General Insurance Sector Update : SAHIs sustain growth; Multi-line players struggle By JM Financial services
The general insurance industry reported a weak 2.8% YoY growth in premiums in Jul’25, reporting INR 297bn on an unadjusted (reported) basis. This follows a growth of 5%YoY in Jun’25 and 7% YTD FY26. Growth has tapered this year as we saw strong growth in fire (heavy in April month) following a 5% contraction in FY25. We suspect the weakness in this month to weak crop business, which does not materially move the bottom-line. Growth for SAHIs remained steady at 10.3% YoY vs 10.5% YoY in Jun’25. These growth numbers remain suppressed and we expect growth for the sector to be 3-4% higher on a like-to-like basis. Despite a 10% YoY contraction, we prefer ICICIGI in the general insurance space.
* Key multi-line players report YoY contraction, we suspect crop and group health: Private multi-line players reported a decline of 3.3% YoY premiums in Jul’25 vs flat Jun’25, growth in PSUs moderated to 3.4% YoY vs 15.4% YoY in Jun’25. Within private multi-line players, Bajaj Allianz reported a decline of 13.0% YoY on the back of strong 17.1% YoY growth in Jun’25 while ICICI Lombard saw premiums contract 10.2% YoY for the second straight month (-10.4% YoY in Jun’25). We suspect it to be due to lower crop business – which accounted for 23% of ICICIGI’s premiums in Jun’24 vs 0.4% in Jun’25. Go Digit also continued strong growth momentum at 27% YoY vs 12% YoY in Jun’25
* SAHIs continue to outperform: SAHIs grew at steady pace at 10.3% YoY vs 10.5% YoY in Jun’25. Amongst SAHIs, Star Health posted a 3.3% YoY growth (vs 2.9% YoY in Jun’25). For 1Q26, Star’s growth, adjusted for 1/n accounting, came in at a respectable 13.2%, despite cutting down on group business. Niva Bupa reported healthy growth of 10.0% YoY (vs 15.5% in Jun’25) while Aditya Birla Health continued its strong growth momentum with 26.7% YoY growth (26.5% YoY in Jun’25 and 27.3% FYTD’26).
* Valuations and view: Despite weak growth, we prefer ICICI Lombard in the general insurance, valuing the insurer at 34x FY27e EPS of INR 67 for a Target Price of INR 2,250. For Star Health, we wait for stability in claims for a couple of quarters, especially as claims ratios have been quite erratic in monsoons. We have a HOLD rating on Star Health, valuing it at 21x FY27e EPS of INR 20 to get a Target Price of INR 420.
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