- New Business Premium: INR70.3 billion, growth of 13%.
- Individual New Business Premium: INR47.5 billion, growth of 17%.
- Gross Written Premium: INR155.7 billion, growth of 15%.
- Protection New Business Premium: INR7.2 billion.
- Profit After Tax: INR5.2 billion, growth of 36%.
- Value of New Business (VoNB): INR9.7 billion, growth of 12%.
- VoNB Margin: 26.8%.
- Assets Under Management (AUM): INR4.15 trillion, growth of 26%.
- Solvency Ratio: 2.01 (regulatory requirement: 1.50).
- Renewal Premium: INR85.4 billion, growth of 16%.
- Annualized Premium Equivalent (APE): INR36.4 billion, growth of 20%.
- Individual APE: INR33.1 billion, growth of 22%.
- Number of New Policies Issued: 4.25 lakh.
- Number of Lives Covered: 4 million.
- Individual ULIP New Business Premium: INR27.5 billion, 58% of individual new business premium.
- Individual Protection New Business Premium: INR1.5 billion.
- Group Protection New Business Premium: INR5.7 billion.
- Total Annuity and Pension New Business: INR15.4 billion.
- Annuity Business: INR11.5 billion, 16% of new business premium.
- Bancassurance Business Contribution: 63% of individual APE, INR20.7 billion, growth of 12%.
- Agency Channel Individual APE: INR10.7 billion, growth of 48%.
- Total Number of Agents: 2,57,266, growth of 15%.
- Profitability: Profit after tax INR5.2 billion, growth of 36%.
- OpEx Ratio: 6.1% (previous year: 6.8%).
- Total Cost Ratio: 10.5% (previous year: 10.8%).
- 13th Month Persistency: 86.5%, improvement of 150 basis points.
- 61st Month Persistency: 59.0%, improvement of 229 basis points.
- Death Claim Settlement Ratio: 98.7%, improvement of 107 basis points.
- Mis-Selling Ratio: 0.04%, lowest in the industry.
Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SBI Life Insurance Co Ltd (BOM:540719, Financial) reported a 13% growth in new business premium, reaching INR70.3 billion.
- The company maintained private market leadership with a 21.8% market share.
- Profit after tax increased by 36% to INR5.2 billion compared to the corresponding period last year.
- Assets under management crossed the INR4 trillion mark, showing a growth of 26% year-over-year.
- The company achieved a robust solvency ratio of 2.01, well above the regulatory requirement of 1.50.
Negative Points
- Protection sales showed a slight decline, attributed to higher demand for ULIP products.
- Margins experienced compression due to a lower growth in protection business and not passing on the drop in interest rates to customers.
- Commission costs increased due to new expense management guidelines.
- Individual annuity business saw a 10% year-over-year decline.
- The banca channel growth was relatively slow at 12%, raising concerns about meeting the full-year growth target.
Q & A Highlights
Q: What will be your strategy around protection income, particularly retail protection and credit life?
A: There was a slight blip in protection sales due to higher demand for ULIP products. To improve protection business, we are collaborating with SBI to offer a simpler product on their digital platform, YONO, with competitive rates and easy issuance. Additionally, we are designing a product for the ultra-HNI segment and simplifying underwriting processes to boost individual protection business.
Q: Can you outline your strategy or plans around product design or commission tweaking post-September 30?
A: We are not planning any commission structure changes. SBI Life, being a low-cost operator, will be least affected by new customer-centric regulations. We will continue with the same rate structure and focus on maintaining our competitive edge.
Q: Do you have plans to improve traction in credit life beyond home loans?
A: Home loans remain the largest portfolio, but we are also targeting education loan customers for protection products. We aim to cover these young customers through group or individual products.
Q: What has driven the year-on-year decline in margins?
A: The decline is mainly due to lower growth in protection sales and not passing on the drop in interest rates to customers. While ULIP sales have increased, the overall product mix and these factors have led to a decrease in margins.
Q: What is the impact of regulatory changes on margins, particularly the surrender penalty guidelines?
A: The impact will be minimal due to our prudent assumptions and higher-than-required surrender values. We do not expect significant changes in margins due to these guidelines.
Q: What is your guidance for growth for the financial year?
A: We maintain our guidance of higher teens to 20% top-line growth and margins in the range of plus/minus 28%.
Q: What is the reason for the increase in commission costs?
A: The increase is due to the expense of management guidelines, which were not applicable in the previous year's first quarter.
Q: Can you provide insights into the growth of the agency channel and its sustainability?
A: Our strategic initiative, Agency 2.0, has led to significant agent accretion and increased productivity. We aim to continue this growth trajectory and enhance our distribution mix.
Q: What is the outlook for the banca channel, given the recent growth trends?
A: The banca channel shows strong seasonality. After a flat March quarter, growth has resumed in June. We expect stronger growth in the second and third quarters, driven by new digital products and continued ULIP demand.
Q: Are there any plans for new product launches or changes in product structure?
A: We plan to launch a term plan for ultra-HNI customers and revamp our par and non-par portfolios. We are also introducing new riders to provide comprehensive solutions to customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
