india life insurance

8/14/2019 India Life Insurance

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Asia Pacific Equity Research02 July 2008

India Life InsuranceInsurance Tracker - May 2008

India

Insurance - Life

Sachin ShethAC

(91-22) 6639-3004

[email protected]

J.P. Morgan India Private Limited

Nitin Kumar(91-22) 6639-3003

[email protected]

J.P. Morgan India Private Limited

Sunil Garg(852) 2800-8518

[email protected]

J.P. Morgan Securities (Asia Pacific) Limited

www.morganmarkets.com

See page 15 for analyst certification and important disclosures, including non-US analyst disclosures.JPMorgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm

may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in

making their investment decision.

Private growth continues, LIC loses share: New businesspremiums (APE) for the industry rose 20% yoy in May08 boosted

by 72% yoy growth for private vs. 19% yoy decline for LIC.

LICs market share shrank to 38% in May-08. Although LICsAPE declined 19% yoy in May, individual APE declined even

more at 22% only to be partly compensated by higher group APE,

up 77%.

SBI, Birla and Reliance continue to garner maximum gainswithin the private space. ICICI maintains share.

LIC continued to lag on volume growth with 21% fewer policies

sold in May08; However, premium per policy increased

marginally by 3% leading to 19% decline in APE growth.

News: HSBC makes an entry in the life business in a JV with

Canara and Oriental Bank.

Figure 1: FY09 growth in new bu siness premium (APE) May 2008 (growth numbers are for the month of May)

20%

-19%

209%176%

145% 132% 115%91% 80% 75% 70%

33%72%

-100%

0%

100%

200%

300%

400%

500%

TotalIndustry

LIC

TotalPrivate

BhartiAxaLife

BirlaSunlife

RelianceLife

SBILife

MaxNewYork

KotakMahindraOldMutual

SaharaLife

TataAIG

ICICIPrudential

MetLife

INGVysya

YoY Growth in NBP(APE) FY09 Ytd Growth in NBP(APE)

844%936%

Source: IRDA, JPMorgan


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Sachin Sheth(91-22) [email protected]

Figure 2: Industry : Growth in New Business Premium (Unweighted)

-100%-50%

0%50%

100%150%200%250%300%

350%400%

Apr

MayJunJul

Aug

SepOct

Nov

DecJan

Feb

Mar

F2007 F2008 F2009

May'08 : 23%

Source: IRDA, JPMorgan.

Figure 3: LIC : Growth in New Busi ness Premium (Unweighted)

-100%

0%

100%

200%

300%

400%

500%

Apr

MayJun

Jul

Aug

SepOct

Nov

Dec

Jan

Feb

Mar

F2007 F2008 F2009

May'08 : 0%


Figure 4: Private Players : Growth in New Business Premium(Unweighted)

0%

20%

40%60%

80%

100%

120%

140%

160%

180%

Apr

May

JunJul

Aug

SepOct

Nov

DecJan

Feb

Mar

F2007 F2008 F2009

May'08 : 69%


Figure 5: ICICI Prudential : Growth in New Business Premium(Unweighted)

-50%

0%

50%

100%

150%

200%

250%

Apr

May

Jun

Ju

l

Aug

Sep

Oc

t

Nov

Dec

Jan

Fe

b

Mar

F2007 F2008 F2009

May'08 : 68%



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Figure 6: Bajaj Allianz : Growth in New Business Premium(Unweighted)

-50%

0%

50%

100%

150%

200%

250%

Apr

May

Jun

Ju

l

Aug

Sep

Oc

t

Nov

Dec

Jan

Fe

b

Mar

F2007 F2008 F2009

May'08 : 5%


Figure 7: SBI Life : Growth in New Business Premium (Unweighted)

0%

100%

200%

300%

400%

500%

600%

700%

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

F2007 F2008 F2009

May'08 : 109%


Figure 8: HDFC SL : Growth in New Business Premium (Unweighted)

0%

20%

40%

60%

80%

100%

120%

140%

160%

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

F2007 F2008 F2009

May'08 : 10%


Figure 9: BSLI : Growth in New Busin ess Premium (Unweighted)

-50%

0%

50%

100%

150%

200%

250%

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

F2007 F2008 F2009

May'08 : 200%



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Figure 10: Trend in New Busi ness Premium (unweighted)Rs billion

