA
Tata AIA Life Insurance Company Private Limited Issuer rating
(stable)
1
[ICRA]AAA Subordinated debt /
1 HDFC Life Insurance Limited
(stable) Issuer rating
[ICRA]AA+
Aditya Birla Sunlife Insurance Company Limited Subordinated debt
0 (stable)
AAA AA+ AA AA- [ICRA]AA+
Max Life Insurance Company Limited Subordinated debt
(stable)
LI Star Union Dai-ichi Life Insurance Company
[ICRA]AA (stable) Subordinated debt
Limited
Source: ICRA Research Source: ICRA Research
There are eight companies under coverage in the Life Insurance (LI) sector. ICRA has subordinated debt ratings (7 entities), and issuer ratings (2 entities) for the insurance companies. For one
of the entities ICRA has both issuer ratings and subordinated debt ratings.
As the insurance industry has a long gestation cycle, and has stringent capital requirements for growth, the companies relied on the parent sponsors for growth capital for an extended
period. The final ratings on all the companies under coverage is determined by parent strength and parent support.
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Industry Performance Analysis and Outlook
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INDUSTRY NEW BUSINESS GROWTH CONTINUES IN 5M FY2022 THOUGH IMPACTED BY LOCKDOWNS IN Q1
EXHIBIT 3: APE of Private players EXHIBIT 4: APE of LIC
600 546 800

505 698
500 462 700
409
600
400 348 488
500 424
360 379
300 400 311
197
200 150 300
183 160
200
100
100
- -
FY2017 FY2018 FY2019 FY2020 FY2021 5MFY2021 5MFY2022 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021
5MFY2021 5MFY2022
Private Single Premium Private Regular Premium
LIC Single LIC Regular LIC Group Single
Private Group Single Private Group Regular
Total for Private Sector LIC Group Regular LIC Total
Source: ICRA Research; LI Council, IRDAI, figs in INR Billion Source: ICRA research; LI Council, IRDAI, figs in INR Billion
The LI industry, in APE (annual premium equivalent) had declined by 14% in FY2021 to Rs. 1,034 billion. The decline was in contrast to growths in the preceding years due to the pandemic-
induced lockdowns from March 2020 till June 2020. The growth had accelerated in H2 FY2021 but was subdued again in Q1 FY2022 due to the local lockdowns in the months of April 2021
and May 2021. 5M FY2022 saw a 7% growth in the APE to Rs. 357 billion.
The total NBP growth had tapered to 7% (Rs. 2.78 trillion) in FY2021, compared to a 21% growth in FY2020. The growth remained subdued in 5M FY2022 at 2% or Rs. 1.01 trillion due to the
localised lockdown in Q1 FY2022. Typically, the last quarter is the strongest in terms of growth for the industry. A closer look between the growth rates indicates a sharp decline in the NBP
growth for LIC in FY2021. FY2020 had seen a sharp uptick in the group nonsingle premium for LIC (predominantly led by high fund/pension management business). Private sector NBP had
slowed down in FY2021, but yet showed a positive growth (8% in FY2021 vs. 9% in FY2020), which accelerated in 5M FY2022 (31%) due to a strong growth in the individual business.
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PENETRATION AND DENSITY WELL BELOW THOSE IN ADVANCED ECONOMIES
EXHIBIT 5: Life Insurance Penetration and Density EXHIBIT 6: Savings as %age of gross National Disposable Income
70 5 15
11.9
4.5 10.7 11.1 11
60 10.4 9.9 10.4
4 2.1
4.4 2.1
10 1.5 2.1 2.1 2.2
50 3.5 1.5 2.3 2
1.8 1.9 1.9 1.5
3.4 3 2.4
40 3.17 3.1
2.82 2.5 5
2.72 2.72 2.76 2.74 3
30 2.6 5.8 4.8 4.6 4.2 4.2
55.7 55 55 2 6.3
49 46.5
20 42.7 41 44 43.2 1.5 2.8
58 0.9 1.0 1.4 1.4 1.4
0
1 (2.1)
10 FY14 FY15 FY16 FY17 FY18 FY19 FY20
0.5
0 0 -5
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Currency Deposits
Shares and debentures Claims on government
Density (USD) Penetration (%) Insurance funds Provident and Pension funds
Source: ICRA Research; LI Council, IRDAI, figs in INR Billion Source: ICRA Research; LI Council, IRDAI, figs in %age
Despite sound growth in the country’s population, life insurance density levels have been rising, albeit at very low growth rates (CAGR of 2% during FY2008-19). To support the same, the GoI
has, over the years, announced various initiatives. Of late, the GoI has made encouraging announcements pertaining to increase in foreign ownership to 74%, listing requirements, the usage
of e-commerce, special schemes (aimed at the masses at minimal rates), and entry of cross-border reinsurance companies operating in the country. The IRDAI has also formed a draft guideline
to form more customer-friendly traditional term policies. ICRA expects these steps to gradually start impacting the penetration and density matrices positively. The new tax regime for
individuals would have a negative impact on the growth of saving schemes (predominantly ULIPS, as ULIP premium sees a large increase in Q4 due to tax benefit)
Awareness levels for insurance products also remain low at present, with about 1.5% of the gross national disposable income (GNPI) parked in insurance funds while the savings in currency
and deposits are more than 5%.
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INDIVIDUAL BUSINESS SEES A STRONG TRACTION IN 5MFY2022, AIDED BY PRIVATE SECTOR GROWTH
EXHIBIT 7: Growth rate for private players EXHIBIT 8: Growth rate for LIC
700 100% 1,400 1,267 1,278 100%
600 574 1,200

503 50% 50%
500 467 1,000 912
404 788 819
400 367 0% 800 0%
321 306
564
300 258 600 517 510 512 502 495
-50% 456 -50%
189 210
185
200 160 400
119 133
-100% 213 171 -100%
100 200
- -150% - -150%
FY2017 FY2018 FY2019 FY2020 FY2021 5MFY2021 5MFY2022 FY2017 FY2018 FY2019 FY2020 FY2021 5MFY2021 5MFY2022
Individual Group Individual Group

Individual premium Growth (RHS) Group Premium Growth (RHS) Individual premium Growth (RHS) Group Premium Growth (RHS)
Source: ICRA Research; LI Council, IRDAI, figs in INR Billion Source: ICRA Research; LI Council, IRDAI, figs in INR Billion
The industry growth on the NBP had slowed in FY2021 compared to the previous years (+7% vs +21% in FY2020). This had further slowed to a 2% growth in 5M FY2022. The slowdown was
on account of the pandemic-related lockdowns in the respective periods. LIC had seen an increase in the group single premium business in FY2021, while in FY2020 they had a large group
non-single premium business (group pension and fund management business).
From an individual non-single business perspective (predominantly the individual retail business), LIC had witnessed a decline in FY2021 (-6% vs +10% in FY2020). LIC agents were restricted
on selling individual policies due to the constricted movements during the lockdown phases. The private sector individual non-single business had a growth in the same period (+7% in FY2021
vs +4.4% in FY2020). The private sector was able to adapt selling policies without physical meetings, compared to the LIC. The 5M FY2022 saw a large increase in the individual non-single
business (+20% to Rs. 247 billion) on the back of a strong growth in the private sector, aided by the increased awareness of life insurance products post the pandemic (as well as reduction in
fixed deposit rates for savings products.)
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INDUSTRY’S RELIANCE ON SINGLE PREMIUM COLLECTIONS REMAINS HIGH PRIMARILY DUE TO LIC
EXHIBIT 9: Premium mix for Private players EXHIBIT 10: Premium mix for LIC
100% 100%
21% 20% 22% 18% 17% 16%
80% 80% 32%
53% 48% 53%
65% 65% 60% 58%
60% 60%
40% 40% 79% 80% 78% 82% 83% 84%

