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Life and health insurance growth lifts sector outlook: Kotak
Private insurers lagged the market but business metrics tell a different story: APE jumped 8-36% and margins widened. Kotak expects the sector to refocus on growth.
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India’s private insurance stocks have lagged the broader market by 7-15 percent over the last three months, dragged by regulatory uncertainty and the impact of GST changes. But the underlying business data points in the opposite direction, according to a Kotak Institutional Equities report.
Life insurers posted annualised premium equivalent growth of 8-36 percent in the June quarter. Margins expanded 200-300 basis points for several players. Kotak credited protection products such as term insurance, along with traditional savings and annuity products, for the improvement.
Health insurers fared similarly. New business rose 37-41 percent in the first quarter. Claims performance strengthened: the combined ratio, which tracks how much premium income is consumed by claims and expenses, improved 160 basis points for Star Health and 300 basis points for Niva Bupa.