q2 results: Q2 results: What to expect from insurance sector – Blue Barrows

Insurance industry earnings may be a mixed bag with companies focusing on guarantee and annuity products reporting a sharp jump in premium growth while those with ULIP and protection concentration lagging behind.

Among general insurers, health could show a sharp rise while the motor insurance market remained depressed.

The first-year premium of life insurers reached Rs 1.82 lakh crore in the first half of the fiscal, showing a 38% jump over the same period last year, data from Insurance Regulatory & Development Authority of India showed.

The growth can primarily be attributed to single premiums and more specifically to Life Insurance Corporation’s (LIC) group single premiums.

reported a 46% jump in first year premium collection in April-September period over the same period last year while the private insurers collectively saw a rather slower 23.3% year-on-year rise compared to 27.7% rise seen for last year.

The profitability of life insurers is measured by the value of its new business (VNB).

“On the profitability front, we expect VNB margins for life insurers to range from being stable to slightly improved sequentially; this would be on account of higher non-par savings products sales as well as some contribution from operating leverage, partly offset by sustained weakness in retail protection,” Emkay Global Financial Services said in a report.

“We project VNB growth to be in the range of 12-14% year-on-year for , and Life Insurance, while would see a decline of 16%,” Motital Oswal Research said.

It said that listed private life insurers are likely to see moderation in APE (annual premium equivalent) growth in H1FY23, from Q1FY23 levels.

Motilal Oswal’s research said that

is expected to post an APE growth of 9% year-on-year, while may see a 4% rise. MAX Life may report a 10% dip while may see a 4% fall.

Insurance demand is positively correlated with economic growth and grows at a multiple to the GDP. “The top line of life insurers is anticipated to remain healthy for FY23 as it would be the first full year without any Covid-related restrictions,” CareEdge Ratings said, expecting the life insurance industry to continue to grow in the low double digits over a three-to-five-year time frame.

Among general insurers, Star Health & Allied Insurance Co announced that its gross direct premium income rose 12% year to date as on September 30, 2022.

Emkay expects

to report second quarter premium growth at a healthy 17% year-on-year, driven by strong growth in motor third party and crop insurance, although partly offset by the weaker growth in motor own damage cover.

It expects Star Health to report a second quarter net profit of Rs 140 crore while ICICI Lombard to see Rs 396 crore, which is 11% lower than a year-ago period.