Life insurance stocks find favour on D-Street after regulatory cloud clears

Business Business: The market sentiment towards life insurance stocks has picked up in the past few months as regulatory concerns have eased, companies are adjusting to new surrender value norms, and there is a shift away from equity-linked policies to more traditional products. June quarter results also showed a similar trend: HDFC Life posted a stable performance, while ICICI Prudential’s results were mixed. Still, analysts believe there is room for further improvement in the ratings of these stocks in FY26.

So far this year, stocks of HDFC Life and SBI Life have rallied 20 to 40 per cent, while LIC and ICICI Prudential have seen modest, stable to positive volatility.

Srikant Chauhan, head of equity research at Kotak Securities, attributed the mixed sentiment to differences in product strategies.

Diversified product mix helped HDFC Life and SBI Life attract investor attention, while ICICI Prudential lagged behind due to weak growth in unit-linked products (a portion of the premium goes into life insurance and the rest is invested in equity or debt funds) and challenges in the bancassurance channel. Meanwhile, LIC remains more vulnerable to equity market fluctuations and is heavily dependent on agency-led growth (a network of agents who sell insurance policies directly to customers).