Life insurers seen posting mixed Q1, health players likely to outperform
Mumbai: The insurance sector is expected to post a mixed set of earnings for the June quarter, with life insurers likely to report slower premium
Mumbai: The insurance sector is expected to post a mixed set of earnings for the June quarter, with life insurers likely to report slower premium growth amid macroeconomic uncertainty, while health insurers may remain the standout performers, aided by sustained demand and improved affordability. General insurers, meanwhile, are expected to continue grappling with intense pricing pressure in motor and commercial lines.For life insurers, annualised premium equivalent (APE) growth is expected to soften after a strong April, as geopolitical tensions and a cautious macroeconomic environment weighed on customer demand during May. Even so, profitability is expected to remain strong with value of new business (VNB) margins stable, supported by product mix and growth in protection products, according to Emkay Research.Among private life insurers, Axis Max Life is expected to remain the fastest-growing player, with retail APE projected to rise 17% year-on-year in the June quarter, followed by SBI Life at around 15%.
ICICI Prudential Life is likely to report a more modest 9% increase, while HDFC Life's retail APE growth is seen at 7.5%, reflecting slower momentum in the HDFC Bank distribution channel. LIC is expected to post about 9% growth during the quarter.Emkay expects VNB margins to improve for Max Life and LIC, remain broadly flat for HDFC Life and ICICI Prudential, and decline slightly for SBI Life because of a higher contribution from group business."While the removal of GST-related input tax credits may put pressure on insurers' profitability, the growing focus on higher-margin protection and non-participating products is expected to offset this impact partly," Care Edge Ratings said."Additionally, increasing participation by private insurers in the group single business segment is likely to intensify competition," the report said.
"The pace of growth will also be influenced by evolving interest rate expectations, financial market volatility stemming from global geopolitical developments, and the performance of the group business."The general insurance segment is likely to remain under pressure as the absence of a motor third-party premium hike, aggressive competition in the motor own-damage business and pricing pressure in commercial lines weigh on premium growth and underwriting profitability.ICICI Lombard is expected to report around 8% gross written premium growth, helped by motor and health insurance, while maintaining a modest improvement in claims and combined ratios due to its profitability focus. Go Digit, however, could see flat premium growth along with higher claims ratios amid continued pricing pressure.Health insurers are expected to outperform the broader sector.
The BriefWire