Emkay Global Financial Services expects life, general and health insurers to report healthy premium growth in the December quarter of FY26, supported by favourable changes in the goods and services tax (GST) regime. However, the brokerage anticipates profitability to remain under pressure due to input tax credit (ITC) losses, higher commissions and regulatory-related costs.

In its Q3FY26 insurance sector note, Emkay Global Financial Services said operating performance across segments should remain satisfactory as improved affordability lifts demand. Premium growth momentum is expected to strengthen, even as margin expansion remains limited.

Life Insurance Segment Performance

Life insurers are projected to post healthy growth in annualised premium equivalent (APE) during the quarter, helped by GST-led affordability gains and the normalisation of base effects following revised surrender value regulations. Protection products are expected to benefit the most, with rising preference for term insurance supporting volumes.

Despite the improvement in premiums, value of new business (VNB) margins are expected to remain under pressure. Emkay Global Financial Services attributed this to GST ITC losses, partly offset by a shift towards higher-margin non-par and protection products, ongoing distributor negotiations and operational efficiency gains. Higher gratuity provisions following the implementation of labour codes are also expected to weigh on reported profitability.

General Insurance Growth Drivers

General insurers are expected to deliver healthy gross written premium (GWP) growth, led by motor and retail health segments. Lower GST rates are likely to support new vehicle sales, boosting growth in motor own-damage policies. Retail health insurance is also expected to see strong demand due to improved affordability after GST exemptions.

In contrast, growth in group health insurance may remain modest amid intense competition. Combined ratios are likely to stay elevated, driven by higher commission payouts, although some insurers may see marginal improvement in claims ratios. Emkay Global Financial Services expects GST ITC losses to have a limited impact on multi-line general insurers, with investment income helping support profit after tax during the quarter.

Health Insurance Segment Outlook

The health insurance segment is projected to report robust growth in retail premiums, supported by GST exemptions and the normalisation of base effects related to the 1/n regulation. Improved affordability is expected to drive demand, particularly for individual policies.

Claims ratios are likely to remain elevated due to higher claim frequency and severity, although the brokerage expects a modest improvement in claims experience during the quarter. Emkay Global Financial Services said it continues to monitor medical cost inflation, which remains a key risk for the segment.

Market Outlook and Investment Perspective

Looking ahead, Emkay Global Financial Services expects life insurers to sustain healthy APE growth as GST tailwinds continue and base effects stabilise. General insurers are likely to maintain steady growth in motor and health lines, while health insurers should see sustained premium expansion on the back of affordability gains and easing regulatory pressures.

From an equity market perspective, the report noted that while regulatory overhangs—particularly around commissions—persist, recovery in growth momentum and gradual improvement in profitability will be critical for insurance stock performance.

Emkay Global Financial Services Limited has announced the successful allotment of non-convertible debentures worth ₹442.00 crore to strengthen its financial position and support business operations. The company has allotted 4,420 senior, unsecured, listed, rated, transferable, and redeemable non-convertible debentures with a two-year tenure.

Debenture Issuance Details

The key details of the NCD issuance are as follows:

Fund Utilization Strategy

Emkay Global Financial Services plans to utilize the proceeds from this debenture issuance for:

• General corporate purposes
• Working capital requirements

Investment Structure and Eligibility

The NCDs were issued on a private placement basis to eligible investors, which may include:

• Banks and financial institutions
• Mutual funds
• Foreign portfolio investors
• Individual investors
• Other entities in accordance with applicable law

Regulatory Compliance and Listing

The debenture allotment was completed in compliance with regulatory requirements under applicable laws. The NCDs will be listed on the Wholesale Debt Market segment of BSE Limited, providing liquidity options for investors and ensuring transparent price discovery in the secondary market.