Private life insurers outperform, LIC sees sharp decline in new premiums for December

Investors will watch out business growth and any potential regulatory changes

Private life insurance companies continued to perform well, with a growth of 11.4 percent in individual annual premium equivalent (APE, a measure of new business) compared to last year, while LIC saw a sharp drop of 13 percent. Growth improved in December 2024 as the industry adjusted to new regulations on surrender values. Analysts at Nuvama Institutional Equities noted that investors will be closely watching business growth and any potential regulatory changes.

HDFC Life had a 12.3 percent growth in individual APE, contributing to an overall growth of 8.8 percent, despite a 21 percent drop in group APE. Analysts at Nuvama maintained their "buy" rating on the stock with a target price of Rs 820 per share, noting the stock is trading at a P/EV ratio of 2x/1.7x for FY26E/FY27E.

SBI Life saw a 16 percent growth in individual APE for December 2024, despite a high base from the previous year. Its 5-year growth rate in individual APE was slightly lower than HDFC Life. Since the stock is trading at a P/EV ratio of 1.8x/1.5x for FY26E/FY27E, analysts kept a "buy" rating and a target price of Rs 1,980.

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ICICI Prudential Life reported 9.4 percent increase in regular premium in December 2024, and its total APE grew by 15.6 percent YoY, with group business APE surging by 56.6 percent. ICICI Prudential is trading at a P/EV ratio of 1.7x/1.5x for FY26E/FY27E, and analysts kept a "hold" rating with a target price of Rs 740.

Meanwhile, Max Financial Services saw a 10.3 percent overall APE growth, mainly driven by an 11.2 percent increase in individual APE. Its 5-year growth rate in individual APE is 14.7 percent. Max Financial is trading at a P/EV ratio of 1.5x/1.3x for FY26E/FY27E, and Nuvama maintained a "buy" rating with a target price of Rs 1,470.

In contrast, LIC struggled compared to its private competitors, with individual APE declining by 13 percent in December 2024, resulting in a 28.9 percent drop in total APE.

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