The insurance sector has been through a turmoil lately, coupled with regulatory crackdown. CLSA believes the insurance sector will continue to see a slowdown. Within the sector, it has chosen Max Financial Services as its top ‘Buy’ in the sector.
CLSA on Max Financial: regulatory overhang on sector continues
The brokerage house picked Max Financial, given the possible listing of Axis Max Life. Private insurers’ individual annualised premium equivalent grew 2% in February 2025 while for total it rose 9%. This was the slowest since March 2024. “In our view, volatility in equity market could have caused slowdown in Ulip sales (we await clarity),” said CLSA. Apart from the business slowdown, the key risk for the sector remains to be the regulatory area, such as regulatory suggestions on mis-selling, delays in the Insurance Amendment Bill, etc.
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CLSA on Max Financial: Total sectoral APE growth intact at 9%
The private insurance companies’ total APE was up 9% YoY in Feb 2025 on a base of 24%. While the Individual APE growth for them was 2% YoY, with the individual number of policies (NOP) declining by 4% YoY in February 2025. “Our estimate of retail protection sum assured, indicates 44% YoY growth in January 2025 on a base of 45%. The strong momentum in protection has sustained,” said CLSA.
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Performance of our coverage
Apart from Max Financial, the brokerage firm chose Axis Max Life as one of its top picks on value unlocking from the possible listing of Axis Max Life. The company is yet to list on exchanges. Axis Max Life’s total APE was up 8% YoY in Feb on a high base of 36%. “Recently, Indian court allowed reverse merger of an insurance company with its holding company, which sets a precedent for Max Financial,” CLSA said.
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