68%
47% 52% 47%
20% 35% 35% 40% 42% 20%
0% 0%
Single Premium Regular Premium Single Premium Regular Premium
Source: ICRA Research; LI Council, IRDAI, figs in INR Billion Source: ICRA Research; LI Council, IRDAI, figs in INR Billion
In line with the trend witnessed during the past few years, especially after the regulatory changes in September 2011, the proportion of single premium in the total NBP generated by the
industry has continuously increased. In FY2021, the share of single premium increased further to 70%. A large part of it due to LIC’s whose single premium accretion accounts for 82% of total
NBP.
In 5M FY2022 the share of regular premium had increased for the private sector, while single premium grew sharply for LIC. The bulk of the single premium business for both LIC and private
players was from the group/corporate customers.
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SHARE OF GROUP BUSINESS INCREASES FOR PRIVATE PLAYERS
EXHIBIT 11: Individual/group business of private players EXHIBIT 12: Individual/group business of LIC
100% 100%
90% 90%
80% 37% 32% 36% 38% 39% 39% 80%
43%
70% 70% 63% 61% 64% 71% 69% 70% 74%
60% 60%
50% 50%
40% 40%
30% 63% 68% 64% 62% 61% 61% 30%
57%
20% 20% 37% 39% 36% 29% 31% 30% 26%
10% 10%
0% 0%
Individual Group Individual Group
Source: ICRA Research; LI Council, IRDAI, figs in INR Billion Source: ICRA Research; LI Council, IRDAI
Group insurance is a key driver for fresh business growth for the life insurance industry. In 5M FY2022, the share of the group business increased to 62% from 59% in FY2021. The LI industry
has been able to cross-sell credit-linked products in its bancassurance channel very effectively in the last few years, these have typically very low expense overheads. In comparison with the
group business underwritten by general insurance companies, the group business of life insurance companies has seen a lower level of claims. Between FY2011 and FY2021, the average
ticket size of group single premium policies has been steadily increasing and stood at Rs. 0.98 billion in FY2021 (Rs. 0.64 billion in FY2019).
LIC’s dependence on group insurance is much higher than its private sector peers. During 5M FY2022, LIC’s group business accounted for 74% of its fresh business collections while that of
private players accounted for only 39%. In recent times, LIC has grown its group insurance business more aggressively than its private sector peers to compensate for the loss in growth
resulting from the regulatory changes leading to a revamp of its entire product suite. LIC has a major advantage over private players as it is in the group fund management business. Given
the large scale, LIC is able to offer finer pricing for group fund products.
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INDIVIDUAL PREMIUM GROWTH TAPERS; GROUP BUSINESS GROWTH PICKS UP FOR PRIVATE PLAYERS AND LIC
EXHIBIT 13: Individual retail and group single trend for Private EXHIBIT 14: Individual retail and group single trend for LIC
500 1,400
438 1,216
394 411
1,200
400 351 982
303 1,000 865
283 748 799
300 247 800
219
200 154 600 466 484
138 153
118 102 107 400 293
222 251 266 276
100
200 89 93
- -
Individual Non-Single Premium Group Single Premium Individual Non-Single Premium Group Single Premium
Source: ICRA Research; IRDAI, figs in INR Billion Source: ICRA Research; IRDAI, figs in INR Billion
Individual non-single premium would be the policies sold to the retail consumers and has increasingly been the focus of life insurance companies. These would include savings as well as
protection products, and the strong growth in the initial years for the private sector has been due to the ULIP policies. In the last two to three years, increasingly the private sector has seen
growth in the protection products but these are yet a small proportion of the overall business. The individual non-single premium business has grown at a CAGR of 9% in the last 5 years for
the private sector to Rs. 438 billion in FY2021. The growth in LIC has been lower with a CAGR of 4.5% in the last 5 years to Rs. 276 billion.
Group single premium composition and growth factors are different in the private sector and LIC. For the private sector this growth is due to higher composition of credit-linked policies,
while for LIC the composition is predominantly superannuation/fund business. For the private sector the growth in group single premium business is high margin-led credit life products,
whereas for LIC it’s a relatively lower margin but high-volume fund/superannuation business.
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RELAXATION OF REGULATORY NORMS LED TO HEALTHY ADDITION OF AGENTS; LIC INCREASES ITS AGENT STRENGTH AT A FASTER PACE
EXHIBIT 15: Agency strength of Private players EXHIBIT 16: Agency strength of LIC
1,000 11.01 11.50 1,600 16.00

13.62
10.69 10.73 11.00 1,400 12.69 14.00
800 10.52 11.31 11.49
10.50 1,200 12.00
13.53
600 1,000 12.08 10.00
9.57 9.57 10.00 11.31
9.33 800 8.00
855 9.50 1,473 1,361
400 757 757 600 1,257 6.00
636 1,100 1,164
529 9.00
400 4.00
200 563
260 327 8.50 489
200 2.00
- 8.00 - 0.00
NBP Private (in INR Thousands) Per Agent NBP LIC (in INR Thousands) Per Agent No. of Agents LIC (in Lakhs) (RHS)
No. of Agents Private players (in Lakhs) (RHS)
Source: ICRA Research; IRDAI, figs in INR Billion Source: ICRA Research; IRDAI, figs in INR Billion
Prior to FY2016, the number of agents in the LI industry had declined steadily. In 2016 IRDAI took a number of steps towards easing the rules pertaining to the recruitment of agents. These
include relaxing the minimum pass percentage qualification criterion and allowing insurance companies to set their own cut-off persistency rates. These steps resulted in a steady uptick in
the agents. The industry added 177,000 new agents in FY2021 with LIC accounting for close to 80% of this. This is sharply in contrast to the reduction in the number of agents in the industry
in FY2019 with LIC alone losing over 17,700 agents during the year. While the entire industry has focussed on improving agent efficiency by faster adoption of technology and has been
cautious in on-boarding new agents, LIC has aggressively expanded its agent force, given the high dependence of its existing business model on agents. Despite increasing the agency strength,
LIC has not been able to increase the efficiency per agent, with average NBP earned from an agent dropping to Rs. 13.6 lakhs in FY2021. The private sector NBP per agents have been lower
compared to LIC but has been increasing steadily over the period 1. Going forward, ICRA expects the agent force to expand at a relatively lower pace, compared to historical trends, as
technology adoption imparts higher efficiency to the existing agent base.
1 The NBP by distribution channels is not available for the latest period, however LIC has a higher reliance on agents as compared to the private sector.
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SUM ASSURED ON NEW BUSINESS SEES GRADUAL INCREASE FOR PRIVATE PLAYERS
EXHIBIT 17: Sum assured trend for private players EXHIBIT 18: Sum assured trend for LIC
15,000.0 0
6,000.0 0
x 100000
x 100000
12,319.7
10,742.2 0.31 0
3,993.7 4,046.2
0.24 8,946.1
4,000.0 0 10,000.0 0.29
8,319.8
3,259.3 0.29 0
0.20 0.21
2,650.2 0.19
0.28
0.16
1,705.8 0.27 0
2,000.0 0.13 1,413.6 0 5,000.0 3,477.3
0.26
2,265.1
0
- -
- 0
FY2018 FY2019 FY2020 FY2021 5MFY2021 5MFY2022
FY2018 FY2019 FY2020 FY2021 5MFY2021 5MFY2022
Group Yearly Renewable Premium Group Non-Single Premium Group Yearly Renewable Premium Group Non-Single Premium
Group Single Premium Individual Non-Single Premium
Group Single Premium Individual Non-Single Premium
Individual Single Premium Total sum assured
Individual Single Premium Total sum assured
Individuals average sum assured (INR) RHS
Individuals average sum assured (INR) RHS
Source: ICRA research; IRDAI annual reports; amounts in Rs. billion apart from individual sum which is in Rs.
thousand
The total sum assured (SA) for both private sector and LIC had increased in FY2021 and 5M FY2022 from the year-ago periods. The total SA for the private sector was Rs. 4.04 trillion up 1%
YoY while for LIC it had increased 7.5% YoY to Rs. 8.9 trillion. The total SA had increased at a CAGR of 11.2% in the last four years for the private sector, and it was across the individual and
group policies. The average individual SA had marginally increased to Rs. 19.9k in FY2021, while in 5M FY2022 it had declined to Rs. 20k (Rs. 24k in 5M FY2021). The increase in individual SA
over the years is due to a shift in product mix towards protection products (which has a higher SA), however, the growth of protection is expected to slow down with increase in reinsurance
rates.
LIC had an improvement in the total SA (+7.5% YoY) in FY2021 to Rs. 8.9 trillion, despite a 8% CAGR decline in the last four years. In 5M FY2022 the total SA had increased 50% due to higher
group mix. The average individual SA for LIC had declined to Rs. 27.9k in FY2021, (Rs. 29.4k in FY2020). However, the average group SA had increased to Rs. 9.7k (Rs. 4.6k in FY2020). LIC had
a historically high fund business, which had reduced till FY2020, and correspondingly the average SA had reduced too. In the individual business for LIC, term assurance product mix is high,
and correspondingly the average SA is higher than private players at Rs. 27.9k in FY2021 (Rs. 29.4k in FY2020)
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NEW BUSINESS PREMIUM GROWTH TO RESUME IN FY2022, AND FY2023
EXHIBIT 19: New business trend for the Life Insurance players
4,000 2,618 3,000

