Life insurers are anticipating slower premium growth amid economic uncertainty and geopolitical tensions affecting customer demand. According to Emkay Research, annualised premium equivalent (APE) growth is expected to soften after a strong April, as geopolitical tensions and a cautious macroeconomic environment weighed on customer demand during May. However, profitability is expected to remain strong with value of new business (VNB) margins stable, supported by product mix and growth in protection products. The sector enters the quarterly earnings season under new accounting standards, with Ind AS mandated from April 1, though some insurers have been granted a one-year regulatory forbearance.
Among private life insurers, Axis Max Life is expected to remain the fastest-growing player with retail APE projected to rise 17% year-on-year in the June quarter, followed by SBI Life at around 15%. ICICI Prudential Life is likely to report a more modest 9% increase, while HDFC Life's retail APE growth is seen at 7.5%, reflecting slower momentum in the HDFC Bank distribution channel. LIC is expected to post about 9% growth during the quarter. According to JM Financial, VNB growth estimates show Max Financial Services at 24%, ICICI Prudential Life Insurance at 16%, and both SBI Life Insurance and HDFC Life Insurance at 12% each. The transition to Ind AS accounting standards is expected to reduce earnings volatility and improve comparability over time.
According to Emkay Research, VNB margins are expected to improve for Max Life and LIC, remain broadly flat for HDFC Life and ICICI Prudential, and decline slightly for SBI Life because of a higher contribution from group business. The removal of GST-related input tax credits may put pressure on insurers' profitability, but the growing focus on higher-margin protection and non-participating products is expected to offset this impact partly. The new accounting standards will shift investor attention beyond traditional metrics to focus on insurance service results, profitability and the sustainability of earnings.
Health insurers are expected to outperform the broader sector, with Star Health projected to deliver about 19% growth in gross written premiums, supported by higher affordability following GST exemption on health insurance premiums. Claims ratios are also expected to improve modestly as the company benefits from strong fresh business and operational measures undertaken over the past year. Niva Bupa is estimated to report a premium growth of around 32%, well ahead of industry expansion, while Star Health is expected to maintain its strong performance trajectory. The accounting transition is expected to make reported earnings more reflective of operating trends, particularly for standalone health insurers, making reported numbers more comparable over time.
The general insurance segment is likely to remain under pressure as the absence of a motor third-party premium hike, aggressive competition in the motor own-damage business and pricing pressure in commercial lines weigh on premium growth and underwriting profitability. ICICI Lombard is expected to report around 8% gross written premium growth, helped by motor and health insurance, while maintaining a modest improvement in claims and combined ratios due to its profitability focus. For general insurers, analysts expect profitability to improve on the back of better underwriting performance and stronger investment income, with JM Financial expecting industry premium growth of around 11%.
