HDFC Life shares jump 3% after IRDAI's surrender regulations soothe Street's nerves

The Insurance Regulatory and Development Authority of India () has notified new product regulations that include guidelines for revised guaranteed surrender value (GSV) of life insurance policies.

In a note, Kotak Institutional Securities said that the draft regulation, released in December 2023, was punitive raising GSV to 75-100% of premiums paid. It was of the view that the final notified guidelines are relaxed and most products fall within the guidelines hence the impact on product profitability would be minimal. The brokerage remains optimistic on the sector and reiterates its buy view on the sector.

Kotak recommends a buy on for a price target of Rs 800.

Meanwhile, Morgan Stanley expects HDFC Life to perform better in the near term since the stock has seen the maximum impact since the changes to 18 regulations were proposed. It said that the new regulations appear to be less onerous than the proposed norms by the regulator in December 2023.

Hong Kong-based CLSA also counts this as a positive for the insurance sector as it picks HDFC LIfe and Max Life as its top bets. "HDFC Life and Max Life should see the most relief as they were the worst affected," it said, adding that it expects healthy margins in the coming quarter. and keep it as our preferred pick

Meanwhile, 's shares were up by over 4% around this time.

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