Analyst Concall
Annualised premium growth to rise going ahead - SBI Life
This story was originally published at 20:15 IST on 17 January 2025
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--SBI Life MD: Witnessed headwinds in group business
--SBI Life: Plan to add 40 branches by the end of FY25
--SBI Life:Shift in value of new business margin due to rise in ULIP share
--SBI Life: Co's mis-selling ratio lowest in industry at 0.03%
--SBI Life: Agency, bancassurance growth in line with target
--SBI Life: Will see how surrender value norms pan out, impact minimal now
--SBI Life: Not heard anything from IRDAI on limiting bancassurance buisness
--SBI Life: IRDAI has always been consultative
--SBI Life:See value of new business growth lower vs annual premium equivalent
--SBI Life: Target individual annual premium equivalent growth of 15-17%
--SBI Life on correction in equity mkt: Don't see any challenges with ULIPs
MUMBAI – The growth in individual annualised premium equivalent will rise above the value of new business going ahead due to the moderation in margins or the change in the product mix, the management of SBI Life Insurance Co. Ltd. said at the post-earnings analyst call.
The management expects the value of new business growth to be in the high single digits or 10% and the annualised premium equivalent growth is seen in the range of 15-17%. The value of the new business of SBI Life Insurance for the nine months ended December grew 6% on year to INR 42.9 billion and the annualised premium equivalent grew by 11% on year to INR 159.7 billion. The insurer witnessed some headwinds in the group business, particularly with the group savings product.
The life insurer said that it was too early to determine the impact of the new surrender value norms. "We will see how it pans out in the first year and affects our margins. We have also previously mentioned that our potential impact is very minimal," the management said.
The Insurance Regulatory and Development Authority of India asked insurance companies to increase the surrender value of life insurance policies, specifically for non-participating products. Surrender value is the total payout given by the insurance companies when the policyholder exits the policy before maturity. The new norms came into effect from Oct. 1.
Asked about the moderation in the new business margins, the management said the shift was due to a rise in the share of unit-linked insurance products. The share of unit-linked insurance plans increased from 61% last year to 67% in Apr-Dec. Even though equity markets are seeing a correction, the management said they don't see that having any adverse impact on the growth in unit-linked insurance plans.
Over the longer term, growing the margin at a high rate will be challenging, the management said, said, adding that they expect margins in the range of 26-29% and the aim is to maintain it at a minimum of 27%.
On the growth of bancassurance and agency channels in the distribution mix, the life insurance company said they are more or less in line with the targets. The life insurance company also said it has plans to improve the agency channels by adding more agents and branches. The insurer added more than 75,000 agents on a gross basis and opened 46 branches in the first nine months of the year. By the end of the financial year, they plan to add 40 more branches.
On media reports that the Insurance Regulatory and Development Authority of India is planning to limit the dependence of insurance companies on the parent banks for the bancassurance business, the management said they have not heard anything from the regulator. The bank also said that they have a mis-selling ratio of 0.03%, which is the lowest in the industry.
"IRDAI always had a consultative kind of approach on every subject. Whatever they have done, they have done after floating a paper, circulating draft guidelines... and only then do they decide on anything. On banca-channel, we have not received any consultation paper," they said. They added that they are building their agency channels just in case any such guidelines come into the picture.
SBI Life Insurance Co. Friday reported a net profit of INR 5.51 billion, up 71.2% on year for the quarter ended December. Sequentially, the bottom line was up 4%. The rise in profits was mainly on the back of a fall in expenses for the life insurer.
On Friday, shares of SBI Life closed 1.8% higher at INR 1540.50 On the National Stock Exchange. End
Reported by Kshipra Petkar
Edited by Saji George Titus
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