Rajesh Bhatia, Chief Investment Officer at ITI Mutual Fund, is optimistic about the life insurance sector, citing easing regulatory concerns and attractive valuations. “My sense is that as you move forward, both your annualized premium (AP) and value of new business (VNB) are going to move very well,” Bhatia said. The top four life insurance companies, primarily bank-backed entities, have been gaining market share from the Life Insurance Corporation of India (LIC). With regulatory overhangs now behind them, these companies are poised for accelerated growth. Bhatia is less enthusiastic about general and health insurance due to challenges such as motor insurance volumes and repricing of third-party insurance. “I am a little less enthusiastic about general insurance,” he said, “especially about healthcare given some of the challenges that standalone health insurers face.” The global cost of capital poses a risk to price-to-earnings multiples, particularly if long-term yields in major markets like the US increase significantly. Bhatia has taken some profits in private banks, citing potentially muted profit growth in the next financial year due to interest rate cuts and potential credit cost increases. “Given that these are now at 2.8-3 times price to book value, my sense is it is good to take some money off the table and allocate it to other places where I see greater value,” he explained. Bhatia’s strategy involves reallocating funds to sectors with greater growth potential, such as life insurance, where valuations are attractive and growth prospects are improving.
