Business Standard

Life insurers extend rally on healthy growth in Q1; ICICI Pru at 52-wk high

As India marches forward to join the ranks of developed nations, the demand for long-term savings, protection and annuity products will only accelerate, believe life insurers.

Life insurance, insurance

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Deepak Korgaonkar Mumbai

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Shares of life insurers continued their northward movement, gaining up to 4 per cent on the BSE in Wednesday’s intra-day trade in an otherwise weak market on the back of a jump in NBP in Q1.

Life insurers reported an 22.9 per cent increase, on a year-on-year basis, in the new business premium (NBP) at Rs 89,726.7 crore for the June quarter (Q1FY25) when compared with Rs 73,004.87 crore in Q1FY24.

Low base effect, increased insurance coverage and increase in single premium drove the growth in life insurance premium in the first quarter of FY25, the Business Standard reported. CLICK HERE FOR FULL REPORT

Life Insurance Corporation of India (LIC), ICICI Prudential Life Insurance Company (ICICI Pru), Max Financial Services, SBI Life Insurance Company and HDFC Life Insurance Company were up 2 per cent to 4 per cent on the BSE in today’s intra-day trade. In the past six trading days, these stocks have rallied between 5 per cent and 9 per cent. In comparison, the BSE Sensex was down 0.87 per cent at 76,650 at 02:14 pm.

Among individual stocks, ICICI Pru hit a 52-week high of Rs 673.60, rallied 4 per cent in intra-day trades. The stock had hit a record high of Rs 724.50 on September 8, 2021.

Shares of LIC were up 2 per cent at Rs 1,055, and were seen inching towards its 52-week high of Rs 1,175 touched on February 9, 2024. SBI Life up 2 per cent at Rs 1,562.45, trading close to its record high of Rs 1,571.55 hit on February 29.

The life Insurance industry sustained its growth trajectory with an impressive 18.9 per cent YoY retail annual premium equivalent (APE) growth in Jun-24, with the private sector exhibiting 22.1 per cent YoY growth and LIC logging a remarkable 12.7 per cent growth.

Analysts at Emkay Global Financial Services remain optimistic about the medium-term outlook for the life insurance sector, and expect Retail APE to grow ~12-13 per cent during FY25E with the private sector reporting ~14-15 per cent growth and LIC growing in the 6-8 per cent range.

Private listed players are expected to surpass industry growth, benefitting from the strong brand presence, extensive distribution network, product innovation, and cost advantage.

Of recent, regulatory uncertainties have led to substantial underperformance of life insurance stocks, which have hence entered an attractive valuation zone. Further, emerging clarity on the sector outlook and the franchise strength of listed players, combined with attractive valuations, provide a favorable risk-reward for life insurance stocks, thus urging a positive stance on the overall sector, the brokerage firm said.

Meanwhile, life insurance products in India are continually evolving, moving beyond a simple savings tool to providing longer term propositions and an enhanced safety net.

As per a Swiss Re study, total insurance premiums in India is expected to grow by 7.1 per cent in real terms over the next five years, well above the global (2.4 per cent), emerging (5.1 per cent) and advanced (1.7 per cent) market averages. A powerful combination of economic growth, a burgeoning middle class, innovative products and supportive regulations is fuelling the Indian insurance market's expansion, HDFC Life said in its FY24 annual report.

As per estimates put out in December 2023 by the National Insurance Academy, sponsored by the Government of India, there exists a striking 93 per cent pension gap in the country. It goes on to state that only 24 per cent of individuals rely on employer-provided retirement plans.

The regulator has articulated its vision of ‘Insurance for All’ by 2047 and rolled out several conducive regulations which will promote innovation, improve ease of doing business, make insurance simple and easily accessible leading to deepening penetration in the country, ICICI Pru said in its FY24 annual report.

As India marches forward to join the ranks of developed nations, the demand for long-term savings, protection and annuity products will only accelerate, the company said.


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First Published: Jul 10 2024 | 2:54 PM IST

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