The life insurance industry in India has reported disappointing numbers for February, with Life Insurance Corp. of India (LIC) being the biggest contributor to the decline. LIC’s annual premium equivalent (APE) fell by 23% year-on-year, leading to a 6% drop in the overall industry’s APE. The number of policies sold in the individual segment decreased by 32% year-on-year, but the average ticket size increased by 24%, mitigating the impact on overall value.
The industry’s decline is attributed to the meltdown in the equity market, which has likely affected sales of unit-linked insurance plans (ULIPs). Large insurance companies such as HDFC Life Insurance and ICICI Prudential Life Insurance have reported varying results, with HDFC Life being the only one to report growth in February. HDFC Life’s outperformance is attributed to its relatively better product mix, with a lower dependence on ULIPs.
Brokerages such as Kotak Institutional Equities have cut their estimates for LIC, predicting a 6% decline in APE for FY26. However, they still maintain a buy rating on the stock with a target price of ₹1,175, indicating over 50% upside from the current market price. The stocks of most life insurance companies, including HDFC, ICICI Prudential, and SBI Life, have been trading sideways for the past year, with reasonable valuations. Investors are hoping for double-digit growth in APE for the next couple of years, which may be triggered by a revival in the stock market and increased demand for ULIPs.