3,500 2,326
2,500
3,000 2,054
1,931
1,618 2,000
2,500 1,475
1,347
2,000 1,500
3,618
1,500 3,184
2,589 2,783 1,000
1,000 1,939 2,147
1,750
500
500
- -
FY2017 FY2018 FY2019 FY2020 FY2021 FY2022e FY2023e
New business premiums NBP density (INR) (RHS)
Source: ICRA Research, amounts in Rs. Billion
ICRA estimates the NBP to grow 14% in FY2022 to Rs. 3.18 trillion, as the nominal GDP is projected to grow by 16%. The NBP is further expected to increase to Rs. 3.6 trillion in FY2023, with
a nominal GDP growth projected at 13%.
ICRA expects the NBP growth to accelerate in H2, and Q4 have always been the strongest quarter for life insurance business growth. With the nominal GDP growth stabilising from FY2023,
ICRA expects the NBP growth to rationalise. The NBP density is expected to increase to Rs. 2,326 from Rs. 2,054 at present. Increasing focus on protection products should help increase the
insurance density in India.
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IMPORTANT REGULATORY/INDUSTRY ANNOUNCEMENTS
FDI limit increase in insurance sector
• An amendment to the Insurance Act, 1938 took place to increase the permissible FDI limit in Insurance companies. The limit is increased to 74% from 49% (at present) and allows foreign
ownership and control with safeguards. The increase in FDI limit and foreign ownership allowance, is a credit positive for the entire sector, and would especially benefit the smaller
insurance firms struggling to raise capital.
LIC IPO to drive global interest in the life insurance segment in India
As part of its strategy to divest stake in public sector entities, the Government of India has been looking at an initial public offering (IPO) for LIC for which draft prospectus is likely to be filed
once the Embedded Value for the entity is finalised. The proposed IPO of the biggest life insurer in the country is likely to pave the way for other private life insurers to list themselves on the
exchange. The interest of foreign investors in the life insurance segment could increase thereby providing capital for the life insurers to grow and tap the large untapped potential of India.
With the listing, LIC would be subject to stringent disclosures thereby providing better product details and product profitability followed by LIC. The investment strategy of the company is
also likely to undergo a change from its current stance of holding high stakes in public sector entities (even higher than the 15% allowed by IRDAI regulations at times). LIC currently maintains
solvency of 1.7x as on June 30, 2021; though higher than the regulatory requirement of 1.5x lower than the other large players in the life insurance segment. With the amendment in the LIC
act, and the listing, the company could look at shoring up the solvency levels.
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FINANCIAL PERFORMANCE & ANALYSIS
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INCREASE IN SINGLE PREMIUM POLICIES DRIVES THE GROWTH
EXHIBIT 20: Premium Mix for Select Private Players EXHIBIT 21: Premium Mix for LIC
2,500 4,000
3,500
2,000 1,203 1,505
465 3,000
1,110
356 2,500 983 1,065
1,500 290
199 2,000
1,000 161 1,249 2,011
1,066 1,500 2,189
928 1,952
769 1,759 1,836
637 1,000
500 305
96 500 296
393 421 447 70
311 351 201 233 313 580 339 407 462
- 57 73 - 263 281 70 51
FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2021 Q1FY2022 FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2021 Q1FY2022
First Year Premium Renewal Premium Single Premium First Year Premium Renewal Premium Single Premium
Source: Company Disclosures, ICRA Research, Amount in Rs. billion Source: Company Disclosures, ICRA Research, Amount in Rs. billion
Renewal premium forms more than 50% of the gross premium earnings of both LIC and the Select Private Players. While the share of renewal premiums remains steady for the Select Private
Players at ~58% in FY2021; the share for LIC was lower in FY2020 and FY2021 at 53-54% as compared to ~58% previously. Within the new business premium, there has been a significant
increase in the reliance on single business premium, which accounted for 82% of the new business premium for LIC (67% in FY2020) and 51% for the Select Private Players (46% in FY2020).
The increase in share of single premium makes the insurance entities profitability metrics highly reliant on persistency of its existing products, more so for LIC where the share of single
premium remains very high. The growth in single premium policies is in line with the growing preference for group credit life product in FY2021. Similarly, for Q1 FY2022 the share of single
premium in overall premium continues to remain high at 24% for the Select Private Players and 37% for LIC. For LIC its predominantly the group fund/superannuation business driving the
single premium growth.
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NON-SINGLE PREMIUM PRODUCTS REMAIN SUBDUED IMPACTING THE APE
EXHIBIT 22: Movement in APE for select Private Players EXHIBIT 23: Movement in APE for LIC
600.0 40% 800.0 65% 80%

29%
23% 30% 700.0 60%
500.0
13% 14% 20% 600.0 40%
400.0 8% 8% 16%
500.0 9%
10% 7% 20%
300.0 400.0
493.9 0% 699.9 -18% 0%
421.6 456.7 300.0
200.0 371.0 -30%
489.8
327.2 -10% 200.0 424.3 -20%
361.3 388.0
100.0 -24%
-20% 100.0 -54% -40%
63.6 82.2 99.5 81.4
- -30% - -60%
'Select Private Players' Select Private Players growth in APE (RHS) LIC LIC APE growth (LHS)
The APE growth in FY2021 remained moderate at 8%. The select private players had seen a huge growth in single premium products (aided by group credit life products), however, the non-
single products were impacted by Covid-19, thereby resulting in a moderate growth of 6%. With subdued growth in non-single products, growth in renewal premium collections is likely to
moderate. For Q1 FY2022, despite the second wave of the pandemic, the premium collection was higher than the same quarter last year (which had been negatively impacted by the Covid-
19 pandemic).
The APE for LIC declined by 30% on a YoY basis in FY2021 on the back of lower non-single premium products. While the single premium product grew by 67% in FY2021, the non-single
premium business declined by 41% on a YoY basis in FY2021. LIC had a stronger growth in the group fund business / annuation business in the past two years. Similarly, the APE was lower in
Q1 FY2022 compared to the same quarter previous year as the non-single premium declined by 27% on a YoY basis.
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COST STRUCTURES FOR PRIVATE PLAYERS DETERIORATE WITH INCREASING COMMISSION EXPENSES
EXHIBIT 24: Expense breakup of Select Private Players EXHIBIT 25: Expense breakup of LIC
30.0% 20.0% 17.4% 18.2%

25.8% 24.8% 16.7% 17.2% 16.4%
25.0% 23.2% 22.3% 15.4% 15.6%
20.4% 21.4%
20.0% 15.0%
20.0%
15.0% 10.0%
10.0%
5.0%
5.0% 5.5% 5.7% 5.9% 5.5% 5.5% 5.1%
4.9% 5.2% 5.3% 5.3% 5.6% 4.7% 4.3% 4.9%
0.0% 0.0%
Operating Expense (Incl. Comm.)/ Gross Written Premium Operating Expense (Incl. Comm.)/ Gross Written Premium
Commission/Gross Written Premium Commission/Gross Written Premium
Source: Company Disclosures, ICRA Research Source: Company Disclosures, ICRA Research
The private sector players had been investing in technology to leverage on the policy sales, as well as claims processing. This had resulted in higher operating expenses in FY2017 and FY2019.
The operating expenses had reduced since then, however, ICRA notes that the decline in FY2021 would partly be due to renegotiated rentals following work from home solutions for
employees. In Q1 FY2022 the opex had declined by 300 bps since last year for select private sector players, however, ICRA expects the opex to increase marginally for the remainder of the
year. The players with a banking sponsor had the benefit of lower cost bancassurance distribution. The commission expenses for the select private sector players increased marginally to
5.6% but has been increasing gradually for the last five years.
For LIC the total operating expense ratio had declined by 200 bps YoY in FY2021 (15.4%), and 260 bps in Q1 FY2022. LIC’s opex has been lower than the private sector due to the scale and
has been reducing albeit marginally over the last five years. The commission expenses for LIC had been increasing till FY2019 but have been on a decline since. ICRA expects the total opex
for LIC to marginally improve as it leverages technology in addition to its large scale.
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PROFITABILITY METRICS IMPACTED IN Q1FY2022
EXHIBIT 26: Trends in profitability for Select Private Players EXHIBIT 27: Trends in profitability for LIC
70.0 12.5% 13.2% 11.7% 15% 35.0 450%