0

20

40

60

80

100

120

140

160

Apr-04

Jul-04

Oct-04

Jan-05

Apr-05

Jul-05

Oct-05

Jan-06

Apr-06

Jul-06

Oct-06

Jan-07

Apr-07

Jul-07

Oct-07

Jan-08

Apr-08

NBP - LIC NBP - Private


*unweighted as data for single premium is not available prior to Feb06

Table 3: Life Insurance - Market Share (APE) for May 2008

Life Insurer Market Share (APE basis) Change yoy Share of Private Change yoy

LIC 38.4% -18.37%Priv ate 61.6% 18.37%

ICICI Prudential 16.3% 5.09% 26.5% 0.5%SBI Life 8.8% 4.47% 14.3% 4.3%Bajaj Allianz 7.8% -1.08% 12.7% -7.9%Max New York 4.8% 2.32% 7.8% 2.0%Birla Sunlife 4.7% 2.86% 7.6% 3.4%HDFC Standard 4.3% -0.58% 7.0% -4.3%Reliance Life 4.3% 2.41% 6.9% 2.6%Kotak Mahindra Old Mutual 2.4% 1.04% 3.8% 0.8%Tata AIG 2.3% 0.77% 3.8% 0.2%Aviva 1.8% 0.05% 2.9% -1.1%Met Life 1.5% 0.44% 2.5% 0.0%ING Vysya 1.4% 0.13% 2.3% -0.7%Bharti Axa Life 0.4% 0.36% 0.7% 0.5%Shriram Life 0.3% -0.14% 0.5% -0.5%Sahara Life 0.2% 0.07% 0.3% 0.0%IDBI Fortis Life 0.1% 0.13% 0.2% 0.2%Future Generali 0.0% 0.03% 0.0% 0.0%



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Table 4: Life Insurance - Market Share (APE) for F2009 YtdLife Insurer Market Share (APE basis) Change yoy Share of Private Change yoy

LIC 38.2% -22.1%Private 61.8% 22.1%

ICICI Prudential 15.4% 4.4% 24.9% -2.7%Bajaj Allianz 8.1% 0.5% 13.1% -5.9%SBI Life 7.8% 4.1% 12.6% 3.3%Max New York 4.9% 2.2% 7.9% 1.3%Birla Sunlife 4.6% 3.0% 7.4% 3.3%Reliance Life 4.5% 2.8% 7.3% 3.1%HDFC Standard 4.5% 0.3% 7.3% -3.2%Tata AIG 3.1% 1.3% 5.0% 0.6%lotal Mahindra Old Mutual 2.3% 1.1% 3.8% 0.6%Met Life 2.2% 1.2% 3.5% 1.1%Aviva 1.9% 0.1% 3.0% -1.4%ING Vysya 1.4% 0.2% 2.2% -0.7%

Shriram Life 0.5% 0.1% 0.7% -0.1%Bharti Axa Life 0.4% 0.4% 0.7% 0.6%Sahara Life 0.2% 0.1% 0.3% 0.0%IDBI Fortis Life** 0.1% 0.1% 0.2% 0.2%Future Generali 0.0% 0.0% 0.0% 0.0%

Figure 11: Market share trends (APE basis) - LIC vs. Private

10%

20%

30%

40%

50%60%

70%

80%

90%

Feb-06

Apr-06

Jun-06

Aug-06

Oct-06

Dec-06

Feb-07

Apr-07

Jun-07

Aug-07

Oct-07

Dec-07

Feb-08

Apr-08

LIC Private



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Table 5: Life Insurance: Average premium per policy, LIC vs. Private, May 2008

No. of policies sold ('000)

May 08

No. of policies sold

('000)F2009 Ytd

Premium per policy (Rs)

May 08

Premium per policy (Rs)

F2009 Ytd

May 08 APE

(Rs mn)

LIC 1,662 2,739 8,083 7760 13,433YoY -21% 3% -19%LIC Share 63% 62% 38%

Private 965 1,692 22,321 20357 21,542YoY 43% 20% 72%Private Share 37% 38% 62%


Table 6: Total Individu al APE, Monthly and F2009 Ytd growth (sorted on Monthly Growth)

Life insu rer May-08 F2009 Ytd

Grand Total 14% 8%LIC -22% -31%Total Private 64% 71%

Bharti Axa Life 842% 932%Birla Sunlife 254% 254%Reliance Life 182% 206%Max New York 130% 101%Kotak Mahindra Old Mutual 121% 111%Sahara Life 91% 107%SBI Life 85% 94%Tata AIG 84% 83%Met Life 70% 149%ICICI Prudential 60% 54%ING Vysya 35% 35%Aviva 26% 19%

