Motilal Oswal Lists HDFC Life, SBI Life Shares As Its Top Pick In Life Insurance Space — Here's Why

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Motilal Oswal Report

During Q3 FY25, the life insurance industry witnessed APE growth of ~8% YoY, driven by ~22% YoY growth reported by private life insurers, while LIC witnessed a decline of ~17% YoY. For 9M FY25, the industry and private insurers grew 14% and 20% YoY, respectively. HDFC Life /ICICI Prudential Life /Max Life /SBI Life delivered better-than-industry growth of 12%/28%/13%/17% YoY.

VNB performance was mixed for listed companies in Q3 FY25. While ICICI Life and SBI Life posted double-digit VNB growth of 19% and 11%, respectively, HDFC Life’s VNB growth was 9% YoY. VNB for Max Life was flat. For LIC, the decline in APE led to a 27% YoY fall in VNB.

On a YoY basis, VNB margin for the industry remained under pressure due to a higher proportion of ULIPs in the product mix and the impact of revised surrender value regulations. However, changes in the commission payout structure and the realignment of prices of non-par products, along with declining bond yields, resulted in sequential margin improvements for few players.

The shift in the product mix toward higher-margin non-linked products like non-par, annuity and protection can also contribute to VNB margin recovery.

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