Best Insurance Stocks in India

19 June 2024
11 min read
Best Insurance Stocks in India
whatsapp
facebook
twitter
linkedin
telegram
copyToClipboard
(The stocks mentioned in the blog are as per Analyst Ratings and Market Capitalisation)

Insurance Industry in India - A brief outline

The insurance industry in India is a little over 200 years old. Today, the major constituents of the industry are public sector companies, private sector companies, and digital insurance providers, or Insuretech companies, as they are known. Insuretech companies, which came on the scene only lately, are the disruptors, providing cutting-edge, fast, and cost-effective services to customers. They have upped the competition quotient among insurance companies for cost-effective delivery of services.

Insurers in India increasingly leverage technology to improve the customer experience, streamline operations, and build innovative products. Thus, digital platforms for purchasing policies, filing and managing claims, and accessing customer support have become pretty common these days. 

Despite being in the market for such a long time, in the financial year 2023, the insurance industry in India had a penetration of just about 4.2%. That’s a very small number for a country with India’s population ― 144 crore as of January 2024. That leaves a huge scope for the growth of the industry. However, the government has rolled out many insurance schemes to cover the lower segment of the pyramid of society. The coverage here is quite high.  

This sector is highly regulated. That is done by the Insurance Regulatory and Development Authority of India (IRDAI), which is mandated to protect the interests of policyholders while ensuring the growth and development of the industry.

Insurance is a capital- and manpower-intensive industry. So, only players with deep pockets can survive in this sector. Regulatory compliance levels are also steep for this sector.

Given these factors, many insurance companies have got themselves listed on the stock exchanges in the last few years, which has helped them raise adequate capital and comply with all regulations in a transparent manner.

Globally, insurance companies are seen as good investment bets. Warren Buffett has major holdings in insurance companies, indicating the potential to make good money from investments in insurance companies.

📣 IPOs to look out for
View all IPOs
Companies
Type
Bidding Dates
SMECloses 26 Jun
SMECloses 26 Jun
SMECloses 26 Jun
SMECloses 26 Jun
SMECloses 27 Jun

Best Insurance Stocks in India 2024 as per Analyst Ratings

The following table represents the best insurance stocks in India in 2024, as per analyst ratings. These analysts perform a comprehensive analysis of the stock market and the stocks under consideration before assigning them a rating.

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.)

S.No.

Best Insurance Stocks in India (as per analyst ratings)

BUY Analyst Rating (in %)

1.

SBI Life Insurance

96.55

2.

HDFC Life Insurance

75.86

3.

ICICI Prudential

73.33

4.

LIC

68.75

*Our stock selection criteria for top stocks based on analyst ratings are mentioned at the bottom of this blog.

Best Insurance Shares in India (as per Market Capitalisation)

Here, we have listed down some of the top insurance sector stocks as per market capitalisation.

S.No.

Top Insurance Stocks in India (as per Market Capitalisation)

1.

LIC

2.

SBI Life Insurance

3.

HDFC Life Insurance

4.

ICICI Prudential

Overview of Best Insurance Stocks in India as per Analyst Ratings

Here is a brief overview of the best insurance sector stocks as per analyst ratings and market capitalisation mentioned above-

1) SBI Life Insurance Company

SBI Life Insurance Company was founded in the year 2000. It provides protection, pension, savings, and health solutions to individuals and group customers.

With 1,040 countrywide offices and a vast network of about 246,000 agents (a growth of 18.3% YoY as of December 2023), 70+ corporate agents, and 10+ bancassurance partners, the company’s offerings are being made available to an increasing number of customers across the country.

A balanced mix of products and distribution has helped SBI Life record growth in earnings and Embedded Value. For the full financial year 2023-24 (April 2023 - March 2024), the annual premium equivalent (APE) grew by 17% compared to the same period in the previous year, or year-on-year (YoY). This growth was ably supported by the growth in the annual premium equivalent of ULIPs, which came in at 28.4% YoY, and group protection APE growth of 45% YoY.

For the fourth quarter ended March 2024, the annual premium equivalent (APE) climbed by 17% YoY to Rs 5,300 crore, and for the nine months ended December 2023 (9M FY24) it stood at Rs 14,390 crore. New Business Premium (NBP) increased 29% YoY to Rs 38,240 crore, though it came in below analysts’ estimates of Rs 39,180 crore. (Numbers coming in below analysts’ estimates are a negative.

