Now, this is little strange. Did not expect to see delays in Sebi approval…
If the queries from Sebi are valid, does ut impact the management credibility of the HDFC group, esp, the queries about spike in profits in FY14 and spikes in AUM in FY17?
Generally , rate of fradulant claims in general insurance is higher in comparision to life ins.hence its somewhat easy to predict the profitabilty of life ins.& IBNR depending on interest rates,scope of investment,expense ratio and other parameters. & In initial years its difficult to serve the large equity portion that is required as per irdai guidelin for both type of insurance companies.So about the pricing of sbi life, its difficult to predict as pru.icici life when listed was available below the issue price for quite some time but then recovered smartly…So sbi life ,icici lombard can also follow the same path depending upon the market sentiment,but in a long run sbi life looks great business to be -in the long run ,but can’t say about their issue price. Thanks…
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This is actually a good point.
From GIC Re DRHP:
- In life insurance, India is the tenth largest market in the world in terms of total premium. In non-lifeinsurance, India is the fifteenth largest insurance market in the world in terms of gross premiums.
2.Total premiums in the Indian life and non-life insurance markets were around ₹4.18 trillion and ₹1.28 trillion respectively in Fiscal 2017.
3.Reinsurance of non-life insurance business accounted for approximately 95% of the total premium ceded in Fiscal 2017.
Thus it seems that even reinsurance ceded by Life insurance cos are lower and even the market size is larger.
5 reasons why Dalal Street is gung ho over insurance IPOs
http://economictimes.indiatimes.com//thumb.cms?photoid=60707820&imgsize=22546&width=640&resizemode=4
The Rs 5,700 cr ICICI Lombard IPO saw a dozen brokerages recommending a ‘buy’ on the issue.
ICICI Lombard oversubscribed only 3 times? Not sure if it is the latest figure, but that sounds quite low isn’t it? Just 18000 Crores
Yeah. I was also surprised. It seems if you want high probability of allotment, better to apply under shareholder quota. Anyway whoever applied at cutoff bid would get allotment under retail quota.
NSE data:
https://www.nseindia.com/products/content/equities/ipos/ipo_current_icicigi.htm
BSE data:
http://www.bseindia.com/markets/publicIssues/CummDemandSchedule.aspx?ID=1422
SBI Life opens tomorrow.
Yes, is it probably because of SBI Life IPO opening tomorrow and everyone wants to apply for that instead of blocking cash with ICICI lombard till it lists?
Over-pricing of these issues may be a factor here.
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Probably yes. We will come to know by 22nd Friday evening after SBI Life IPO closes
Very slow start to SBI Life IPO as well. Subscribed 9% / 0.09 times
If few of these high priced IPOs flop(either during subscription) or just after listing…that will erase some froth or greed from this market and make it more healthy.
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Yes, that would be really good
Similar pattern of subscription so far for SBI Life as well (compared to ICICI Lombard). Only subscribed 50% with one day left
ICICI Pru Life was available for 3.5 times EV. Always wanted to add more and today was the day. 
All the more I feel SBI Life is overvalued with a ~20% premium over ICICI Pru Life and I can’t figure out why there should such high premium.
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A general question - Can a person have two demat accounts? Is it legal? So, basically two different demat accounts linked to same PAN / Aadhaar
Of course you can have multiple accounts. I also have two accounts. Can have any number so long you keep paying the annual AMC.
However note that you can’t apply for IPOs from multiple demat accounts. One person one application (multiple bids) and one demat account.
Basant Maheshwari has the following views on insurance companies in a TV interview…Any counter views?
Q: In a recent tweet you said, “Insurance is about spending a lot of time first then making profits - it’s a great rocket to be in - after it leaves the earth’s orbit !” Is it a good pocket to invest in if somebody doesn’t mind holding on for a first few years of uncertainty or lack of returns?
A: It’s good to say that I am a long-term investor and I want to buy the company for next 20 years. It doesn’t happen. So, if you buy a company and then NASDAQ falls 100 points, you call up the broker and ask what’s wrong with the company. So insurance companies globally, I get this theory of how American insurance companies have made so much money. But for first several years, you have to get your theory right.
For example, insurance is basically a bet. It’s a bet on whether you are going to die or not. I can give 10 percent lower than the competitor but the risk of that will never come to you next month because nobody dies the following month when you have taken an insurance. Over the 5-10 years, you have to create a pool of reserves for yourself. You have to create a pool where you get a sense of how the market is evolving, how life expectancy turns out and the data for that is only with LIC and that will be the blockbuster. I don’t think LIC will grow at that rate. If you have a 50-year view by a bank, by an insurance company then split the money to 50-50 and buy the best risk managers. You could be running an insurance company for 50-70 years and one wrong premium pricing could put you back almost to square one. It is fashionable to talk about how India is an underpenetrated market, insurance could grow because savings could grow, per capita income will be $3000 and all that. But you need to invest a lot in your reserves, you have to plough back and then you will get profits. For Birla Insurance, they were not able to show a profit for 5-10 years. We are not in a position to predict what is going to happen.
As an insurance company, I will say if you have a 20-year view then go and buy them where you will make 15-20 percent CAGR for next 20 years. But it’s easier to talk about 20 years. For the stock market, 20 years is 200 years. I don’t think that’s the way to be.
Also, on an overall scale, the idea of leaving the earth’s orbit was…when I wrote that… because most rockets you launch, don’t leave the earth’s orbit, they come back before they leave the atmosphere. In that context, we have to give lot of time and then can we invest. These private insurances are 15-20 years old and you don’t have the history for that.
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All the recent insurance company IPOs have had a subdued subscription levels. As I read from web, even GIC IPO got oversubscribed (just 1.3 times) primarily because LIC subscribed for almost 8000 - 9000 crores of the 11000 crore IPO size. Any feedback on this and how the HDFC Life IPO might turn out to be? If the valuation was the reason, then Dmart shouldn’t have got oversubscribed like it did and see the price now at around 1200 compared to the IPO price of 300 or so.
Sept monthly business figures for first year premium collections are out. ICICI Pru and HDFC Life continues to power ahead of others. ICICI Pru - 15% for the month and 32% for the year, HDFC Standard Life - FTM 25% and FTY 30% resp whereas SBI Life is shrinking -36% and -8% resp. So now ICICI Pru, HDFC Life and SBI Life has almost market share. Rs 4247 Cr, 4402 Cr and 4284 Cr premium collected by these 3 companies respectively.
https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_List.aspx?DF=MBFL&mid=3.1.8
Can somebody explain the difference between following types of policies
Individual Single Premium
Individual Non-Single Premium
Group Single Premium
Group Non-Single Premium
It is important as HDFC Life earns 50% of the premium from “Group Single Premium” policies whereas for ICICI Pru this category is almost negligible and SBI Life’s dependence on this category is going down in 2017 as compared to 2016.
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