4 Life Insurance Stocks To Buy that Have Fallen 30% In Last 6-Months

Stocks of life insurance companies have plunged in the last few months. In some cases the fall has been even steeper than the markets. However, Emkay Global remains bullish on some of these stocks and has recommended a buy in its report on the insurance sector.

4 life insurance stocks to buy

Name	Target price	Current market price
HDFC Life	690	562
ICICI Prudential Lie	660	503
Max Financial	1030	728
SBI Life	1645	1068

Emkay has set a price that is sharply higher in the case of SBI life. Some of these stocks have taken a near 30% knock in the share price from their 52-week highs.

Private sector leaders well-positioned for strong growth

Emkay Global has said that private sector players are well positioned to gain market share amid difficult external environment. In the backdrop of a rapidly changing external environment, changing customer demographics and their product preferences, our hypothesis of large private life insurers continuing to take market share away from LIC is playing well and will continue to be so in the coming years. Powered by their strong brands and distribution networks (especially bancassurance reach), private sector leaders are executing their strategy very well by being agile and innovative when it comes to offering insurance products to match customer preferences and needs amid a dynamic external environment. Based on the risk-reward proposition, Emkay's pecking order of stocks to buy is SBI Life, Max Life, HDFC Life and ICICI Prudential Life.

Current interest rate rise favorable for profitability and growth of life insurers

The current rise in interest rates from historical low levels will improve VNB margins of par and non-par products of life insurers, Emkay Global has said. Even after increasing guarantees in non-par products to stay competitive, the scope of keeping a higher spread increases with high interest rates. In par products, higher interest rates generally increase the surplus and hence the surplus share for both the policyholders and shareholders.