Insurance stocks today: GIC share jumps 9%, LIC shares rise 3%; why are insurance stocks rising? Should you bet on them?
3 min read 04 May 2023, 10:43 AM ISTSome of the insurance companies have posted decent March quarter earnings which appears to have a positive rub-off on other sectoral peersS
PremiumMany insurance sector stocks traded with healthy gains in morning trade on BSE on May 4, with shares of General Insurance Corporation of India (GIC) surging nearly 9 per cent and those of Life Insurance Corporation of India (LIC) rising nearly 3 per cent.
Shares of The New India Assurance Company jumped nearly 7 per cent while shares of ICICI Prudential Life Insurance Company and SBI Life Insurance Company rose 2 per cent each.
Stocks such as HDFC Life Insurance Company, Star Health and Allied Insurance Company and ICICI Lombard General Insurance Company rose up to a per cent.
Some of the insurance companies have posted decent March quarter earnings which appears to have a positive rub-off on other sectoral peers.
Industry observers point out that healthy quarterly numbers and a positive growth outlook have made some of the insurance stocks attractive bets for the long term.
Healthy Q4 show
HDFC Life posted a standalone PAT of ₹358.66 crore in March 2023 quarter, rising by 13.8 per cent from ₹315.22 crore in the preceding quarter. The company declared a dividend of ₹1.90 per equity share. The insurer closed the fiscal year FY23 on a strong note delivering growth across all key metrics.
Star Health and Allied Insurance Company's profit after tax (PAT) stood at ₹619 crore for the financial year ended March 31, 2023, against a loss of ₹1,041 crore in FY22. During the quarter ending March 2023, the company's net profit reached ₹101.79 crore against a net loss of ₹82.04 crore during Q4FY22.
The total annualised premium equivalent (APE) of ICICI Prudential Life Insurance Company rose nearly 26.5 per cent year-on-year in Q4 and 11.7 per cent YoY in FY23.
SBI Life Insurance Company records double-digit growth in both PAT and net premium incomes in the fourth quarter of FY23. SBI posted a 15.57 per cent growth in PAT to ₹776.85 crore in Q4FY23, compared to a profit of ₹672.15 crore in the same period a year ago. Net premium income soared by 14.1 per cent to ₹19,896.92 crore versus ₹17,433.77 crore in Q4 of the previous fiscal.
ICICI Lombard posted a net profit of ₹436.96 crore in Q4FY23, rising by 39.82 per cent compared to a profit of ₹312.51 crore in the same quarter a year ago.
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Road ahead
Most insurance firms ended the financial year 2023 on a strong note and their growth prospects look attractive.
As per a report by CareEdge (CARE Ratings), the Indian non-life insurance market would grow by approximately 13-15 per cent over the medium term.
"The health insurance segment is on track to breach the ₹1 lakh crore mark, while Motor insurance premiums to cross ₹85,000 crore in FY24 given the fact that they have already crossed ₹90,000 crore and ₹80,000 crore mark respectively during the last year," CareEdge said.
"The growth would be driven by the popularity of health insurance products/schemes, growing demand for motor insurance (third party and owner damage) products, an expected rise in per capita / disposable income levels, a greater volume of transactions under segments such as fire, marine, export credit, customised products, especially in motor and health insurance and gradual introduction of new products."
"Further, improving profitability, and stabilisation of loss ratios which had increased during the pandemic, expenses of management would be controlled given the regulations around the same, enabling regulatory environment, strengthening of distribution networks (increase in the number of partners, digital issuance and online channels are expected to witness continued growth) higher investment yields due to a rising interest rate environment and adequate availability of growth capital will support growth," said CareEdge.
The rating agency said the outlook is expected to be stable in the medium term. However, the intensification of competition and an uncertain geopolitical environment and high inflation can negatively impact economic growth and subsequently the non-life insurance sector.
Disclaimer: The views and recommendations given in this article are those of the rating firm. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
