Why New India Assurance Share Price is Rising

With so much uncertainty in the world today, it pays to have a little insurance. And it just so happens that insurance stocks look plenty attractive today.

Shares of insurance companies have traditionally been among the best-performing ones on the exchanges.

In line with their traditional image, Indian insurance stocks have demonstrated commendable performance over the past month.

This positive trajectory aligns with the overall optimism characterizing the Indian stock market, fuelled by expectations of a robust economic recovery.

Among the noteworthy performers in this sector is the New India Assurance company. Shares of the company jumped 7% yesterday (22 Nov 2023), while over the month, the stock has surged over 27%.

Here's what's driving the stock higher.

#1 Resilient Financial Performance

For the first half of the financial year 2023-24, the company showcased resilience amid challenges, reporting a 3.4% YoY increase in total income, reaching Rs 191 billion (bn) compared to Rs 184.7 bn the previous year.

This positive trajectory was primarily fuelled by an impressive 8.1% YoY growth in Gross Written Premium (GWP), escalating from Rs 191.9 bn in H1 2022-23 to Rs 207.6 bn in H1 2023-24.

The noteworthy expansion in GWP was predominantly steered by robust performances in Motor OD (32.54%), Health (6.35%), and Others (9.01%) segments.

Despite a setback in the Marine segment (-5.11%), the overall GWP surged by 8%, reflecting the company's strategic strengths.

Segment-wise Gross Written Premium (GWP) Performance

Segment	GWP H1 2023-24 (Rs in billion)	GWP H1 2022-23 (Rs in billion)	YoY Growth
Fire	33.3	32.4	2.68%
Marine	5	5.3	-5.11%
Motor OD	25.6	19.3	32.54%
Motor TP	26.8	25.5	5.14%
Health including Personal Accident	96.9	91.2	6.35%
Others	19.9	18.3	9.01%
Total	207.6	191.9	8.14%

Data Source: Investor Presentation

However, the reported net profit for the first half of the financial year 2023-24 witnessed a 60.3% YoY decline, falling to Rs 0.6 bn from Rs 1.5 bn in the previous year.

This decline was notably attributed to specific challenges faced in Q2FY24, making it one of the most demanding quarters for the company.

The challenges encompassed CAT (catastrophe) losses due to floods amounting to a net of Rs 3 bn, adverse developments in the aviation portfolio totalling about Rs 500 million (m), and loss of approximately Rs 710 m in foreign operations stemming from risk and CAT losses in Dubai and the UK.

It's crucial to note that these challenges were identified as one-off losses, and beyond these extraordinary circumstances, the company anticipates a stabilisation in profitability going forward.

Despite the confluence of adverse events impacting the quarterly results, the Motor and Health portfolios demonstrated growth, hinting at improved profitability in these segments in the future.

Moreover, the agency channel is experiencing robust growth, and the company foresees delivering enhanced results in the coming quarters.

This positive outlook, coupled with the anticipation of improved profitability in key segments, has instilled confidence among investors, likely contributing to the upward momentum in the share price.

#2 Robust October Performance

The surge can be further attributed to the robust growth experienced by non-life insurance companies.

This isparticularly highlighted by a 13.65% increase in monthly premiums from Rs 209.5 bn to Rs 238.1 bn in October 2023 compared to the previous year.

Among them, New India Assurance, witnessed a substantial 14.6% rise in premiums, reaching Rs 31.9 bn.

What Next?

The future of the insurance industry in India looks promising owing to several changes in the regulatory framework, technological advancements, government support, and increasing awareness.

The insurance industry in India is likely to introduce new trends like product innovation, multi-distribution, better claims management, and regulatory trends in the Indian market as incomes rise and purchasing power and household savings grow exponentially.

As the Indian economy continues to grow, disposable incomes are increasing, leading to a growing demand for insurance products.

Projections indicate that the non-life insurance sector is expected to experience significant growth, with a projected 14-15% increase in gross direct premium income (GDPI) through FY37.

This growth trajectory is poised to further enhance the overall performance of insurance companies.

How New India Assurance Shares have Performed Recently

New India Assurance shares have gained 27% in the last one month and more than 86% in 2023 so far.

The company touched its 52-week high of Rs 177.9 on 22 November 2023 and its 52-week low of Rs 92 on 21 November 2022.

About New India Assurance

The New India Assurance Company is a leading multinational general insurance company headquartered in Mumbai, India.

The company has a rich history of over a century, serving individuals, families, and businesses across India and internationally.

With a strong network of over 1,900 offices across India and a presence in 25 countries, the company has established itself as a trusted provider of comprehensive insurance solutions.

The company's product portfolio encompasses of motor insurance, health insurance, travel insurance and more.

For more details, see the The New India Assurance company fact sheet and quarterly results.

You can also compare company with its industry peers:

The New India Assurance vs GIC of India.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...