Bright Prospects

The Indian insurance sector is set for multi-fold growth, driven by increased foreign investment inflow, rising M&As and intense competition among insurers.

- Kumar Dipankar

A consolidation phase in the insurance sector, which started with HDFC Ergo acquiring private player L&T General Insurance last year, is expected to continue in this year. The new regulations have encouraged consolidation among some large players, while a few other companies are gearing up to list on the bourses.

Besides, the sector is likely to witness more inflow of foreign direct investment (FDI) and may perhaps see a few more companies hitting the stock market. Foreign investment in the insurance sector, which received a big momentum last year, is expected to keep flowing in coming years as well. But analysts note that the quantity of investment is set to moderate.

In 2016, more than Rs 10,000 crore of FDI landed in India as various insurers allowed their foreign partners to increase their stake to 49 per cent from the 26 per cent earlier. Last year, Nippon Life Insurance of Japan invested Rs 2,265 crore to increase its stake in Reliance Life Insurance to 49 per cent from 26 per cent, while Canada-based Sun Life Financial pumped in money to raise its holding in Birla Sun Life Insurance by buying shares worth Rs 1,664 crore.

Aviva, the UK-based insurance player, acquired an additional 23 per cent in Aviva Life Insurance Company India from joint venture partner Dabur Invest Corporation for Rs 940 crore, upping its stake to 49 per cent in the joint venture. The latest in the series of stake sale was SBI Life off loading 3.9 per cent to KKR & Co and Singapore Temasek Holdings for Rs 1,800 crore.

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