Strong May for most private insurance players; inflows to equity MFs still muted

May 2019 was a strong month for most of the private sector players with 27% y-o-y growth in overall APE (26% y-o-y in April, 2019). Excluding ICICI Prudential Life (overall APE up 4% y-o-y), other large players reported 25-55% growth. A low base and focus on ULIPs coupled with moderate appetite for equity investments were the likely reasons. Overall inflows to equity mutual funds were better m-o-m but broadly still muted. Against this backdrop, the sustenance of such high growth is crucial.

Private sector individual APE growth was strong at 27% in May, 2019 Private sector players reported 27% y-o-y growth in individual APE in May, 2019, significantly higher than 12-18% in past three months. Overall industry growth was 13% as LIC reported 3% y-o-y decline.

HDFC Life reported strong increase in individual APE for a second straight month at 59% y-o-y in May, 2019 (31% in April). ICICI Prudential Life reported 1% y-o-y growth in May in individual APE; this compares with 2% in April and 14% in March. SBI Life’s individual APE growth was strong at 37% y-o-y in May, despite a high base of 27% y-o-y growth in May, 2018. Max Life’s growth in individual APE was strong at 23% y-o-y, somewhat lower than 28% growth in April. Birla SL reported 31% y-o-y growth in individual APE, lower than 46% growth in April. Tata AIA was up 74%, though lower than 125% in April.

Net MF equity inflows remain muted

Mutual fund inflows to equities improved marginally, with inflows at Rs 27 bn in May versus Rs 20 bn in April due to higher gross inflows. This compares to Rs 95 bn in March, Rs 44-66 bn in December 2018-February 2019 and Rs 86-107 bn in the preceding six months. Interestingly, SIPs are broadly stable over the past few months at Rs 80-82 bn; this meant that the non-SIP flows reported large net outflow.

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