At SBI Life, the value of new business margin, or VNB margin, Q4FY24 was 28.1%, down 1,107 bps from FY23. For 9MFY24, the VNB margin decreased by 5.07% in comparison to 9MFY23.

2) HDFC Life Insurance

HDFC Life Insurance Company was founded in 2000. It is headquartered in Mumbai, India. This well-known insurance company offers a wide array of products for protection, investment, pension, savings, annuities, health, etc.

Its insurance products, such as life insurance, term life insurance, Unit-linked insurance plans, Endowment policies, whole life insurance, and retirement plans, are widely accepted in India.

For the first nine months of FY24, HDFC Life reported a near 5% YoY growth in APE. The VNB also climbed by a similar near-5% YoY, while the VNB margin remained stable at ~26.5%. Lower APE was the result of a slowdown in the bancassurance business/agency channel and lower growth in the high-ticket business following the change in rules related to Surrender Value. However, growth in lower-ticket businesses could offset this difference going forward, the management feels. Non-participatory APE / Annuity also declined by 32% YoY / 9% YoY. ULIPs reported a strong growth of 88% YoY. Persistency trends were strong in most segments. The management says near-term growth looks challenging. However, they remain positive about medium- to long-term prospects. 

For Q4 ended March 2024 of FY24, APE fell by 8.5% to Rs 4,730 crore, and for the nine months ended December 2023 (9M FY24), it stood at Rs 8,560 crore. New Business Premium (NBP) increased 1.9% YoY to Rs 29,630 crore, though it came in above analysts’ estimates of Rs 29,210 crore. Gross premium came in at Rs 63,080 crore, below analysts’ estimates of Rs 64,880 crore.

The VNB margin contracted by 520 basis points to 25.7% for Q4 FY24 and 0 bps for 9M FY24. 

Insurance Fun Fact - Groww

3) ICICI Prudential

Promoted by ICICI Bank Limited and Prudential Corporation Holdings Limited, ICICI Prudential Life Insurance Company Limited (ICICI Prudential Life) is one of the most renowned insurance companies in India.

ICICI Prudential Life (IPru Life) started operations in 2001 and has since been offering a plethora of insurance products to customers across India. Its popular offerings include term insurance plans, health insurance, ULIPs, child plans, retirement plans, and pension plans.

At IPru Life, for the fourth quarter ended March 2024 (Q4 FY24), the APE climbed by 9.58% to Rs 3,615 crore, and for 9M FY24 it grew by a tiny 1.67% at Rs 5,430 crore. NBP increased 6.85% YoY to Rs 18,081 crore, though it came in below analysts’ estimates of Rs 45,000 crore. The gross premium came in at Rs 43,236 crore, below analysts’ estimates of Rs 10,700 crore.

The VNB margin contracted by 4,281 basis points to 18.3% for Q4 FY24 and 1,656 bps for 9M FY24. This happened because of a change in the mix of ULIP and Participating products. For the years FY24-26, analysts have forecast VNB margins falling by 200-300 bps and absolute VNB at 8-12%.

4) LIC

The Life Insurance Corporation of India (LIC) was established on September 1, 1956. It is a statutory corporation and has been leading the insurance industry for years.

The primary objective of setting up LIC was to spread life insurance widely, mainly to rural areas and the socially and economically backward classes. The company has been offering its services across the nation in both rural and urban areas with its insurance policies. Some of the popular insurance products of LIC are Saral Jeevan Bima, Bima Jyoti, Arogya Rakshak, Dhan Rekha, and many more.

For Q4 ended March 2024 of FY24, APE climbed by 10.68% to Rs 21,180 crore, and for 9M FY24, it stood at Rs 35,790 crore. NBP decreased 4.81% YoY to Rs 1,64,926 crore. Gross premium came in at Rs 1,52,553 crore in Q4FY24, compared to Rs 1,31,964 crore YoY and Rs 1,17,323 crore QoQ.

VNB margin contracted by 1,714 basis points to 17.4% for Q4 FY24 and increased 1,369 bps for the 9M FY24. 

▶️ You may also want to know the various Types of Insurance Policies in India

Sr No.

Company

Branches

No. of agents (lakh)

Annualised Premium Equivalent (Rs Cr)

Value of New Business (Rs Cr)

Embedded value (Rs Cr)

1

SBI Life

1,040

2.46

₹19,720

₹5,550

₹58,260

2

HDFC Life

535

2.14

₹13,290

₹3,500

₹47,500

3

ICICI Prudential

471

2.09

₹9,046

₹2,227

₹42,337

4

LIC

3,636

14.14

₹56,970

₹9,583

₹7,27,344

 

Sr No.

