- New Business Premium: INR260 billion, growth of 21%.
- Individual New Business Premium: INR177.6 billion, growth of 17%.
- Gross Written Premium: INR561.9 billion, growth of 19%.
- Protection New Business Premium: INR29.7 billion, growth of 17%.
- Profit After Tax: INR10.8 billion, growth of 15%.
- Value of New Business (VoNB): INR40.4 billion, growth of 11%.
- VoNB Margin: 28.1%.
- Asset Under Management (AUM): INR3,714.1 billion, growth of 24%.
- Solvency Ratio: 2.09.
- Renewal Premium: INR301.9 billion, growth of 17%.
- Annualized Premium Equivalent (APE): INR143.9 billion, growth of 17%.
- Number of New Policies Issued: 16.42 lakh.
- Number of Lives Covered: 25.8 million, growth of 104%.
- Individual ULIP New Business Premium: INR101.7 billion, 57% of individual new business premium.
- Group New Business Premium: INR82.4 billion, growth of 31%.
- Individual Annuity Business: INR38.7 billion, growth of 35%.
- Total Annuity and Pension New Business: INR67.9 billion, growth of 12%.
- Agency Channel New Business Premium: Growth of 21%, contributing 18% of new business premium.
- Number of Agents: 243,590, growth of 26%.
- Operational Efficiency Ratio: 5.1%.
- Total Cost Ratio: 9.9%.
- 13th Month Persistency: 85.3%.
- 61-Month Persistency: Improvement of 449 basis points.
- Death Claim Settlement Ratio: 98.8%, improvement of 148 basis points.
Release Date: January 25, 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 21% growth in new business premium, reaching INR260 billion.
- The company maintained its private market leadership with a 25.3% share and a strong individual new business premium growth of 17%.
- Asset under management grew by 24% to INR3,714.1 billion, reflecting robust financial health.
- The company achieved a solvency ratio of 2.09, well above the regulatory requirement of 1.50.
- SBI Life Insurance Co Ltd (BOM:540719) received prestigious awards, including the World-Class in Service Category at the 23rd Global Performance Excellence Award 2023.
Negative Points
- Agency channel growth slowed down to 15% in the nine-month period, compared to 20% in the first half.
- There is an increase in operational expenses, including commissions and rewards, which could impact profitability.
- Persistency rates showed a slight dip in the third quarter, raising concerns about long-term customer retention.
- The company faces potential challenges from increased competition in Tier 2, 3, and 4 cities.
- Surrender rates have increased, which could impact the value of new business margins if the trend continues.
Q & A Highlights
Q: What is happening with the agency channel growth, and how are you planning to improve it in the next quarter?
A: Agency channel growth has been consistent at around 15%. While Q3 is typically more banca-focused, we expect agency to come back strongly in Q4. There is no major change in commission structure, and we continue to focus on strengthening our distribution mix.
Q: What gives SBI Life an edge in competition in Tier 2, 3, and 4 cities, and what is your guidance for next year?
A: Almost 39% of our business comes from rural and semi-urban areas, leveraging SBI's extensive branch network. We are also strengthening our network in these areas. We are present in all SBI branches, and our focus remains on making more branches active. We expect to maintain our growth trajectory.
Q: What is your view on the surrender value regulation and its potential impact on margins?
A: The surrender value regulation is still in draft stage. We have given our representation to the regulator and the Life Insurance Council. We do not foresee a significant impact on SBI Life as our product mix and features are already aligned with sustainable practices.
Q: Why does agency channel growth tend to be larger in Q4 compared to Q3?
A: Q3 is typically more banca-focused, while agency tends to perform better in Q4. This pattern is expected to continue, and we anticipate strong numbers from the agency channel in Q4.
Q: Can you provide details on the growth in the protection segment, particularly in group and retail protection?
A: Growth in group protection is mainly driven by group term life. We expect individual protection to see growth in Q4. We are focusing on increasing our individual protection share.
Q: What is the impact of increased costs and surrenders on your margins?
A: There is no significant impact on margins from increased costs or surrenders. We have not changed our assumptions and continue to maintain a conservative approach. Persistency rates have improved, and we do not foresee any major concerns.
Q: Are there any considerations for increasing payouts for banca and agency channels?
A: We have not increased commission payouts and continue to be the lowest cost player in the industry. Our current strategy is yielding comfortable growth numbers, and we do not plan to change the commission structure at this time.
Q: What is the product pipeline for the next three to six months?
A: We are working on new savings products in the non-par segment, individual par products, and enhancing features in deferred annuity products. Our focus is on offering a comprehensive suite to meet customer needs.
Q: How are you addressing recurring concerns around mis-selling?
A: SBI Life has the lowest number of complaints regarding mis-selling, at around 0.03%. We continue to focus on ethical sales practices and ensuring customer satisfaction. There has been no perceptible change in sales due to recent reports.
Q: What is your strategy for individual retail protection going forward?
A: We are introducing new products that can be easily sold online and through digital channels. Our focus remains on increasing the protection business in our overall mix, and we expect good numbers in the current quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
