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The Annualised Premium Equivalent (APE) for private life insurance companies grew by 10% in FY25, lower than the five-year average of 13.8%.
By Yash Jain May 20, 2025, 1:05:00 PM IST (Updated)
Private life insurers in India reported their slowest growth in five years during FY25, with New Business Premium (NBP) growing at just 9.8%. In comparison, the five-year average NBP growth stood at 16.6%, with each individual year from FY20 to FY24 witnessing higher growth than FY25.
Year-wise NBP growth
| Year | NBP Growth |
| FY20 | 12% |
| FY21 | 16% |
| FY22 | 23% |
| FY23 | 20% |
| FY24 | 12% |
| Average | 16.60% |
| FY25 | 9.80% |
Private life insurance: FY25 APE growth slower than 5-year average
The Annualised Premium Equivalent (APE) for private life insurance companies grew by 10% in FY25, lower than the five-year average of 13.8%.
Year-wise APE growth
| Year | APE Growth |
| FY20 | 9% |
| FY21 | 8% |
| FY22 | 21% |
| FY23 | 23% |
| FY24 | 8% |
| Average | 13.80% |
| FY25 | 10% |
Retail APE growth drops to 6-year low
The primary drag on APE growth was the retail business—an important indicator of individual policy sales—which slowed sharply to 3.23% in FY25. This is a steep decline from 24% in FY23 and 22% in FY22.
The five-year average for retail APE growth is 13.6%.
Year-wise retail APE growth
| Year | APE growth |
| FY20 | 9% |
| FY21 | 8% |
| FY22 | 21% |
| FY23 | 23% |
| FY24 | 8% |
| Average | 13.80% |
| FY25 | 10% |
Has growth bottomed for the private life insurance industry?
Management outlook for FY26
HDFC Life Insurance: Expects soft APE growth in H1 FY26, with a potential rebound in H2. Margins are expected to remain range-bound.
ICICI Prudential Life Insurance: Aims to outperform the private life insurance industry in terms of growth.
SBI Life Insurance: Projects 12% growth in total APE and 14% growth in individual APE. VNB margin is expected at 27–28%, with 14% growth in Value of New Business (VNB).
Axis Max Life Insurance: Targets 16–17% growth in total APE, a VNB margin of 24–25%, and 22% growth in VNB.
Brokerage sentiment and valuation trends
HDFC Life Insurance: Covered by 36 brokerages—29 'Buy', 7 'Hold'. 12-month consensus target price: ₹814 (10% upside).
ICICI Prudential Life Insurance: Covered by 34 brokerages—22 'Buy', 10 'Hold', 2 'Sell'. Target price: ₹671 (10% upside).
Max Financial Services: Covered by 20 brokerages—19 'Buy', 1 'Hold'. Target price: ₹1,500 (10% upside).
SBI Life Insurance: Covered by 36 brokerages—33 'Buy', 3 'Hold'. Target price: ₹1,956 (10% upside).
Valuation metrics: Price to embedded value (P/EV)
Private life insurance companies have witnessed a significant derating in valuations between FY20 and FY24.
But have valuations now bottomed out?
| Company | FY21 P/EV (Peak) | FY27E P/EV |
| HDFC Life | 4.8x | 2.2x |
| ICICI Prudential | 2.7x | 1.4x |
| Max Financial | 3.3x | 2.0x |
| SBI Life | 2.5x | 1.8x |
With valuations potentially bottoming out and both management and brokerages turning positive, could FY26 finally be the turnaround year for the private life insurance sector?
(Edited by : Anshul)
First Published:
May 20, 2025 12:10 PM
IST
