Joined: 06/Sep/2006
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Posted: 25/Oct/2006 at 2:46pm
Originally posted by basant
Private Insurance will be a steady 20%-25% grower post 2008. See there is nothing new about insurance just that as people get wealthy and businesses expand they would need further/additional coverage.By 2010 ICICI would have creamed its insurance business and I do think that there would be nothing significant for investors to make a big multibagger out of it.Never read into the US insurers but we cannot match the absolute size. Their GDP is 20 times larger then ours.
1) Post 2008 for how long?
2) Which private insurance company would you invest into, if it got listed?
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Joined: 01/Jan/2006
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Posted: 25/Oct/2006 at 2:53pm
At least for the next 5-7 years.
All depends on the price at which they get listed. As they say everything is good only at a price. But ICICI, HDFC should be the front runners.
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Posted: 17/Nov/2006 at 4:39pm
Good point. I think that the DCF is the only way to value an insurance company but all calculations could go topsy turvy if a company has large claims that is why most insureres do not protect against deaths in case of war or natural disastors etc.
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
I am not sure how we can do it by DCF. this is one business in which money comes first and liability later. Also there are different type of policies - term/ULIp/Endowment etc. With everything the risk and the premium are different. Also most of the insurance companies are more interested in selling ULIPs as they make much more money on those. One possible way of doing this would be segregating the premiums in two parts - risk premium(sum assured etc) and non-risk premium(mutual fund investments etc). then each will have to be valued separately. Non risk premium income can be taken to be equivalent to mutual funds with certain AUMs while the risk premium income can be taken as % of mortality probability. Obviously Insurance companies have an advantage of having very long term investors and much higher margins on non-risk premium business so that will create some valuation gap as compared to normal mutual funds. This concept is still hazy but seems like a way to start.
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Posted: 18/Nov/2006 at 8:16pm
Sundaram finance is into General Indurance and that takes a few years to throw back cash. Apart from that it is solid value but when that value would get unlocked is the question?
Edited by basant - 18/Nov/2006 at 8:18pm
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