7.1% 396.1%
60.0 7.1% 4.6% 10% 30.0 368.0% 376.2% 366.8% 400%
50.0 5% 350%
25.0
300%
40.0 0%
20.0 250%
30.0 57.5 63.0 59.4 59.6 -5%
55.4 15.0 200%
20.0 -10% 26.9 27.1 29.0
22.3 24.5 45.… 150%
10.0 -15% 10.0
13.0 -21.2% 100%
0.0 -20% 5.0 50%
-5.7 1.5%
-10.0 -25% 0.0 0.03 0.03 0.2% 0%
Profit After Tax Median Return on Equity Profit After Tax Return on Equity
While the profitability for select private players remains at similar levels in FY2021 with PAT of Rs. 59.6 billion (Rs. 55.4 billion in FY2020), the median ROE for select private players had been
declining since FY2018 due to losses at certain smaller players, and a decline in profitability for the bigger players. The select private players reported a cumulative loss of Rs. 5.7 billion in Q1
FY2022 due to high claims during the second wave of the pandemic. ICRA expects the private players’ profitability to remain subdued in FY2022 due to high claims in Q1.
LIC’s profitability improved in FY2021 with a PAT of Rs. 29 billion (Rs. 27 billion in FY2020) supported by both higher premiums underwritten and an improvement in investment income in
FY2021. The Q1 profitability for LIC is typically lower mainly because most of its business is underwritten in the last quarter of the year (and the bonus is declared and accounted for in the
last quarter). For Q1 FY2022, while the net benefits paid were higher due to the higher Covid-related claims, profitability remained similar at Rs. 0.03 billion due to higher premiums
underwritten and net investment income in Q1 FY2022 as compared to Q1 FY2021.
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INVESTMENT INCOME IMPROVES FOR SELECT PRIVATE PLAYERS IN FY2021
EXHIBIT 28: Investment Income for Select Private Players EXHIBIT 29: Investment Income for LIC
2,000 147.3% 160% 3,000 88.5% 100%

140% 78.4%
2,500 69.3% 80%
1,500 120% 64.1% 64.7% 66.3%
97.8% 62.4%
83.5% 100% 2,000
60%
1,000
59.7% 80% 1,500
40.5% 36.4%
-2.4% 60% 40%
500 1,000
40%
662 586 (45) 1,804 482 393 20%
534 20% 500
- 1,925 2,058 2,236 2,368 2,794 606 724
FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2021 Q1FY2022 0% - 0%
(500) -20% FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2021 Q1FY2022
Income from Investments and Fees Investment Income/Gross Premium Income from Investments and Fees Investment Income/Gross Premium
Investment income for the select private players improved in FY2021 supported by the significant positive change in fair value of investments as compared to a negative change in fair value
in FY2020. The change in fair value is linked to the movement in the equity market investment. This largely pertains to the unit-linked segment and is directly passed to the shareholders and
hence does not have an impact on the profitability.
LIC’s investment income has seen a gradual increase over last five years and is less volatile than that of private players. While the investment income as a % of Gross Premium declined in
FY2020, however, it continued to remain above 60%. While the select private players hold a bond-heavy portfolio with a lower duration, LIC has large (legacy) equity investments along with
longer-duration bonds.
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INVESTMENT PROFILE (EXCLUDING LINKED PORTFOLIO) INDICATES LOWER EQUITY COMPOSITION FOR SELECT PRIVATE PLAYERS
EXHIBIT 30: Investment profile of Select Private Players EXHIBIT 31: Investment profile of LIC
7,000 40,000 36,295

34,884
5,571 5,779
6,000 35,000 1,845 30,574 2,016
27,542 28,489 2,932 2,924
4,597 1,019 30,000 723 1,658 741
5,000 4,317 1,040 25,161
1,691 1,398 2,670 6,620
3,720 25,000 22,394 2,549 5,938 752
783 952 1,045 2,348 705 4,043
4,000 743 952 2,297 719 3,276
3,085 401 1,319 826 4,571
584 394 835 20,000 2,004
2,544 812 511 851 4,587
3,000 431 481 363 3,998
731 348 15,000
347 561 332 349 403
2,000 485 274 353 23,445 21,452 23,994
220 312 10,000 18,213 20,561
235 2,704 2,895 14,223 16,407
1,000 2,064 2,214 5,000
1,258 1,506 1,721
- -
G-Sec Equity & Preference shares G-Sec Equity & Preference shares
Debentures & Bonds Infrastructure and social sector Debentures & Bonds Infrastructure and social sector
Other investments Total Investments Other investments Total Investments
The life insurance industry, as indicated above, is reliant on investment income to bolster its profitability. The investment book had grown 29% YoY to Rs. 5.6 trillion for the select private
players while it grew by 22% to Rs. 34.9 trillion for LIC in FY2021.
The composition of the investment book has largely remained unchanged for LIC. In FY2020, the share of G-Sec had increased offsetting the decline in equity book. However, as on March
31, 2021 the share of G-Sec and equity remained similar to historical levels of 67% and 17% respectively. For the select private players, G-Sec is the dominant portfolio with a share of 49%
as on March 31, 2021 followed by the infrastructure and social sector at 17%. The share of equity has continued to remain below 10%. With the interest rates expected to harden, ICRA feels
the reliance on Government securities (especially longer dated securities) to remain high, especially with the increasing focus on protection and non-par business which are longer tenor
contracts.
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DEBT SECURITIES BY TENOR
EXHIBIT 32: Select Private Players EXHIBIT 33: LIC
100.0% 100.0%
24.0% 22.8% 16.8% 19.6% 23.0%
25.7% 29.8% 29.8% 29.9% 31.9% 27.5% 29.9%
80.0% 80.0% 33.8% 35.1%
7.1% 14.0% 11.1%
7.8% 5.9% 9.1% 6.1%
5.2% 6.4% 5.7% 5.7% 9.9% 5.9%
60.0% 13.3% 14.7% 15.3% 60.0% 12.8% 14.8% 7.2% 5.7%
16.8% 17.0% 16.3% 17.5% 18.3% 17.6%
16.7% 17.7%
18.2% 20.3% 27.4% 21.6% 16.8% 11.6%
40.0% 22.4% 18.6% 17.2% 17.9% 40.0% 11.4%
16.5% 9.4% 8.6%
21.8% 19.6% 15.6% 14.7% 14.5% 24.7% 24.1% 23.5% 21.5%
20.0% 15.3% 15.5% 20.0% 23.7% 26.3% 21.9%
8.1% 7.3% 7.5% 7.7% 6.7% 8.0% 6.1%
5.9% 6.1% 7.5% 8.7% 7.5% 8.3% 7.7%
6.8% 8.2% 7.7% 7.2% 7.5% 7.6% 6.7% 2.4% 2.5% 4.0% 3.6% 3.5% 3.4% 3.6%
0.0% 0.0%
<1 Year 1 - 3 Years 3 - 7 Years 7 - 10 Years <1 Year 1 - 3 Years 3 - 7 Years 7 - 10 Years
10 - 15 Years 15 – 20 Years Above 20 Years 10 - 15 Years 15 – 20 Years Above 20 Years
With a high growth witnessed in the longer-term protection and non-PAR products in the life insurance industry, the reliance on longer term securities has increased. There was a marked
increase in longer tenor Government paper (above 20 years) for both LIC and the select private players as the companies looked to match its longer-term liabilities (term policies pay-out).
LIC’s total debt portfolio had increased 10% YoY and had a marked increase (36%) in the greater than 20-year debt securities. For the select private player’s growth in overall debt portfolio
of 28% in FY2021 was similar to a growth of 28% in the greater than 20 years debt portfolio. The private players had a higher shorter tenor paper with less than 1-year debt securities at 7.5%
of total portfolio as of March 31, 2021, compared to 3.5% of LIC.
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STRESSED INVESTMENT EXPOSURE REMAINS LOW FOR SELECT PRIVATE PLAYERS
IL&FS Financial Dewan Housing Reliance Home
Select Private Players IL&FS Reliance Capital Ltd Total
Services Ltd Finance Finance Ltd
Mar-21 2.05 0.12 1.71 0.35 0 4.22
Mar-20 3.03 0.17 2.28 0.35 0 5.83
IL&FS Financial Dewan Housing Reliance Home