HDFC Standard 16% 33%Bajaj Allianz 2% 18%Shriram Life -16% 51%


Table 7: Total Group APE, Monthly and F2009 Ytd growth (sorted on Monthl y Growth)


Grand Total 127% 78%LIC 77% 21%Total Private 154% 108%

SBI Life 344% 332%

Bajaj Allianz 325% 255%Max New York 222% 502%ICICI Prudential 178% 73%Kotak Mahindra Old Mutual 17% 36%Met Life 17% 25%Tata AIG 13% 295%Reliance Life -23% 66%HDFC Standard -65% -65%ING Vysya -67% -34%Aviva -78% -8%Birla Sunlife -84% -37%



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Table 8: Total Indivi dual Premium as a pr oportion of Total APE, Monthly and F2009 Ytd (sort ed onmonthly basis )


Grand Total 89.2% 91.2%LIC 92.4% 94.5%Total Private 87.2% 89.1%Shriram Life 100.0% 100.0%IDBI Fortis Life** 100.0% 100.0%Sahara Life 100.0% 100.0%Bharti Axa Life 99.8% 99.6%Met Life 99.8% 99.8%ING Vysya 99.5% 99.3%Aviva 99.5% 96.3%Birla Sunlife 99.3% 97.6%Reliance Life 99.2% 98.0%Max New York 96.9% 95.2%

Kotak Mahindra Old Mutual 96.7% 95.0%Tata AIG 95.8% 87.4%HDFC Standard 95.8% 96.6%Bajaj Allianz 95.7% 97.2%ICICI Prudential 80.1% 82.1%Future Generali * 61.4% 40.8%SBI Life 57.8% 67.3%


Table 9: Monthly Contribution to Full Year APE, F2008

Total LIC Private

April 3.6% 4.9% 2.5%May 5.2% 6.1% 4.3%June 6.0% 7.1% 4.9%July 7.2% 9.3% 5.2%August 9.9% 14.1% 6.0%September 6.3% 4.4% 8.0%October 5.6% 4.3% 6.7%November 6.8% 6.0% 7.5%December 9.4% 7.7% 11.0%January 10.8% 11.0% 10.6%February 9.7% 7.9% 11.4%March 19.6% 17.2% 21.9%Total 100% 100% 100%



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Table 10: Market Share, F2008Life Insurer Market Share (APE basis) YoY growth in APE Share of Private

Total 100% 31%LIC 48.1% 0%Private 51.9% 84%

ICICI Prudential 13.7% 70% 26.3%Bajaj Allianz 10.3% 82% 19.9%SBI Life 6.2% 93% 11.9%HDFC Standard 4.1% 75% 7.9%Reliance Life 3.4% 168% 6.6%Birla Sunlife 3.4% 130% 6.6%Max New York 2.4% 74% 4.6%Kotak Mahindra Old Mutual 1.9% 88% 3.6%Aviva 1.8% 50% 3.5%Tata AIG 1.5% 51% 3.0%Met Life 1.4% 133% 2.6%

ING Vysya 1.2% 50% 2.3%Shriram Life 0.3% 49% 0.5%Bharti Axa Life 0.2% 1270% 0.4%Sahara Life 0.1% 234% 0.3%IDBI Fortis Life** 0.0% NM 0.0%Future Generali * 0.0% NM 0.0%



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Sector News

HSBC launches insurance JV with CanBank, Oriental Bank (June 17ET) TopHSBC sees great potential for its insurance products in the fast-growing economies

of China and India as part of a global push to boost its insurance business. Europe's

biggest bank on Monday launched its life insurance joint venture in India, a market

where it will face stiff competition from state-run Life Insurance Corp and a host of

ventures of the world's top insurance companies including AIG, Allianz and Aviva.

Thomas Cook ties up with Bajaj Allianz (June 13 ET) TopIn order to attract more footfalls in its offices across the country, travel solutions

provider Thomas Cook (India) on Thursday entered into an corporate agency

agreement with Bajaj Allianz Life Insurance (BALI). Thomas Cook (India) has

already tie-ups with Tata AIG for selling general insurance products and with ICICI

Bank for credit cards.

