Best Multibagger Insurance Company Stocks for Decades
In this article, we are going to do Insurance Sector Analysis in detail. Indian Insurance Sector is having a lot of potential to grow in the near future. We have tried to analyze the insurance sector on a broader angle here.
Insurance Sector Analysis
The life insurance industry in India is regulated by the Insurance Regulatory and Development Authority of India (IRDAI). Twenty four Life Insurance companies are licensed to do Insurance Business in India. Out of these companies, Life Insurance Corporation Of India (LIC of India) is the only public sector company.
Here is a detailed analysis of the Indian Insurance Sector and which companies should you look at.
- Total Gross Premium Written for FY2018-19 was almost $100 Billion. Thus, the valuation of total premiums write (Life insurance + Non-life insurance) in India in FY2018-19 was around Rs.7 Lakh Crore.
- If we compared it with Mutual Fund Industry, the total inflow in mutual fund industry is normally around Rs.1-1.5 Lakh Crore (that to in a good year). So, we can clearly get the growth potential of insurance sector in coming years.
- Out of the total Rs.7 Lakh Crore premium in FY2018-19,
- 75% : Life Insurance Companies’ premium (Rs.5.25 Lakh Crore)
- 25% : Non-Life Insurance Companies’ premium (Rs.1.75 Lakh Crore)
Life Insurance Segment
- If we take life insurance industry into consideration, public sector companies are contributing almost 66.2% in gross premium written. In this, LIC (Life Insurance Corporation of India) is a major contributor to public sector life insurance segment. That is, out total Rs.100 life insurance premium over the entire country, LIC is contributing Rs.66.2 in gross premium in FY2019. Also, in new-business premium contribution of Life Insurance is Rs.52.
- Also, the shares of HDFC standard Life, SBI Life Insurance and ICICI Prudential Life Insurance are growing considerably. All private sector players are contributing 33.8% Life Insurance Segment in FY2019.
Insurance Penetration in India
- Insurance Penetration rate indicates the level of development of insurance sector in a country. Penetration rate is measured as the ratio of premium underwritten in a particular year to the GDP.
- Overall Insurance Penetration includes:
- Life insurance penetration considers premiums from life insurance policies only as a percentage of GDP and
- Non-life insurance penetration considers premium from other than life insurance policies like auto insurance, health insurance, etc. as a percentage of GDP
- According to IRDAI’s annual report, India’s overall Insurance Penetration for FY2017-18 was at 3.69% of Premium as a % of GDP.
- India’s Insurance penetration is one of the lowest across the world. (Developed Economy : USA – 7.14% , UK – 10.61%), (Emerging Economy : South Africa – 12.89%). Average of insurance premium across the developed economies as well as emerging economies is almost 6.09%.
- So it is a very big opportunity for insurance sector in Indian economy, since we are 2% down compared with world average insurance penetration.
- With the increase in India’s per capita income, insurance penetration is expected to see 50% growth by 2023. It indicates the prolonged earning visibility for insurance sector in coming future. As a result, the listed insurance players is going to enjoy the premium valuations hand-in-hand.
Premiums Market Share in First Year Life Insurance
- In the above market share contribution, LIC is not yet listed company. But the next 3 private insurance players – HDFC Standard Life, SBI Life Insurance, ICICI Prudential Life Insurance all are listed companies.
- A detailed analysis of the best Multibagger cis available on our website in stock subscription. Here, we have covered the analysis of almost all the listed insurance companies, be it general insurance or life insurance.
Non Life Insurance Segment
- We can see how aggressively the private sector is growing in Non Life Insurance Segment.
- Non life insurance products can be broadly categorized into the following product verticals : Motor insurance, Health insurance, Crop insurance, Fire insurance, Marine insurance and other insurance products.
- Individual market share in terms of Gross Direct Premium Collected is shown above.
- In Non Life Insurance segment, New India Assurance is the largest general insurance company in India in terms of net worth, domestic gross direct premium, profit after tax and number of branches.
- ICICI Lombard general insurance is the second highest listed non life insurance player in terms of gross direct premium collected. The detailed analysis of ICICI Lombard general insurance is also available in our stock subscription.
- United India Insurance, The Oriental Insurance Company, National Insurance Company and Bajaj Allianze General Insurance are also having a significant market share in terms of gross direct premium collected.
- In accordance with the future growth potential , the listed players in the Insurance sector can be a good investment bet for the retail investors.
- Best Multibagger Insurance Company Stocks are given below. You should keep the following 4 stocks on your radar :
- SBI Life Insurance,
- HDFC Standard Life Insurance,
- ICICI Prudential Life Insurance and
- Lombard General Life Insurance.
- These companies can add a good value to your portfolio. All the 4 stocks mentioned above are covered in our detailed stock analysis vedios as well as eBooks.