Private life insurers sulk despite higher March premiums — ICICI Prudential over 3% down

Private life insurance companies in March witnessed a high growth in their new business premiums on back of tax break expiry, but stocks slipped on fears that the best is behind. Even ICICI Prudential Life Insurance dropped despite a strong quarterly earnings. While it fell intraday by 3.7 percent, HDFC Life, Maxi Financial Services and SBI Life dropped by 2.66 percent, 2.07 percent and 1.9 percent respectively on the Bombay Stock Exchange (BSE).

At the time of writing this report, ICICI Prudential was trading lower at 2.20 percent. HDFC Life was trading lower at 2.6 percent, while Maxi Financial was trading lower at 2.04 percent. The benchmark BSE was 0.12 percent down at that time.

According to brokerage house HSBC, these private insurance firms reported strong annual premium equivalent (APE) numbers but growth was driven by increase in ticket sizes.

"This accelerated growth could impact FY24 growth. The APE growth estimates is expected to be down by 600 bps," HSBC said.

Kotak Institutional Equities, on the other hand, said that Q4FY23 was higher than estimates translating into high base. Emkay Global said that they expect flattish growth for FY24.

Investec added that the budget proposals will impact the value proposition in the high-ticket segment. Their estimate is ~10 percent -12 percent of value of new business (VNB) for all players.

Meanwhile, ICICI Prudential Life Insurance reported a 26 percent year-on-year (YoY) jump in net profit at Rs 235 crore for the fourth quarter that ended March 31, 2023. In the corresponding quarter last year, the company posted a net profit of Rs 185 crore.

The March premium for ICICI Prudential Life Insurance grew by 31 percent on a year-on-year basis. FY23 premium for ICICI Prudential Life Insurance grew by 13 percent and retail APE for the insurer also saw a growth of 59 percent in March on a year-on-year basis.

For SBI Life Insurance, the March premium grew by 23 percent on a year-on-year basis, FY23 premium grew by 16 percent. Retail APE for SBI Life Insurance in the month of March saw a growth of 12 percent on a year-on-year basis.

HDFC Life Insurance was the strongest stakeholder in the month of March. The premium for HDFC Life Insurance in the month of March grew by 83 percent, FY23 premium for the insurer grew by 16 percent.