Best bet on life insurance sector…
ICICI Pru Life Insurance (ICICI Life) is a joint venture between ICICI Bank Ltd and Prudential Corporation Holdings Ltd, a part of Prudential Group. ICICI Life commenced its operations in FY01 and was among India’s first private sector life insurance companies. The company offers its customers vast and diversified products in life insurance, health insurance and pension products & services to cater to the specific needs of customers in different life stages, enabling them to meet their long-term savings and protection needs.
Valuation: ICICI Life remains outperformer in private life insurance space despite challenging business environment. The untapped opportunity and penetration in life insurance provides ample scope for the company to grow its portfolio at a rapid pace. As a result, ICICI Life will continue to deliver strong return ratios with RoE at 22% and return on embedded value (ROEV) at 15% in FY19E. Hence, we initiate coverage (IC) on ICICI Life and assigned BUY rating with a target price (TP) of Rs450/- where we value the company at 3.5x FY19E embedded value (EV). EV is a common valuation measure in the insurance industry which measures potential future profits from existing business.
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