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Nirmal Bang Report
Life insurance stocks have corrected by 9-16% over the last six months versus a correction of 9% and 5.3% in Nifty 50 and Bank Nifty, respectively. Sector valuations appear attractive at 1.7-2.7 times given the visibility of long-term structural growth and scope for margin expansion.
In the last five years, private life insurance companies' annual premium equivalent has compounded at 11.7% compound annual growth rate compared to 8.7% CAGR in bank credit and (down) 6.4% CAGR in mutual fund net inflows.
We concur with the overall market view that the life insurance sector is poised to clock ~15% CAGR going forward.
We believe that protection will grow at a higher rate given the attractive product proposition while savings could somewhat mirror the gross domestic product growth rate.
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