Company

Profit After Tax (Rs Cr)

Profit 3-year CAGR growth

Profit 5-year CAGR growth

Persistency ratio (13th month)

Persistency ratio (61st month)

1

SBI Life

₹1,894

9.16%

7.37%

85.40%

59%

2

HDFC Life

₹1,570

4.97%

4.25%

87%

53%

3

ICICI Prudential

₹852

-3.80%

-5.66%

89%

64%

4

LIC

₹40,916

140%

73%

78%

61%

Sr No.

Company

Solvency ratio

Return on Equity

Net Written Premium (Rs Cr)

Net Written Premium 3-year CAGR growth

Net Written Premium 5-year CAGR growth

1

SBI Life

196%

13%

₹80,587

17.43%

19.63%

2

HDFC Life

187%

11.50%

₹62,112

17.64%

29.00%

3

ICICI Prudential

192%

7.73%

₹41,760

6.09%

6.43%

4

LIC

198%

49%

₹4,76,831

5.78%

7.18%

Should You Invest in Insurance Stocks?

The insurance industry has been evolving over the years. This process has gathered pace in the last few years, thanks to the increasing use of technology in this sector. The use of cutting-edge technology is changing the way products are developed, offered, and executed in the industry — all while keeping customer demographics and needs at the core. 

You can consider investing in this sector as per your investment horizon and the strengths of the stocks or funds in question. But remember, as with investments in other sectors, these too come with their usual share of competition, the weight of regulatory policies, scams, etc.

Summing Up

Insurance is widely perceived as an evergreen sector, with expansion and growth being inevitable. The government too is doing its share to strengthen the industry with insurance programs such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).

Some of the big positives for the industry are government support, IRDAI regulations, tech integration, and seamless distribution channels. On the other hand, it faces impediments in the form of stringent regulations, cutthroat competition, fraud, and low insurance penetration, which could impact its performance.

Thus, before investing in any insurance stocks, make sure to analyse their market potential, market reputation, and financial performance while keeping your investment objective in perspective.

You may also be interested to know

1.

Best Agriculture Stocks in India

2.

Best Indian Railway Stocks in India

3.

Best Green Hydrogen Stocks in India

4.

Best EV Stocks in India

5.

Best FMCG Stocks in India

*Stock Selection Criteria for Top Stocks Based on Analyst Rating

Investors must carefully read through the following information on stock selection criteria while running through the stocks based on analyst ratings-

These stocks have been shortlisted as per Analyst ratings provided by the I/B/E/S (The Institutional Broker’s Estimate System) database, further aggregated by Refinitiv. Ratings are determined by analysts' forecasts of company performance, taking into account metrics like earnings per share, sales, and net income. These ratings should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).  

Before investing, investors must conduct independent research and not solely rely on the information provided here. This will allow investors to make appropriate investment decisions based on their financial goals, investment objectives and risk tolerance.

*Stock Selection Criteria for Top Stocks Based on Market Capitalisation

These stocks are chosen based on their market capitalization, which represents the total value of a company's outstanding shares. The selection is arranged in descending order, placing the largest companies first and the smaller ones later. This helps prioritize stocks based on their market size. 

It is important to note that market capitalization in no way guarantees a company’s performance or the returns from its stocks. However, it can be used as a criterion for shortlisting companies from within a sector. Investors should recognize that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This stock selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to buy/sell any securities by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
Do you like this edition?
LEAVE A FEEDBACK
ⓒ 2016-2024 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 5.0.7
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  GROWWMF |  SBI |  AXIS |  HDFC |  UTI |  NIPPON INDIA |  ICICI PRUDENTIAL |  TATA |  KOTAK |  DSP |  CANARA ROBECO |  SUNDARAM |  MIRAE ASSET |  IDFC |  FRANKLIN TEMPLETON |  PPFAS |  MOTILAL OSWAL |  INVESCO |  EDELWEISS |  ADITYA BIRLA SUN LIFE |  LIC |  HSBC |  NAVI |  QUANTUM |  UNION |  ITI |  MAHINDRA MANULIFE |  360 ONE |  BOI |  TAURUS |  JM FINANCIAL |  PGIM |  SHRIRAM |  BARODA BNP PARIBAS |  QUANT |  WHITEOAK CAPITAL |  TRUST |  SAMCO |  NJ