Q3FY22: Here’s what to expect from life insurance companies

It is expected to be a steady quarter for life insurance companies but a quarter where margins are expected to moderate for most listed life insurance players. Premium growth for life insurance companies is expected to be driven by annuity and credit life products and also recovering Unit Linked Insurance Plan (ULIP) segment will aid the premium growth.

The annualised premium equivalent (APE) for the industry is expected to be around 23-25 percent. The demand for retail protection products has been subdued in the quarter, which would limit the margin expansion for most life insurance companies.

The value of new business (VNB) margin for listed life insurers is expected to be between 26 percent and 28 percent. For individual players HDFC Life, the APE growth is expected to grow by about 23 percent, which would be supported by non-par savings and annuity products. VNB margin is expected to remain flat year on year. The stock has been down nearly about 5 percent in the last three months and it trades at about 4.2 times FY22 price to embedd insured value.

For ICICI Prudential, it is expected to have the lowest APE growth amongst our listed peers of about 15 percent. VNB margin is expected to remain flat at around 25.6 percent. The stock is down nearly 12 percent in the last three months and trades at 2.6 times FY22 price to embedded value.

A strong APE growth of around 28 percent is expected for Max Life Insurance. VNB margin is expected to moderate due to higher contribution from the ULIP segment.

For SBI Life expected APE growth will be about 39 percent - that would be strongest amongst the listed life insurance players. SBI Life is also likely to be an exception to that moderating margin trend as the insurance company's margin is expected to see slightly over 23 percent as compared to 21.9 percent. The stock is up over 6 percent in the last three months and trades at 3.3 times FY22 price to embedded value.

Watch the accompanying video of CNBC-TV18’s Yash Jain to get a handle on the Q3 expectations from the insurance sector in earnings special - Quarter Se Quarter Tak (QSQT).