Life Insurance Corporation stock has experienced a 14% surge in the last 6 months. This bullish leap was propelled by promising prospects of achieving double-digit growth in new business premiums.
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Life insurance Corporation stock – Growth prospects
As per LIC’s Chairman, the company is foreseeing a surge in growth, primarily driven by increased business at the individual retail level. This anticipation of growth has heightened investor confidence, leading to an upsurge in LIC shares by as much as 14% in the last 6 month with increased trade volume. This positive momentum also extended to other state-run general insurers like New India Assurance Co and General Insurance Corporation of India.
LIC reported a growth rate of 6.9% in premiums, given the sluggish performance of less than 3% in the first half of the fiscal year.
Life Insurance Corporation stock – Regulatory support
These developments come in the wake of regulatory actions by the Reserve Bank of India (RBI). The RBI imposed restrictions on unsecured lending by banks and shadow lenders to curb the surge in risky consumer loans. Consequently, shares of banks experienced a downturn, prompting investors to seek safer havens in non-lending firms like insurers and asset managers.
Jefferies, in a recent report, highlighted the prudence of such a shift, emphasizing that insurers and asset managers might be comparatively safer bets than banks, particularly in times when the RBI cautioned banks to undertake stress tests and avoid over-enthusiastic lending practices. Analysts foresee a reversal from the subpar premium growth experienced in the previous financial year to a double-digit surge, projecting a recovery in market share for LIC.
It is also observed a potential shift of investment from lenders to insurers following recent regulatory actions. This redirection of investment interest indicates a repositioning of “hot money” in the market.
The positive outlook for the insurance sector amidst regulatory changes and evolving market dynamics underlines the potential for sustained growth as the economy progresses, making insurers an attractive prospect for investors seeking stability and growth.
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