LIC IL&FS Reliance Capital Ltd Total
Services Ltd Finance Finance Ltd
Mar-21 1.4 0 39.46 23.25 8.00 72.11
Mar-20 1.4 0 41.62 23.25 8.00 74.27
Source: Public Disclosures as per L-35, ICRA Research, Amount in Rs. billion
The investment operations for insurance companies operating in India are governed by the IRDAI regulations. The guidelines are prudent and are in line with the objectives of minimising
credit risks, while ensuring a return commensurate with the risk class. The credit risk profile for the investment portfolio for the industry indicates very low levels of credit risks with majority
of the investments into either sovereign securities or AAA/AA securities, thus highly liquid and safe. Most companies’ investment guidelines allow investment in corporate debt, which carries
rating of AA and above. However, the above are few stressed investment exposures of the insurers, which were highly rated but were subsequently downgraded to a lower category. The
select private players had stressed investment book of Rs. 4.22 billion as on March 31, 2021 (0.7% of the networth).
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PERSISTENCY PERFORMANCE IMPROVES PRIVATE PLAYERS
EXHIBIT 34: Persistency ratio (Median) performance – Select Private Players EXHIBIT 35: Persistency ratio performance – LIC
90% 90%
80% 80%
80% 81% 80% 82%
77% 77% 79%
70% 77% 70% 76%
74% 74% 72% 72%
70%
60% 60%
63%
58% 59% 59%
50% 50% 56%
52% 54% 53%
50% 49% 51%
40% 47% 47% 48% 40%
30% 30%
13th month persistency 61st month persistency 13th month persistency 61st month persistency
The persistency ratio has been on an improving trajectory for the select private players (both 13th month and 61st month). The improvement in persistency has been driven by the movement
to the more stable traditional protection insurance products. There has been an increased investor awareness and customer engagement which has thereby improved the retentions across
most players.
LIC traditionally enjoyed better persistency compared to private players. However, there has been a significant improvement in the persistency levels for the private players while the LIC’s
13th month persistency remained stagnant. The 61st month persistency ratio for LIC, however, continued to remain higher than the private players. LIC’s persistency was impacted in FY2020
as the IRDAI allowed an additional grace period for policies which were due in March 2020. For Q1 FY2022, the persistency for LIC has been lower than FY2021.
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PRIVATE PLAYERS INCREASE THE DIRECT ORIGINATIONS
EXHIBIT 36: Distribution channels of Select Private Players – New Business Premium EXHIBIT 37: Distribution channels of LIC – New Business Premium
100% 3% 4% 4% 5% 4% 5% 5% 100%
80% 35% 29% 30% 32% 34% 80%

39% 38%
3% 63% 62% 63%
4% 71% 68% 73%
60% 2% 4% 3% 60% 77%
2% 4%
40% 40% 44% 44% 40%

43% 43% 36% 0%
1% 0%
1% 0%
1%
37% 0%
0%
1% 1% 0%
1%
20% 20% 36% 37% 0%
36% 30%
28% 22% 26%
20% 21% 18% 17% 15% 17% 16%
0% 0%
Agents Banks Corp agents-others Direct Others Individual Agents Banks Corp agents-others Direct Others
Bancassurance continues to remain the largest sourcing channel (aided by the open architecture regulation and the expansion in branch network thereby increasing the reach) for the select
private players and has remained range bound at 43-44%. There has been an increasing in direct sourcing over the last 3-4 years with the increasing proprietary sales force and digital
awareness. The reliance on the agency channel has, however, been on a declining trend.
LIC’s direct sourcing channel has increased in FY2020 and FY2021 forming 68% of the total gross premium in FY2021. LIC has a large group business, which is predominantly sourced directly.
ICRA expects the bancassurance channel to be important for the select private players, especially for the growth of credit life products.
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LIQUIDITY LEVELS REMAIN COMFORTABLE ACROSS THE INDUSTRY
EXHIBIT 38: Liquidity levels at Select Private players EXHIBIT 39: Liquidity levels for LIC
1.88
6,000 1.90 1.92 40,000 1.90
1.89 1.89 1.88 1.85
1.90 35,000 1.83
5,000 1.81 1.85
1.80
1.87 1.88 30,000 1.68
1.82 1.80
4,000
1.86 25,000
1.75
3,000 1.84 20,000
5,201 5,372 34,096 1.70
33,001
1.82 15,000 27,283
2,000 4,035
23,772 26,202
3,507
1.80 10,000 21,220 1.65
2,922
1,000 2,418
1.78 5,000 1.60
0 1.76 0 1.55
FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2022 FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2022
Liquid assets Liquid assets / Total outflows Liquid assets Liquid assets / Total outflows
Life insurance industry unlike the general insurance industry have longer tenor liabilities, which along with the stringent investments guidelines result in a fairly matched asset liabilities tenor.
With the growth in the investment book for select private players increased investment in Government Securities, the total liquid assets2 increased to Rs. 5.2 trillion as of Q1 FY2022 compared
to Rs. 4.3 trillion in Q1 FY2021. The liquid asset coverage to estimated outflows 3coverage stood at 1.87 as on June 30, 2021. Similarly, for LIC the liquid assets increased in FY2021 and Q1
FY2022 with a liquid asset coverage of 1.88x as on June 30, 2021.
2
Total liquid assets = Total investments (excluding linked investments) (after ICRA estimated haircuts) + Cash & bank balance
3 Estimated outflows = (Total Policyholder liabilities*0.50) + Current liabilities + debt due in 1 year.
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COMFORTABLE CAPITALISATION PROFILE SUPPORTED BY INTERNAL ACCRUALS
EXHIBIT 40: Median Solvency levels at Select Private players EXHIBIT 41: Solvency levels for LIC
18.0 2.7 3.0 25 1.8 1.8

