Life insurers' shares gain after positive Morgan Stanley and Nomura reports

Life insurance stocks were trading higher on Tuesday morning after reports from brokerage houses Morgan Stanley and Nomura noted that most large private players saw an acceleration in premium growth on a year-on-year (YoY) basis.

At 9:40 am, the share prices of SBI Life Insurance, HDFC Life Insurance, and ICICI Prudential Life Insurance rose 1.87 percent, 1.59 percent, and 1.37 percent respectively. On an intraday basis, the stock prices of all three companies surged 2.44 percent each.

Also, an ET report noted that the FDI limit in insurance companies may rise to 74 percent.

The report said, "The government may raise the overseas investment limit in insurance to 74 percent in the February budget, up from 49 percent now, possibly paving the way for foreign control of companies."

Furthermore, Morgan Stanley in its report said: “ICICI PruLi’s individual premium growth rose 20 percent YoY versus 18 percent YoY last month led partly by favourable base. Meanwhile, HDFC Life saw individual premium growth rising 43 percent YoY versus the decline of 15 percent last month, while SBI Life’s accelerated to 20 percent YoY from 3 percent last month.”

In the case of SBI, individual single premiums grew 175 percent YoY, the report added.

Nomura believes that this trend of 27 percent growth in the private sector indicates pick-up adjusting for the muted base. Growth remained broad-based with 25 percent for bancassurance and 33 percent for non-bancassurance companies, it added.

Moreover, a good part of the growth was driven by 100 percent YoY growth for LIC Insurance, said the brokerage.