Whalesbook
Strong FY26 Premium Growth
Life insurers closed fiscal year 2026 with significant momentum, reporting a 15.7% year-on-year increase in new business premiums (NBP). This is a substantial acceleration from the 5.1% growth seen in FY25. March 2026 alone saw a 23.5% surge in NBP.
Industry Annual Premium Equivalent (APE) grew 14.5% year-on-year for FY26. Private sector insurers performed better, with APE rising 14.9%, slightly ahead of Life Insurance Corporation (LIC), which saw 13.9% growth. This indicates broad-based expansion within the private segment.
Mixed Company Performance in March
Company data for March 2026 showed mixed results. SBI Life Insurance Company Limited recorded 8.5% year-on-year growth, followed by Axis Max Life Insurance at 6.9%. In contrast, ICICI Prudential Life Insurance Company Limited (IPRU Life) and HDFC Life Insurance Company Limited experienced declines of 0.9% and 0.3% respectively. LIC posted a 9.9% increase.
For the full FY26, the industry grew by 10.1%. Axis Max Life led private players with an 18.7% year-on-year increase, and SBI Life followed with 13.1%. HDFC Life achieved 7.7% individual APE growth, while IPRU Life saw a 1.2% decrease. In March, SBI Life maintained its lead in individual APE market share at 16.5%, with HDFC Life, Axis Max Life, and IPRU Life holding 10.9%, 7.5%, and 6.2% respectively.
FY27 Outlook and Valuations
Despite March figures, the fourth quarter saw slower momentum than the third, influenced by geopolitical instability and normalized GST 2.0 impacts. Looking ahead to FY27, return-guarantee products are poised to become attractive, offering a spread of over 100 basis points between government securities yields and fresh deposit rates. Sector valuations, ranging from 0.6 to 2.1 times implied FY27 price to enterprise value (P/EV), appear historically attractive.
Regulatory Risks and Opportunities
Potential regulatory risks exist, particularly for SBI Life, should mandatory open architecture for banks be introduced. While recent Reserve Bank of India (RBI) draft norms do not mandate this, requiring choice of provider only in bundled cases, SBI Life's closed bancassurance model, supported by its parent-subsidiary structure and low cost base, could be impacted. SBI Life has maintained mid-teen growth with healthy 26-28% VNB margins and a 19% core operating return on embedded value (RoEV).
ICICI Prudential Life recovered retail APE in the latter half of FY26, posting 10.9% VNB growth and a 24.7% VNB margin, aided by its diversified channel mix. HDFC Life's results showed an 8% VNB decline in Q4, with management forecasting continued weak demand in Q1FY27. Expansion into smaller towns has driven 75% of new clients towards Unit-Linked Insurance Plans (ULIPs).
An improved product mix, especially greater focus on retail protection and annuities, could lead to valuation upgrades across the sector. Companies with efficient cost structures and strong distribution networks are well-positioned for evolving market dynamics.