Best Insurance Stocks in India

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.

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. 

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

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.