Annualised premium equivalent (APE)

What is annualised premium equivalent?

Annualised premium equivalent (APE) is the standard measure of new business volume for life insurers. It adds the full annual premium of every regular premium policy sold in a period to 10% of the single premiums sold in the same period. The 10% weight treats a single premium as roughly equal to ten years of regular premium, so that a large one-off deposit does not swamp the figure.

Indian insurance law has no definition of APE. Listed life insurers use it as a market convention in results and investor presentations, and it is the denominator of the VNB margin.

How APE is calculated

APE = annualised first year premium on regular and limited premium policies + 10% × single premium

"Annualised" means the premium is counted as if paid for a full year at the point of sale, whatever the payment mode. A ₹4,000 a month policy counts as ₹48,000 of APE in the month it is issued, even though only one instalment has been collected.

SBI Life defines APE in its results as the sum of annualised first year premiums on regular premium policies and 10% of single premiums, written in the period from both retail and group customers. Some insurers report individual APE (retail only) alongside total APE.

A close cousin is individual rated premium (IRP), published by the Life Insurance Council. It weights single premiums at 10% but uses the first year premium recorded rather than an annualised figure, and covers only individual business. Private market share rankings are commonly quoted on IRP.

Worked example (illustrative numbers)

In a quarter, a life insurer sells:

Measured on new business premium, single premium is 62% of sales. Measured on APE it is 14%. The APE view better reflects how much long-term business the channels wrote.

How APE is reported in India

Listed insurers disclose APE growth, product mix and channel mix on an APE basis each quarter. SBI Life, for example, reported APE of ₹185.2 billion for the nine months to December 2025, up 16%, against new business premium of ₹313.3 billion. Its APE product mix was 7% participating, 31% non-participating and 62% ULIP, and its APE channel mix was 62% bancassurance, 27% agency and 11% other channels.

IRDAI's statistics and the Life Insurance Council's monthly data are on a premium basis (first year, single and renewal premium), so APE figures come mainly from insurer filings to stock exchanges.

What APE means for distribution

• It is the fairest common measure of sales effort. APE lets a distribution head compare an agent who sold ten ₹50,000 regular premium policies with a relationship manager who placed one ₹50 lakh single premium. On premium, the second looks ten times bigger. On APE they are equal.
• Targets and incentives often run on APE. Many insurers set channel and partner targets, contests and sales manager scorecards on APE or weighted premium, which steers effort toward regular premium business.
• APE is gross of persistency. Annualising assumes the customer pays for the whole year. If monthly payers stop after a few instalments, APE overstates what was really sold. Pair APE with 13th month persistency of the same cohort.
• APE is not profit. A ULIP-heavy APE mix and a protection-heavy one can have very different margins. VNB and VNB margin show what the APE is worth.
• Read growth with mix. Strong APE growth from one channel or one product can hide weakness elsewhere. Insurers' quarterly presentations break APE down by channel and product, which makes peer comparison possible.