Stock Market

An insurance co is a hedge in itself, says Ashvin Parekh

Speaking to CNBC-TV18 Ashvin Parekh, Managing Partner, Ashvin Parekh Advisory Services, said that in insurance companies one is looking at growth. The policy holder ensures cash flow and unless he surrenders his policy, the value to the insurance continues to grow, he said.


On parameters which are critical for an insurance company, he said, the biggest thing for a life company is a hedge in itself. Persistency is the most critical part, he said.


R Sreesankar of Prabhudas Lilladher commented on ICICI Pru’s IPO.


The insurer’s margins are 8 percent compared to industry’s 17 percent. He said that market conditions are different now. “We also didn’t have HDFC-Max coming into the picture. Valuations are a thing of the market,” he said, adding that we have Nifty at about 8900.


Speaking about margins, he said, it depends on the product mix. ICICI Pru has a higher share of Ulips and lower margins.


He said if you are a long-term investor, you are going to see an upside by investing in ICICI Pru’s IPO.

Transcript to follow…