SBI Life Insurance Co Ltd (NSE:SBILIFE) Q2 2025 Earnings Call Highlights: Strong Profit Growth ...

GuruFocus News

Thu, Oct 24, 2024, 1:00 PM 4 min read

New Business Premium: INR157.3 billion, private market share of 21.3%.
Individual New Business Premium: INR114.9 billion, growth of 13%, private market share of 25.7%.
Gross Written Premium: INR359.9 billion, growth of 7%.
Protection New Business Premium: INR17.2 billion.
Profit After Tax: INR10.5 billion, growth of 38% over the previous period.
Value of New Business: INR24.2 billion, margin of 26.8%.
Embedded Value: INR660.7 billion, growth of 29% over the previous period.
Assets Under Management: INR4.39 trillion, growth of 27%.
Solvency Ratio: 2.04, above the regulatory requirement of 1.50.
Renewal Premium: INR202.6 billion, growth of 16%.
APE Premium: INR90.3 billion, growth of 9%.
Individual APE: INR82.6 billion, growth of 16%.
Individual New Business Sum Assured: Growth of 20% over the previous period.
Agency Channel Individual APE: INR27.9 billion, growth of 36%.
Number of Agents: 2,64,058, growth of 11%.
Claim Settlement Ratio: 99.2%, improvement of 68 basis points.
OpEx Ratio: 5.8%.
Total Cost Ratio: 10.6%.
13 Month Persistency: 86.4%, improvement of 98 basis points.
61 Month Persistency: 61.9%, improvement of 438 basis points.

Warning! GuruFocus has detected 5 Warning Signs with FMBRY.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

SBI Life Insurance Co Ltd (NSE:SBILIFE) reported a strong profit after tax of INR10.5 billion, marking a 38% growth over the corresponding period last year.
The company maintained its private market leadership with a 21.3% share in new business premium and a 25.7% share in individual new business premium.
SBI Life Insurance Co Ltd (NSE:SBILIFE) introduced nine new products, including unit-linked insurance, term insurance, and annuity products, enhancing its product portfolio.
The company's embedded value grew by 29% to INR660.7 billion, indicating strong underlying business performance.
The solvency ratio stands at 2.04, well above the regulatory requirement of 1.50, showcasing financial stability.

Negative Points

The company experienced slower growth in premium numbers than anticipated due to a high base from the previous year.
There were headwinds in the group business, particularly with group savings products, due to unsustainable rates offered by competitors.
SBI Life Insurance Co Ltd (NSE:SBILIFE) faced challenges in the bancassurance channel, with slower growth as they prioritize digital platform development.
The protection segment's growth was not as strong as expected, partly due to delays in launching new products.
The company's credit life new business premium showed minimal growth, indicating challenges in this segment.

Q & A Highlights

Q: Can you provide an outlook on growth, particularly in the retail and group segments, and how you see the transition within the bank channel affecting growth? A: Amit Jhingran, CEO, explained that the company has grown by 15% on an IRP basis, despite a high base from the previous year. The focus is on shifting business to digital channels, particularly through the YONO platform, which is causing a temporary slowdown. However, they expect growth to return and aim for a 15-17% growth for the year. The launch of new protection products is expected to positively impact margins.

Q: Have you observed any changes in product margins on a sequential basis? A: An unidentified company representative noted that margins were slightly lower in the first quarter but improved in the second quarter. They expect further improvement in the third quarter. The company optimizes value for both customers and shareholders, reflecting market realities in their pricing.

Q: How is the agency business performing, and what initiatives are in place to sustain growth? A: Amit Jhingran highlighted the Agency 2.0 program, which focuses on improving agent activation, productivity, and collaboration. The agency business grew by 33% in the first half, and they expect to continue this growth trajectory.

Q: Can you elaborate on the impact of the new surrender value guidelines on margins and product offerings? A: Amit Jhingran stated that the company was minimally affected by the new surrender value guidelines, as their products already offered competitive surrender values. They do not foresee any significant impact on margins and expect to maintain a 26-27% VNB margin for the full year.

Q: What is the strategy for growth within the bank channel, particularly with the focus on digital platforms like YONO? A: Amit Jhingran explained that the YONO platform is being developed as a marketplace, and the company is focusing on digital transactions as the future. Despite the digital shift, the opportunities within the State Bank of India remain significant, with only 2% penetration of coverable accounts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info