UCO Bank set to form Non-life JV with Liberty (June 9 ET) TopUCO Bank has decided to enter into a joint venture agreement with the US-based

Liberty to foray into non-life insurance business during the current financial year.

After deciding to enter the non-life insurance business, the bank was in talks with

several foreign players like the Liberty of US, Engine of Italy and a few other

Japanese firms for roping in a foreign partner as per IRDA regulations. While UCO

would have a minimum stake of 30 % in the JV, there would be another nationalized

bank as a partner in the joint venture. The foreign company would hold 26 % as per

regulatory norms.


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Appendix I:Figure 15: 10 year bond yields

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

Jan-0

3

Apr-

03

Ju

l-03

Oc

t-03

Jan-0

4

Apr-

04

Ju

l-04

Oc

t-04

Jan-0

5

Apr-

05

Ju

l-05

Oc

t-05

Jan-0

6

Apr-

06

Ju

l-06

Oc

t-06

Jan-0

7

Apr-

07

Ju

l-07

Oc

t-07

Jan-0

8

Apr-

08

Source: Bloomberg


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Price Performance Charts (From Jan 07)

Figure 16: HDFC

1000

1300

1600

1900

2200

2500

2800

3100

Ja

n-0

7

Ma

r-07

May-0

7

Ju

l-07

Se

p-0

7

Nov-0

7

Ja

n-0

8

Ma

r-08

May-0

8

Source: Bloomberg

Figure 17: SBI

850

1050

1250

1450

1650

1850

2050

2250

2450

Ja

n-0

7

Mar-

07

Ma

y-0

7

Ju

l-07

Se

p-0

7

No

v-0

7

Ja

n-0

8

Mar-

08

Ma

y-0

8

Source: Bloomberg

Figure 18: ICICI Bank

500

600

700

800

900

1000

11001200

1300

1400

1500

Jan-0

7

Mar-

07

May-0

7

Ju

l-07

Sep-0

7

Nov-0

7

Jan-0

8

Mar-

08

May-0

8

Source: Bloomberg

Figure 19: Bajaj Auto / Bajaj Finserv

500

1000

1500

2000

2500

3000

Jan-0

7

Mar-

07

May-0

7

Ju

l-07

Sep-0

7

Nov-0

7

Jan-0

8

Mar-

08

May-0

8

Bajaj Finserv, listed on 26th May'08

Source: Bloomberg


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Price Performance Charts (From Jan 07)

Figure 20: ABNL

900

1100

1300

1500

1700

1900

2100

2300

2500

Ja

n-07

Ma

r-07

May-07

Jul-07

Se

p-07

Nov-07

Ja

n-08

Ma

r-08

May-08

Source: Bloomberg

Figure 21: Reliance Capital

500

750

1000

1250

1500

1750

2000

2250

2500

2750

3000

Jan-07

Ma

r-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Ma

r-08

May-08

Source: Bloomberg

Figure 22: Kotak Mahindra Bank

350

450

550

650

750

850

950

1050

1150

1250

1350

1450

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Source: Bloomberg

Figure 23: Max India

100

150

200

250

300

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Source: Bloomberg


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Analyst Certification:

The research analyst(s) denoted by an AC on the cover of this report certifies (or, where multiple research analysts are primarilyresponsible for this report, the research analyst denoted by an AC on the cover or within the document individually certifies, with

respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this reportaccurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the researchanalysts compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by theresearch analyst(s) in this report.

Important Disclosures

Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:

JPMorgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the

average total return of the stocks in the analysts (or the analysts teams) coverage universe.] Neutral [Over the next six to twelvemonths, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams)coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return ofthe stocks in the analysts (or the analysts teams) coverage universe.] The analyst or analysts teams coverage universe is the sector

and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe.

Coverage Universe: Sachin Sheth: Allahabad Bank (ALBK.BO), Axis Bank Ltd (AXBK.BO), Bank of Baroda (BOB.BO),

Bank of India (BOI.BO), Canara Bank (CNBK.BO), Centurion Bank of Punjab (CENB.BO), Development Credit Bank

(DCBA.BO), HDFC (Housing Development Finance Corporation) (HDFC.BO), HDFC Bank (HDBK.BO), ICICI Bank

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Bank of India (UNBK.BO), YES Bank Ltd (YESB.BO)

JPMorgan Equity Research Ratings Distribution, as of June 30, 2008

Overweight

(buy)Neutral

(hold)Underweight

(sell)

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