Why Kotak AMC Is Adding Insurance Stocks To Its Portfolio
Kotak Asset Management Company Ltd. is including insurance names in its portfolio as it believes the sector is under-penetrated and less vulnerable to cyclical volatility, according to Harsha Upadhyaya, its chief investment officer for equity.
“We do have have some exposure to insurance names. There we believe that the penetration levels are very low for our country,” Upadhyaya told BloombergQuint in an interview. “Also, it’s more of a long-term business and less prone to cycles as compared to asset management.”
“We expect the top three private life [insurance] companies to double annual new business value in four years, extending to a 21-26 percent CAGR over the next decade,” a research note by JP Morgan said. The life insurance industry is still in the early stages of a multi-year growth story, it said, adding that major Indian life insurers reported 20-56 percent net business value growth in the first half of FY20.
“The flows will also see more continuation rather than cyclicality. To that extent, we do have exposure to general and life insurance in our portfolios,” Upadhyaya said.
WATCH | CIO Harsha Upadhyaya on why Kotak AMC is betting on the insurance sector