JPMorgan raises HDFC Life and GIC to Overweight with higher targets, LIC and SBI Life top picks

Insurers are also adjusting to the GST exemption on health and life insurance premiums which has kicked in from today, potentially reducing cost for the players.

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26 Aug, 2025 12:21

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Shares of insurers HDFC Life and GIC are higher in a weak market, after a brokerage note by JPMorgan upgraded both shares to Overweight with higher price targets, while keeping LIC are its top Overweight pick.

The note added that LIC and SBI Life, along with HDFC Life and GIC Re remain among the top of its pecking order in the space.

With in the non-life insurance space, the note finds more upside potential in the reinsurance sector while India's life insurance plays are poised for a most growth upside among Asia, riding on the demographic dividend.

Insurers are also adjusting to the GST exemption on health and life insurance premiums which has kicked in from today, potentially reducing cost for the players. With industry promising to pass on the cost, this should result in significant savings for the policy buyers.

Life Insurance

Soon after the announcement, HDFC Life said on September 4 said that the GST relief will trigger demand. "...we believe that this change will spur demand over time and hence be accretive to our Value of New Business (VNB). We expect a non-material (less than 0.5%) impact on our Embedded Value (EV). As we have done in the past, we will continue to work towards our aspiration of doubling our Value of New Business over 4-4-1/2 years," HDFC Life said.

The move is being seen by the industry as structurally positive, and is expected to drive "higher penetration, improve persistency, and accelerate long-term growth", according to HDFC Life.

For HDFC Life, the Value of New Business (VNB) for Q1FY26 stood at Rs 809 crore, a growth of 12.7 percent on year and a two-year CAGR of 15 percent, with new business margins steady at 25.1 percent.

Non-Life Insurance

The non-life insurance space is projected to grow at 13-15 percent annually over the next few years, according to GIC Re. This growth is expected to be driven by health, motor and emerging areas like surety bonds and cyber insurance.

"GIC Re is well-positioned to capitalize on this growth, with a diversified portfolio and a commitment to underwriting profitability," the company had said in its annual report earlier in September.

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