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The private life insurers reported an aggregated 34.22 per cent decline in premiums in March from a year before. In total, their new premiums rose 11.64 per cent year-on-year (YoY) to Rs 80,919.40 crore for the year ended 31 March.
In a note on April 11, HDFC Securities said it expects ICICI Prudential to report a total annualised premium equivalent (APE) decline of 14.3 per cent YoY in the fourth quarter as the company reported a 9.9 per cent decline in January-February sales.
After these estimates were published, ICICI Prudential Life reported 32.26 per cent decline in first year premiums in March 2020 over March 2019, data on April 24 showed.
“We expect value of new business (VNB) margins to moderate to 20.6 per cent largely due to lower than expected scale,” HDFC Securities said in the note.
The key monitorables at the earnings announcement would be lockdown performance and FY21E sales guidance, protection share and persistency trend, margin levers and guidance, the brokerage said.
In a note on April 24, Kotak Insitutional Equities pointed that weakness in capital markets and lower high ticket ULIPs have led to a sharp decline in APE (on a low base).
Overall APE declined 47 per cent YoY in March 2020 translating to 19.5 per cent YoY decline in overall APE in 4QFY20 and 3 per cent decline for the year, the brokerage said.
The share of ULIPs had dropped to less than 70 per cent in 9MFY20 from more than 80 per cent in 9MFY19 and will likely decline further, the brokerage warned.
“The share of annuity and protection mix in overall APE will increase and aid VNB. In our view, higher tax rate post removal of DDT will also impact EV and VNB in FY2021E, in a significant manner,” Kotak analysts said in the note.
Kotak expects 270 basis points quarter-on-quarter (QoQ) decline in VNB margins to 18.3 per cent in the March quarter.
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