We expect five major trends in the life insurance space – growth revival, persistency improvements, low interest rates, regulatory changes and cost efficiency – to improve margins and RoEV for the private players. Of these, growth revival will be the most important. We estimate these factors could add up to 30% - 40% valuation upgrades on top of normal EV compounding (12 % - 18%) over the next five years. The top 6 private players should be the biggest beneficiaries of such trends and we expect market share to concentrate towards them. They could also facilitate industry consolidation given better capital availability and strong financial positions. We init iate at BUY on Bajaj Finserv, Max India, Reliance Capital and Aditya Birla Nuvo.

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Life Insurance – India PDF 2.8 MB