2.5 1.7
16.0 1.8
2.1 2.5 20
14.0 2.0 2.1 2.0 1.7
12.0 2.0
15 1.6 1.7
10.0 1.6 1.6
16.9 1.5 1.6 1.6
8.0
10 20.1 1.6
6.0 11.4 1.0 17.6 16.7
10.1 15.4 14.6
4.0 8.1 8.9 9.1 12.4 1.5
0.5 5
2.0 1.5
- - - 1.4
FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2022 FY2017 FY2018 FY2019 FY2020 FY2021 Q1FY2022
Total Technical reserves / Last annualised claims Total Technical reserves / Last annualised claims
Regulatory solvency ratio Regulatory solvency ratio
Median solvency levels for select private players remained at 2.0-2.1x for the last three years. The larger players have been reporting back-book surplus higher than the new business strain,
which had helped meet the capital requirement for the required growth. While the current solvency remains comfortable, ICRA notes that the solvency levels for the industry would be
contingent on the underwriting losses incurred on account of Covid-19 pandemic. For Q1 FY2022, the profitability has been impacted for most life insurers due to the high Covid-19 related
claims during the second wave. Several players focused on growing the premium for non-participatory products, which typically have had higher capital strain in the early years. ICRA expects
the solvency levels to reduce marginally as the private players increase their share of non-participatory products. LIC’s solvency was historically maintained at 1.6x primarily due to large
dividend pay-outs to the Government, per the Life Insurance Corporation Act 1956. The same improved to 1.8x in FY2021.
The reserve buffer, as measured by the total technical reserves / total last annualised claims paid, has gradually increased for private players over the last five years. The ratio was 11.4x as
of March 31, 2021, compared to 10.1x in the previous year. LIC traditionally had better reserve coverage but has been declining over the last few years. The ratio, however, increased to 14.6x
as of March 31, 2021, compared to 12.4x in FY2020 for LIC. With lower claims due to the Covid-19 pandemic in Q1 FY2021, technical reserves / last annualised claims paid is substantially
higher in Q1 FY2022. ICRA expects the reserving ratio to be lower in FY2022.
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COMPANY FINANCIALS
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Page | 34
Annexure 1: Combined Financial Indicators for the 16 Insurers
In INR Billions LIC Select Private Players Total
INCOME STATEMENT FY2019 FY2020 FY2021 Q1FY2022 FY2019 FY2020 FY2021 Q1FY2022 FY2019 FY2020 FY2021 Q1FY2022
First Year Premium 313.3 579.6 339.3 50.9 392.6 421.1 447.4 72.6 705.9 1,000.7 786.7 123.5
Renewal Premium 1,951.7 2,011.1 2,188.6 462.0 928.3 1,065.8 1,248.7 233.2 2,880.0 3,077.0 3,437.2 695.2
Single Premium 1,110.1 1,203.2 1,505.0 305.5 289.9 356.4 465.3 95.7 1,400.0 1,559.6 1,970.3 401.2
Gross Premium Written 3,375.1 3,793.9 4,032.9 818.4 1,610.8 1,843.4 2,161.4 401.5 4,985.9 5,637.3 6,194.3 1,219.8
Net Premium Written 3,371.9 3,790.6 4,028.4 817.2 1,593.3 1,816.0 2,125.3 390.0 4,965.1 5,606.6 6,153.7 1,207.2
Income from Investments and Fees 2,236.4 2,368.5 2,793.8 724.4 586.3 (45.0) 1,804.2 392.7 2,822.7 2,323.5 4,598.0 1,117.1
Net Commission Expenses 200.0 210.3 221.7 41.9 82.2 94.2 104.2 17.5 282.2 304.4 325.9 59.4
First Year Premiums 88.0 97.1 89.7 15.1 55.1 60.8 65.9 10.6 143.1 157.9 155.6 25.7
Renewal Premiums 100.6 103.4 114.3 23.4 21.3 24.9 29.1 5.1 121.9 128.3 143.5 28.5
Single Premiums 4.9 4.4 5.6 0.6 3.5 4.9 5.6 1.2 8.4 9.3 11.2 1.8
Total Operating Expenses 555.2 658.7 621.6 127.4 296.1 348.7 343.5 70.1 851.2 1,007.4 965.0 197.5
Amount Available For Claims 5,053.1 5,500.4 6,200.7 1,414.2 1,883.5 1,422.3 3,586.0 712.6 6,936.6 6,922.7 9,786.7 2,126.8
Claims By Death 170.8 175.1 238.8 73.6 86.8 112.0 168.0 104.2 257.6 287.0 406.7 177.8
Claims By Maturity 1,514.5 1,511.6 1,656.6 350.5 161.7 199.6 244.0 42.2 1,676.1 1,711.2 1,900.6 392.7
Claims By Surrender 692.4 701.5 801.0 183.0 379.7 448.9 470.4 109.8 1,072.1 1,150.4 1,271.4 292.8
Benefits paid – Net 2,509.4 2,542.2 2,868.8 650.2 758.4 927.7 1,058.8 263.5 3,267.8 3,469.9 3,927.6 913.7
Net change in valuation of liability in respect of life policies 2,438.4 2,861.8 3,222.0 748.1 1,034.1 401.3 2,435.7 446.5 3,472.5 3,263.1 5,657.6 1,194.6
Profit Before Tax 27.0 27.2 29.1 0.0 62.2 57.3 63.6 (5.6) 89.2 84.6 92.6 (5.6)
Tax 0.1 0.1 0.1 0.0 2.8 2.0 3.9 0.1 2.9 2.0 4.0 0.1
Profit After Tax 26.9 27.1 29.0 0.0 59.4 55.4 59.6 (5.7) 86.3 82.5 88.6 (5.7)
ICRA LIMITED
Page | 35
BALANCE SHEET FY2019 FY2020 FY2021 Q1FY2022 FY2019 FY2020 FY2021 Q1FY2022 FY2019 FY2020 FY2021 Q1FY2022
Assets
Total Shareholders' Investments 6 7 7 16 432 457 558 571 439 464 566 587
Total Policyholders' Investments 27,535 28,483 34,877 36,279 3,288 3,860 5,013 5,208 30,824 32,342 39,889 41,487
Assets Held to Cover Linked Liabilities 719 705 329 302 3,676 3,403 4,870 5,123 4,394 4,108 5,199 5,424
TOTAL ASSETS 31,080 32,035 38,118 39,325 7,743 8,080 10,834 11,292 38,823 40,115 48,952 50,617
Liabilities
Net Shareholders's Funds 7 7 64 64 503 539 621 615 509 546 685 679
Net Worth (adjusted for accumulated losses) 7 7 64 64 458 494 577 566 465 501 641 630
Total Policyholders' Funds 30,549 31,230 37,225 38,554 6,967 7,251 9,833 10,283 37,516 38,481 47,059 48,838
Funds for Future Appropriations 0 0 0 0 72 95 109 112 72 95 109 112
Current Liabilities 524 797 829 707 241 233 290 304 765 1,030 1,119 1,012
Subordinate debt - - - - 2 2 21 21 2 2 21 21
TOTAL LIABILITIES 31,080 32,035 38,118 39,325 7,743 8,080 10,834 11,292 38,823 40,115 48,952 50,617
ICRA LIMITED
Page | 36
FY2019 FY2020 FY2021 Q1FY2022 FY2019 FY2020 FY2021 Q1FY2022 FY2019 FY2020 FY2021 Q1FY2022
Growth
NPW Growth 6.1% 12.4% 6.3% 5.9% 22.2% 14.0% 17.0% 22.5% 10.8% 12.9% 9.8% 10.7%
First Year Premium Growth 11.3% 85.0% -41.5% -27.3% 11.8% 7.2% 6.2% 28.1% 11.6% 41.8% -21.4% -2.5%
Renewal Premium Growth 6.3% 3.0% 8.8% 13.5% 20.8% 14.8% 17.2% 15.9% 10.6% 6.8% 11.7% 14.3%
Single Premium Growth 4.2% 8.4% 25.1% 3.3% 45.9% 23.0% 30.6% 37.5% 10.8% 11.4% 26.3% 9.8%
Profitability
Net commission / Net Premium Written 5.9% 5.5% 5.5% 5.1% 5.2% 5.2% 4.9% 4.5% 5.7% 5.4% 5.3% 4.9%
