Shares of major life insurance companies witnessed a decline during today’s trading session after UBS shared its cautious outlook on the sector, highlighting concerns around growth and margins. The report emphasized that the growth in insurance companies has largely been driven by the ULIP (Unit Linked Insurance Plan) segment.
UBS noted that margins might remain stretched due to a higher share of ULIPs and changes in non-linked surrender payouts. The brokerage also expects companies to transition to new commission payout structures tied to policy persistency, which could mitigate the impact of recent regulatory changes but may pressure profitability.
Performance of life insurance stocks as of 11:42 AM:
- ICICI Prudential Life Insurance: Down 3.31% at ₹670.20
- SBI Life Insurance: Down 3.20% at ₹1,512.55
- HDFC Life Insurance: Down 2.67% at ₹672.05
- Bajaj Finserv: Down 1.36% at ₹1,593.95
UBS further added that competitive intensity in the retail protection segment is waning as companies may not be able to cross-subsidize with other products under new guidelines. This could limit the net impact on the value of new business (VNB) margins.
Despite the challenges, moderate growth in retail protection is expected to continue for most firms.
