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CLSA Expects Life Insurance Sector To Outperform In 2023


CLSA has initiated a ‘buy’ rating on all four listed private life insurers and expects the sector to outperform broader indices in 2023.

Indian life insurers underperformed the broader indices by 23-36% (ex-SBI Life Insurance Co.) driven by open architecture by banks—whereby they sell multiple insurers’ products—weakness in protection and high valuations pre-Covid, the brokerage said in its industry report.

“We believe drags from protection and open architecture are behind us and valuations are undemanding with just 4-9% growth factored in for the medium term.”

According to the report, the drivers for all four listed private life insurers are different.

“HDFC Life and Max Life should gain from lower drags from open architecture, while ICICI Bank’s contribution is negligible to not drag ICICI Prudential Life. SBI Life continues to deliver industry leading growth and margins,” it said.

SBI Life remains their preferred sector pick with an expected upside of 31%.

Here’s what the brokerage said on life insurers:

SBI Life Insurance Co.

HDFC Life Insurance Co.

ICICI Prudential Life Insurance Co.

Max Financials Ltd.


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