Feature

Signs of Life

How the Street is valuing private life insurers — the next big proxy to play the financialisation theme

Shutterstock

While buying insurance as an instrument of safety, against future contingencies, comes as a natural choice to consumers, evaluating the same business from the perspective of an investor is a completely different ballgame. Insurance as a business is characterised by high, uncertain risks. Profitability, surprisingly, plays a smaller role than client stickiness in determining the long-term sustainability of the business. Thus, it becomes crucial to adopt a different framework to evaluate the business.