Commission on First Year Premium/First Year Premium 28.1% 16.8% 26.4% 29.7% 14.0% 14.4% 14.7% 14.6% 20.3% 15.8% 19.8% 20.8%
Commission on renewal Premium/Renewal Premium 5.2% 5.1% 5.2% 5.1% 2.3% 2.3% 2.3% 2.2% 4.2% 4.2% 4.2% 4.1%
Commission on Single Premium/Single Premium 0.4% 0.4% 0.4% 0.2% 1.2% 1.4% 1.2% 1.2% 0.6% 0.6% 0.6% 0.4%
Operating Expense Ratio 16.5% 17.4% 15.4% 15.6% 18.6% 19.2% 16.2% 18.0% 17.1% 18.0% 15.7% 16.4%
Net Benefit Paid/ Total Premium 74.4% 67.1% 71.2% 79.6% 47.6% 51.1% 49.8% 67.6% 65.8% 61.9% 63.8% 75.7%
(Net Benefit Paid+ Change in valuation)/ Total operating
88.2% 87.7% 89.3% 90.7% 82.2% 75.0% 88.9% 90.7% 86.5% 84.9% 89.2% 90.7%
revenues
Income from Investments and Fees / Net Premium Written 66.3% 62.5% 69.4% 88.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
PAT/ Total Income 0.5% 0.4% 0.4% 0.0% 2.7% 3.1% 1.5% -0.7% 1.1% 1.0% 0.8% -0.2%
Net Profits/Net Premium 0.8% 0.7% 0.7% 0.0% 3.7% 3.0% 2.8% -1.5% 1.7% 1.5% 1.4% -0.5%
Return on Equity 396.1% 366.8% 45.6% 0.2% 13.0% 11.2% 10.3% -1.0% 18.5% 16.5% 13.8% -0.9%
ICRA LIMITED
Page | 37
Annexure 2: Entity-wise Financial Indicators
In INR Billions SBI Life Insurance ICICI Prudential Life Insurance HDFC Life Insurance
First Year Premium 90.6 98.3 103.4 14.0 69.8 65.1 51.9 8.8 50.6 60.4 68.6 12.9
Renewal Premium 192.0 240.4 296.3 50.3 205.7 209.4 225.1 41.4 142.1 154.7 184.8 38.9
Single Premium 47.3 67.6 102.9 19.4 33.9 59.8 80.4 18.5 99.1 111.9 132.5 24.8
Gross Premium Written 329.9 406.3 502.5 83.8 309.3 334.3 357.3 68.7 291.9 327.1 385.8 76.6
Net Premium Written 328.9 403.2 497.7 83.1 305.8 328.8 349.7 66.0 289.2 322.2 381.2 75.4
Income from Investments and Fees 117.9 35.3 321.9 77.1 109.5 (117.7) 483.0 96.4 96.3 (26.1) 335.1 72.4
Single Premiums 0.7 1.0 1.1 0.2 0.5 0.6 1.0 0.2 1.2 1.4 1.3 0.3
Total Operating Expenses 36.1 42.2 40.3 8.9 42.0 47.4 43.2 10.6 50.6 65.6 61.3 10.5
Amount Available For Claims 410.7 396.3 779.3 151.4 373.3 163.7 789.6 151.8 335.0 230.6 655.0 137.4
Claims By Death 15.6 17.3 30.1 15.8 10.9 16.1 27.3 20.4 15.3 23.0 30.5 16.0
Claims By Maturity 44.4 43.8 62.0 5.8 22.7 25.9 37.1 5.7 26.6 43.9 66.8 12.9
Claims By Surrender 40.6 37.1 47.2 12.7 106.1 149.8 162.1 38.0 60.1 65.0 68.8 16.4
Benefits paid – Net 152.9 162.5 215.8 47.9 142.6 193.8 226.4 56.7 139.9 190.2 225.7 58.0
Net change in valuation of liability in respect of life policies 236.8 210.4 540.6 99.3 211.6 (48.6) 544.4 95.7 176.5 22.2 409.4 75.4
Profit Before Tax 13.7 14.1 15.4 2.3 11.6 10.7 10.8 (2.2) 12.9 13.1 13.5 3.1
Tax 0.5 (0.1) 0.9 0.1 0.2 0.0 1.2 (0.3) 0.1 0.2 (0.1) 0.1
Profit After Tax 13.3 14.2 14.6 2.2 11.4 10.7 9.6 (1.9) 12.8 13.0 13.6 3.0
ICRA LIMITED
Page | 38
Assets
Total Shareholders' Investments 57.2 68.3 86.0 94.8 79.9 74.2 100.8 92.3 50.5 58.6 85.4 89.7
Total Policyholders' Investments 644.7 734.2 939.4 972.3 400.7 467.5 635.7 668.5 571.2 671.9 905.4 941.3
Assets Held to Cover Linked Liabilities 691.3 785.7 1,162.2 1,226.5 1,109.5 970.8 1,385.5 1,450.9 633.8 541.8 747.6 781.8
TOTAL ASSETS 1,467.3 1,655.8 2,268.3 2,370.3 1,630.9 1,560.3 2,172.2 2,278.2 1,300.0 1,321.6 1,795.7 1,868.9
Liabilities
Net Shareholders's Funds 75.8 87.4 104.0 105.8 70.4 72.1 91.1 84.8 56.6 68.0 86.4 89.5
Net Worth (adjusted for accumulated losses) 75.8 87.4 104.0 105.8 70.4 72.1 91.1 84.8 56.6 68.0 86.4 89.5
Total Policyholders' Funds 1,351.4 1,531.0 2,113.5 2,212.4 1,513.7 1,442.5 2,018.3 2,116.0 1,181.2 1,195.0 1,628.4 1,702.3
Funds for Future Appropriations 2.8 7.1 8.4 10.0 10.3 12.3 13.5 12.2 11.0 8.8 9.9 9.2
Current Liabilities 37.2 30.0 42.3 42.1 36.3 33.2 37.2 53.3 51.1 49.1 64.9 61.8
Subordinate debt - - - - - - 12.0 12.0 - - 6.0 6.0
TOTAL LIABILITIES 1,467.3 1,655.8 2,268.3 2,370.3 1,630.9 1,560.3 2,172.2 2,278.2 1,300.0 1,321.6 1,795.7 1,868.9
ICRA LIMITED
Page | 39
Growth
NPW Growth 30.7% 22.6% 23.4% 9.5% 14.1% 7.5% 6.4% 18.9% 23.8% 11.4% 18.3% 31.7%
First Year Premium Growth 11.3% 8.5% 5.2% 29.4% -5.1% -6.7% -20.3% 40.3% 6.7% 19.5% 13.5% 25.8%
Renewal Premium Growth 33.4% 25.2% 23.2% 9.7% 15.2% 1.8% 7.5% -0.1% 16.4% 8.8% 19.4% 20.1%
Single Premium Growth 67.5% 42.9% 52.1% -1.7% 82.5% 76.6% 34.4% 89.1% 49.9% 12.9% 18.3% 54.9%
Profitability
87.2% 85.0% 92.3% 91.9% 85.3% 68.8% 92.6% 93.8% 82.1% 71.7% 88.7% 90.3%
revenues
Income from Investments and Fees / Net Premium Written 35.8% 8.7% 64.7% 92.7% 35.8% -35.8% 138.1% 146.0% 33.3% -8.1% 87.9% 96.1%
PAT/ Total Income 3.0% 3.2% 1.8% 1.4% 2.7% 5.1% 1.1% -1.1% 3.3% 4.4% 1.9% 2.0%
Net Profits/Net Premium 4.0% 3.5% 2.9% 2.7% 3.7% 3.2% 2.7% -2.8% 4.4% 4.0% 3.6% 4.0%
Return on Equity 17.5% 16.3% 14.0% 8.4% 16.2% 14.8% 10.5% -8.7% 22.6% 19.0% 15.7% 13.5%
ICRA LIMITED
Page | 40
In INR Billions Max Life Insurance Kotak Tata AIG
Renewal Premium 94.1 106.0 121.9 22.4 41.9 52.3 58.4 9.5 35.9 50.7 69.6 13.9
Single Premium 12.9 14.9 19.9 4.4 14.4 20.0 22.8 4.0 1.6 4.7 6.3 0.8
Income from Investments and Fees 51.2 24.1 124.6 25.1 23.7 4.4 67.9 15.5 22.4 3.0 88.3 16.4
Single Premiums 0.2 0.2 0.3 0.1 0.2 0.4 0.5 0.1 0.0 0.1 0.1 0.0
Claims By Death 6.5 8.4 13.5 10.3 6.6 8.8 12.2 5.7 2.5 3.6 7.0 7.8
Net change in valuation of liability in respect of life policies 101.2 74.6 194.6 29.9 49.9 40.7 105.4 19.2 42.5 33.5 142.3 22.2
Tax 0.7 0.6 (0.1) 0.1 0.2 0.3 0.3 0.1 0.2 0.2 0.2 0.1
Profit After Tax 5.6 5.4 5.2 0.7 5.1 6.1 6.9 (2.7) 0.3 0.4 0.5 (1.1)
ICRA LIMITED
Page | 41
In INR Billions Max Life Insurance Kotak Tata AIG
Assets
Assets Held to Cover Linked Liabilities 198.6 191.6 283.7 297.5 139.4 133.5 193.7 204.2 105.5 95.0 164.3 180.6
TOTAL ASSETS 659.3 717.7 941.7 974.2 317.1 365.5 482.7 497.5 302.9 335.0 491.2 514.6
Liabilities
Total Policyholders' Funds 585.7 640.7 852.3 883.8 273.5 312.4 418.8 437.7 268.6 291.9 441.7 465.5
Subordinate debt - - - - - - - - - - - -
TOTAL LIABILITIES 659.3 717.7 941.7 974.2 317.1 365.5 482.7 497.5 302.9 335.0 491.2 514.6
ICRA LIMITED
Page | 42
In INR Billions SBI Life Insurance Kotak Tata AIG
Growth
NPW Growth 16.5% 10.8% 17.3% 26.5% 23.6% 26.7% 6.9% 37.7% 45.5% 36.1% 33.0% 11.6%
First Year Premium Growth 21.4% 5.6% 18.2% 29.4% 9.5% 22.7% -4.2% -10.2% 56.1% 19.8% 26.8% 7.4%
Single Premium Growth 11.3% 16.1% 33.3% 56.7% 32.4% 38.4% 14.1% 84.8% - 187.5% 33.9% -53.8%
Profitability
