Life insurance stocks fall; HDFC Life, SBI Life, Max Financial dip up to 7%

According to the latest data, HDFC Life distributes 65 per cent of its insurance policies through banking channels, followed by SBI Life (60 per cent), Max Life (52 per cent), and ICICI Prudential

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Shares of life insurance companies traded weak on Thursday, falling up to 7 per cent on reports that insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) may consider capping parent bank's share to insurers' total bancassurance business to up to 50 per cent only, CNBC-TV18 said, citing sources.  Meanwhile, at the recently held State Bank of India (SBI) Economist Conclave, finance minister Nirmala Sitharaman highlighted that though bancassurance has improved insurance penetration, it has also led to mis-selling. Debasish Panda, chairman of the IRDAI, also underscored growing concerns regarding banks mis-selling insurance products. CLICK HERE FOR FULL REPORT

  According to the latest data, HDFC Life distributes 65 per cent of its insurance policies through banking channels, followed by SBI Life (60 per cent), Max Life (52 per cent), ICICI Prudential (29 per cent), and LIC (4 per cent), the TV channel reported.

 

Among the individual stocks, shares of SBI Life Insurance (Rs 1,407.50) and Max Financial Services (Rs 1,100) were down 7 per cent, while HDFC Life Insurance was down 5.5 per cent at Rs 643.50 on the BSE in Thursday’s intra-day trade. In comparison, the BSE Sensex was down 1.53 per cent at 79,003 at 02:14 pm. 

 52-week high levels 

SBI Life Insurance has slipped 27 per cent from its 52-week high level of Rs 1,935 touched on September 3, 2024 as the insurer reported a lower single-digit revenue growth during the September 2024 quarter (Q2FY25). Max Financial and HDFC Life have lost 16 per cent and 15 per cent from their respective 52-week highs, data shows.

 

That said, October 2024, analysts at Elara Capital said in life insurance quarterly review, saw stronger-than-expected annual premium equivalent (APE) growth for HDFC Life, ICICI Prudential, and Max Life. As a result, sector growth for H2FY25, projected at 14 per cent YoY, is expected to be revised up if growth momentum sustains. 

 

"October 2024 APE growth was ahead of expectations despite ongoing renegotiation with distributors on commissions for non-linked savings products, the brokerage firm said. Analysts expect overall VNB growth of 8 per cent YoY in H2FY25E as VNB margin is likely to be lower on account of higher mix of ULIP. Lower VNB margin in FY25 is likely to impact ROEV negatively across companies. Additionally, given higher share of ULIP, which usually have lower persistency, there could be negative operating variances in the embedded value (EV)," the analysts said.