The highly underpenetrated and underserved life insurance sector in India had high hopes from the listing of the (). The industry is back on recovery with some mixed views from the analysts.
New business premiums surged 89 per cent yearly in May 2022 for all life insurers on a lower base. YTD sales are up 72.6 per cent on a YoY basis, with private players’ sales growing by 67.5 per cent YoY.
On a 3-year CAGR basis (total APE), the private industry seems to have performed better with a CAGR of 14.3 per cent against a 2.1 per cent degrowth for LIC, said brokerage firm Nirmal Bang Institutional Equities.
The protection segment for life insurers is expected to continue to pick pace as supply-side issues subside and non-par and annuity segments are likely to witness strong growth.
“We note that up to FY22, the private sector has been gaining market share, likely driven by attractive product offerings, while LIC has mostly focused on selling par products,” it added.
ShareKhan by
said that individual annual premium equivalent (APE) business demonstrated strong growth in May 2022 on a YoY basis, with companies under coverage gaining market shares and policy growth remained healthy.
“We believe that after witnessing muted growth in business premiums in January and February 2022, the life insurance industry is witnessing healthy recovery.”
“ULIPs will remain affected by volatility in capital markets. Further, after witnessing underperformance for the past two years, the insurance sector is poised to return to a healthy growth trajectory,” it added.
On the contrary, Nomura believes that underlying growth trends are now moderating, especially on a trailing three-month basis, over the past few months now.
“Even looking at the historical month-on-month growth trends in May (pre-Covid), the private sector averaged over 30 per cent growth against over 20 per cent monthly growth in May 2022, again pointing towards moderation,” the brokerage adds.
Factors such as a large protection gap and expanding per capita income are key long-term growth drivers for the sector. Strong players armed with the right mix of products, services, and distribution are likely to gain from this, the analysts said.
With individual protection turning around, the industry outlook on sales and VNB margins is positive, Nirmal Bang’s report noted. “We are witnessing greater thrust on non-par savings products”, added with a positive stance on life insurance.
remains the top pick of Nirmal Bang, thanks to its rising market share. It also has a buy rating for , ICICI Prudential Life Insurance and .
HDFC Life Insurance, Max Financial Services, and ICICI Prudential Life remain the preferred picks from the life insurance sector by BNP Paribas Sharekhan.
Life’s growth trends seem most resilient, whereas Max Life bounced back after a weak second half of the fiscal, said Nomura. It has a buy rating on both the counters, along with Life Insurance.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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