81.1% 76.6% 84.8% 83.7% 76.3% 72.1% 83.0% 96.2% 75.9% 68.0% 86.7% 85.0%
revenues
PAT/ Total Income 2.8% 2.9% 1.7% 1.2% 4.9% 5.7% 3.9% -8.7% 0.4% 0.5% 0.2% -3.0%
Return on Equity 20.1% 21.0% 17.4% 9.7% 18.5% 18.1% 17.1% -29.8% 1.6% 2.1% 2.2% -21.2%
ICRA LIMITED
Page | 43
In INR Billions Reliance Life Insurance Star Union Dai-ichi Life Insurance Bajaj Allianz Life Insurance
Renewal Premium 32.9 34.3 36.0 6.6 13.2 15.4 18.3 3.9 39.3 45.7 57.1 12.2
Single Premium 0.7 0.7 0.7 0.1 1.0 1.9 3.7 0.5 31.9 32.6 38.5 8.1
Single Premiums 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.4 0.7 0.6 0.1
Claims By Death 1.9 1.8 2.2 1.2 1.7 1.7 2.7 1.6 10.4 12.1 13.7 6.1
Net change in valuation of liability in respect of life policies 12.9 3.9 38.5 7.4 11.6 9.2 25.0 5.7 51.5 (2.1) 147.5 32.5
Profit Before Tax 0.3 0.4 0.5 (0.5) 1.0 0.6 0.7 (1.1) 5.8 5.2 6.9 0.9
Tax - - - - 0.0 - - - 0.8 0.7 1.1 0.0
Profit After Tax 0.3 0.4 0.5 (0.5) 1.0 0.6 0.7 (1.1) 5.0 4.5 5.8 0.8
ICRA LIMITED
Page | 44
Assets
TOTAL ASSETS 215.9 212.6 257.4 265.1 87.1 96.6 124.3 130.5 598.6 591.5 764.6 798.0
Liabilities
Subordinate debt - - - - - - - - - - - -
ICRA LIMITED
Page | 45
Growth
NPW Growth 7.3% 1.9% 6.6% 9.4% 11.9% 15.1% 28.2% 67.8% 17.1% 9.9% 23.2% 48.2%
First Year Premium Growth 19.1% -6.1% 13.6% 12.1% -1.9% 0.9% 36.8% 209.3% 24.4% 10.5% 28.2% 48.6%
Single Premium Growth -10.9% 0.2% 1.6% 49.7% -11.4% 87.1% 93.5% 101.5% 10.1% 2.3% 18.2% 95.5%
Profitability
78.9% 68.3% 83.5% 84.0% 77.7% 74.2% 83.6% 95.8% 77.3% 67.0% 86.6% 89.2%
revenues
PAT/ Total Income 0.4% 0.7% 0.6% -3.1% 3.8% 2.2% 1.5% -12.2% 3.7% 4.5% 2.4% 1.5%
Net Profits/Net Premium 0.6% 0.8% 1.1% -5.9% 5.2% 2.6% 2.3% -19.0% 5.7% 4.6% 4.9% 3.4%
Return on Equity 2.0% 2.8% 3.7% -15.1% 16.9% 9.0% 9.1% -63.7% 5.2% 4.6% 5.4% 3.1%
ICRA LIMITED
Page | 46
In INR Billions PNB Metlife Life Insurance India First Life Insurance Limited Bharti AXA Life Insurance Limited
First Year Premium 14.2 13.5 15.1 2.3 6.8 8.5 8.9 1.5 r 5.9 5.6 1.1
Renewal Premium 31.0 37.3 40.4 7.9 11.4 14.9 20.0 3.1 11.6 13.6 15.0 2.8
Single Premium 2.6 4.2 4.9 0.9 13.9 10.2 11.6 3.8 3.3 2.4 2.2 0.5
Single Premiums 0.1 0.2 0.2 0.0 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0
Claims By Death 3.5 4.6 7.3 4.6 2.9 3.5 5.3 3.1 0.9 1.1 1.9 1.2
Net change in valuation of liability in respect of life policies 30.5 21.0 54.9 11.7 23.9 (3.2) 22.8 7.6 12.1 12.7 20.4 4.0
Profit Before Tax 1.5 0.9 1.1 (1.5) 0.6 (1.0) 0.3 (1.4) (0.4) (2.1) (1.5) (0.8)
Tax 0.1 0.0 0.1 - - - - - - - - -
Profit After Tax 1.4 0.9 1.0 (1.5) 0.6 (1.0) 0.3 (1.4) (0.4) (2.1) (1.5) (0.8)
ICRA LIMITED
Page | 47
Assets
TOTAL ASSETS 216.7 238.4 297.1 310.0 156.3 152.7 176.5 183.6 62.6 76.4 99.7 102.4
Liabilities
Subordinate debt 0.0 - - - 1.0 1.0 1.0 1.0 0.6 0.6 0.6 0.6
ICRA LIMITED
Page | 48
Growth
NPW Growth 20.7% 14.8% 8.7% 42.9% 39.9% 2.8% 20.2% 43.5% 23.3% 5.4% 4.2% 26.9%
First Year Premium Growth 12.6% -4.6% 11.6% 20.2% 18.7% 25.0% 5.1% 108.0% 32.5% 1.9% -5.0% 18.0%
Single Premium Growth 57.5% 62.2% 14.4% 96.5% 50.7% -27.0% 13.8% 64.4% 13.1% -28.1% -6.8% 134.4%
Profitability
78.3% 76.0% 83.7% 90.8% 86.1% 78.6% 87.5% 97.0% 65.9% 66.1% 78.3% 81.1%
revenues
PAT/ Total Income 2.2% 1.6% 1.1% -7.6% 1.4% -2.8% 0.5% -10.5% -1.6% -8.5% -4.6% -11.9%
Net Profits/Net Premium 3.1% 1.7% 1.7% -14.1% 1.9% -3.0% 0.8% -18.7% -1.9% -10.0% -6.9% -20.0%
Return on Equity 11.7% 7.1% 7.1% -45.5% 9.3% -13.6% 3.9% -91.8% -16.6% -55.3% -34.7% -76.4%
ICRA LIMITED
Page | 49
In INR Billions Aditya Birla Sun Life Insurance Canara HSBC OBC Exide Life Insurance
Renewal Premium 35.9 43.5 52.1 10.9 20.3 24.2 28.1 4.8 20.8 23.3 25.4 4.6
Single Premium 21.1 18.7 25.1 3.4 5.4 5.6 12.9 6.2 0.6 1.1 0.9 0.3
Income from Investments and Fees 34.5 6.2 79.9 18.4 11.4 (8.1) 42.3 8.7 12.2 9.6 17.6 4.4
Single Premiums 0.0 0.1 0.1 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0
Claims By Death 4.7 5.6 7.9 5.4 1.4 2.0 3.2 2.4 2.0 2.4 3.2 2.7
Claims By Surrender 40.8 37.8 30.4 7.5 8.8 8.7 14.9 2.5 - - - 1.7
Net change in valuation of liability in respect of life policies 34.8 7.8 104.9 16.6 21.1 3.7 61.5 14.4 17.1 15.4 23.3 5.0
Tax - - 0.1 0.0 - - 0.1 - (0.0) 0.0 0.1 -
Profit After Tax 1.3 1.0 1.1 0.2 1.7 1.1 0.9 (0.9) 0.1 0.3 0.5 (0.8)
ICRA LIMITED
Page | 50
Assets
TOTAL ASSETS 423.8 431.4 545.3 563.8 154.7 159.5 225.9 237.6 149.7 164.9 191.4 197.2
Liabilities
Funds for Future Appropriations 0.1 0.1 - - 1.8 2.4 5.4 5.2 1.4 3.4 3.9 4.0
Subordinate debt - - 1.5 1.5 - - - - - - - -
ICRA LIMITED
Page | 51
Growth
NPW Growth 27.3% 6.5% 22.2% 3.7% 25.4% 12.7% 29.3% 36.6% 14.4% 11.9% 3.3% 20.2%
First Year Premium Growth 43.5% -0.7% 14.8% -0.9% 11.5% 5.7% 3.9% 57.3% 2.2% 4.1% -11.2% 56.1%
Single Premium Growth 50.3% -11.7% 34.4% -41.7% 34.0% 2.7% 131.6% 57.5% 80.7% 96.8% -18.1% 76.6%
Profitability
81.3% 75.5% 87.5% 87.0% 81.0% 68.1% 88.7% 94.8% 72.1% 73.2% 81.0% 89.3%
revenues
Income from Investments and Fees / Net Premium Written 47.3% 8.1% 84.3% 109.4% 33.1% -20.7% 84.2% 71.1% 43.4% 30.4% 54.2% 76.1%
PAT/ Total Income 1.2% 1.2% 0.6% 0.7% 3.6% 3.4% 1.0% -4.5% 0.4% 0.7% 1.1% -8.3%
Return on Equity 6.0% 4.7% 4.4% 4.1% 15.3% 8.8% 7.4% -32.0% 1.3% 2.5% 4.5% -30.1%
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ICRA LIMITED
Page | 52

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INDIAN LIFE INSURANCE

Profitability of life insurance players

Karthik Srinivasan Sahil Udani

EXHIBIT 1: Rating spread EXHIBIT 2: ICRA’s rated universe

Company name Rating Instruments

600 546 800

700 100% 1,400 1,267 1,278 100%

600 574 1,200

Individual Group Individual Group

40% 40% 79% 80% 78% 82% 83% 84%

Single Premium Regular Premium Single Premium Regular Premium

Individual Group Individual Group

1,000 11.01 11.50 1,600 16.00

4,000 2,618 3,000

Source: ICRA Research, amounts in Rs. Billion

600.0 40% 800.0 65% 80%

30.0% 20.0% 17.4% 18.2%

70.0 12.5% 13.2% 11.7% 15% 35.0 450%

2,000 147.3% 160% 3,000 88.5% 100%

7,000 40,000 36,295

IL&FS Financial Dewan Housing Reliance Home

80% 35% 29% 30% 32% 34% 80%

40% 40% 44% 44% 40%

18.0 2.7 3.0 25 1.8 1.8

In INR Billions LIC Select Private Players Total

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