Daily Market Analysis on Insurance, Indian Oil Corporation, Renewable energy, Goldman Sachs,
- Insurers to make Life, Health cover norms tougher
On account of both the pandemic as well as the Insurance Regulatory and Development Authority (IRDA) new rules for health insurance on standardization of terms and conditions. Insurers will be making the purchase of life and health cover tougher for millions. In order to account for high payouts on the current ones in a covid affected nation, the insurance business is likely to underwrite strict norms for future policies.
- 25-30% Hike in Term Insurance Prices
Companies have been instructed to conduct physical medical examinations of applicants — a departure from the telemedical assessment. Those with serious ailments or comorbidities will find it harder to get their applications approved. Furthermore, prospective policyholders who are self-employed, students, frontline workers prone to accidents or are thought to be more exposed to potential infection, applicants with annual income less than Rs 5 lakh or those without college degrees can face higher rejection rates. Tighter norms come on top of a 25-30% hike in term prices being quoted by most life insurers.
- Stringent Underwriting Process on Health insurance Side
Patients with long-term illness history can expect more strict application norms as IRDA rules no longer allow for exclusions on pre-existing conditions. Existing mental health ailments could face an even higher rejection rate as the Supreme Court has made it mandatory for insurers to cover costs of mental health treatments as well. For those recovering from Covid, an unofficial cooling-off period of 45-90 days after a Covid-negative report has been mandated before a policyholder can be eligible for either a health or term life cover. This, because “mid-term effects of coronavirus are yet unknown to the medical community”, according to an industry executive. According to Sources India could be headed towards a persona-based risk pricing model. This means, other things being equal, those who are deemed less likely to be in a claims situation would have to pay a lesser premium.
According to latest industry data compiled by the General Insurance Council (GIC), health insurers have received over 14 lakh Covid claims worth over Rs 22,000 crore as on May 14. Life insurers on the other hand have settled death claims worth over Rs 2,000 crore in FY21 on account of the pandemic as per data compiled by IRDA.
- The government hiked subsidy on DAP fertilizer by 140%.
Last year, the actual price of DAP (Di-ammonium Phosphate) was Rs.1700 per bag. Where the central government has provided a subsidy of Rs.500 per bag. Due to the recent price surge of Phosphoric acid, ammonia, etc in the international market. The price of the DAP bag is now Rs.2400. So at Wednesday Meeting chaired by the Prime Minister, the central government has decided to increase the subsidy to Rs.1200 per bag, which is an increase of 140% to ensure that farmers do not have to face the brunt of price rise.
- India climbs to 3rd spot on EY index on impressive show by solar PV segment
Due to exceptional performance on the solar photovoltaic (PV) front. India has moved at the third spot on EY’s Renewable Energy Country Attractiveness Index(RECAI). As per EY’s statement, India’s solar sector is expected to grow significantly post the pandemic, with generation from solar PV forecast to exceed coal before 2040. This change is due to the Indian government’s policy ambitions, which have led solar PV to be the most cost-competitive source of power in the region and improving further. India also committed to setting up 450 GW for renewable energy power capacity by 2030 in the recent climate summit hosted by the US. This will likely increase the share of renewable energy in the overall power generation installed capacity to 54 percent, in comparison to the share in an overall gross generation to 36 percent. In 2020, global renewable energy capacity investments grew 2 percent to USD 303.5 billion. RECAI 57 estimates that future development to achieve net-zero will require a further investment of USD 5.2 trillion.
- Adani Green shares hit 5% upper circuit on the acquisition of SB Energy’s renewable portfolio
Adani Green Energy will acquire 5 GW of renewable power portfolio from SB Energy India for a fully completed enterprise evaluation (EV) of $3.5 billion (approx Rs 26,000 crore). SB Energy has a total renewable portfolio of 4,954 MW in four states. This is the largest acquisition in India’s renewable space. The share purchase agreement was signed on May 19 for the acquisition of 100 percent interest in SB Energy from SoftBank Group and Bharti Group, which held 80 percent and 20 percent stake, respectively. The deal is expected to enable Adani Green Energy to achieve its target renewable portfolio of 25 GW, four years ahead of the timeline, and takes the company’s present total renewable capacity to 24.3 GW and operating renewable capacity of 4.9 GW.
- Goldman Sachs set to buy 33% stake in GVK Bio at Rs 7,300-crore valuation
Goldman Sachs is all set to acquire about 33% minority stake in Aragon Life Sciences, formerly known as GVK Biosciences. The deal will value Aragon, co-promoted by the GVK Group and DS Brar, the former CEO & managing director of Ranbaxy Laboratories, at Rs 7300 crore ($1 bn). Existing shareholder Chryscapital will sell its 17% stake along with promoters who will dilute about 16% stake. Aragen is a leading provider of outsourced discovery, development, and manufacturing services across both large and small molecule platforms. The company serves a worldwide customer base that spans the United States, Europe, and Japan.
- Indian Oil Corporation Q4 results: Rs 8,781-cr net profit beats estimates on inventory gains
Indian Oil Corporation Ltd on Wednesday reported a fourth-quarter profit that beat analysts’ estimates by a huge margin as higher crude prices boosted the inventory value of the country’s biggest refiner. It reported a net profit of Rs 8,781 crore for the quarter ended March 31, compared with a loss of Rs 5,185 crore a year ago. Inventory gains are booked when oil prices rise by the time a company processes oil into fuel. Brent crude prices jumped about 23% during the March quarter. Revenue rose 18% to Rs 1.64 trillion. From April to March 2021 average gross refining margin – the difference between the cost of crude oil processed and the selling price of refined products – jumped to $5.64 per barrel against $0.08 a barrel a year ago.