Why ICICI Pru Life, SBI Life Insurance, HDFC Life shares surged today

Shares of Life Insurance companies are trading with gains in Tuesday's session with ICICI Prudential Life leading the pack as it surged over 10% intraday after the company reported better-than-expected March quarter earnings on Monday. Other insurance company stocks like HDFC Life Insurance and SBI Life Insurance also jumped in trade.

At around 11:05 am, ICICI Prudential Life Insurance shares was up 10.8% at ₹501 per share on the BSE. HDFC Life Insurance shares were trading 3% higher at ₹686 per share on the BSE while SBI Life Insurance also jumped as the stock was up 2% at ₹924 per share in Tuesday's early deals.

Brokerages noted that the company reported a strong topline performance with a better growth outlook supported by new partnerships and products. Motilal Oswal in the result note stated that ICICI Prudential posted 23% YoY growth in new business premium, led by a steady traction in both regular and single premium business. ''VNB (value of new busines) margin moderated to 23.6% (25.1% in FY21), led by moderation in protection mix. We estimate the company to deliver ~25% CAGR in VNB over FY21-23E, led by robust premium growth, buoyed by new partnerships and product segments,'' Motilal Oswal said in the result note.

Jefferies in an analyst note said that ICICI Prulife has expanded distribution channels by adding new bancassurance partners which has led to a 40% rise in addressable client base. The brokerage expects the company's premium growth to bounce back from FY22 onwards and pay-offs from new distribution tie-ups to begin.

In another note for India's life insurance sector, analysts at Jefferies stated that in March 21, the sector retail APE (Annual premium equivalent) jumped 121% YoY led by LIC's 196% rise & private players' 90% rise. This comes on low base due to Covid impact. The brokerage believes that the surge in growth is stronger for SBI Life & ICICI Pru Life (ULIP heavy) & bit moderate for HDFC Life & Max Life.

Source: Live Mint