Capitaline

Analyst Meet / AGM 26-Apr-19

Conference Call

SBI Life Insurance

Expects protection business to continue to grow faster than overall business

SBI Life Insurance conducted a conference call on 25 April 2019 to discuss its financial results for the quarter ended March 2019. Sanjeev Nautiyal, MD&CEO of the company addressed call:
Highlights:

The company posted strong 30% growth in gross written premium (GWP) to Rs 32990 crore in FY2019, driven by quality and spread of the business.
The company focused on 4 key parameters in FY2019 a) increasing protection share, b) customer engagement, c) Digitization and d) learning & development.
The renewal premium has surged 33% to Rs 19200 crore, while new business premium income jumped 26% to Rs 13790 crore. Individual renewal premium surged 35% to Rs 18150 crore, while group single premium jumped 86% to Rs 3980 crore.
Individual rated premium (IRP) has increased 15% to Rs 8950 crore in FY2019 with the 22.3 private market share. Individual New Business Premium has shown consistent growth and increased 15% to Rs 9640 crore in FY2019.
The Company has registered growth in savings and protection business reflecting balanced product mix. Total protection new business premium has increased by 174% to Rs 1640 crore in FY2019. The share of total protection NBP (individual and group) has increased from 5.5% in FY2018 to 11.9% in FY2019.
The company expects the protection business growth to continue to grow faster than the overall business, while the company is unsure of maintaining 5-6 time faster growth for protection business compared with overall business growth.
New Business APE increased by 14% to Rs 9700 crore in FY2019.
The company has maintained cost leadership with total Cost ratio declining to 10.5% in FY2019 from 11.2% in FY2018. The commission ratio has eased to 4.1% in FY2019 from 4.4% in FY2018, while operating expense ratio also declined to 6.4% in FY2019 as against 6.8% in FY2018.
The Value of New Business (VNB) increased by 24% to Rs 1720 crore in FY2019, while VNB margin increased by 150 bps from 16.2 % in FY2018 to 17.7% in FY2019.
The product mix change positively contributed to margins by 300 bps, while assumption change and other negative variance impacted margin by 150 bps in FY2019.
The Assets under Management has grown by 21% to Rs 141020 crore end March 2019 with debt-equity mix of 77:23. 90% of the debt investments are in AAA and Sovereign instruments.
The Company has strong distribution network of 184452 trained insurance professional and widespread operations with 908 offices across country. The company has added 15352 agents in FY2019 and expects the agency channel to exhibit improved performance going forward.
NBP channel mix for FY2019 is bancassurance channel 64%, agency channel 21%, and other channels 15%.
The largest bancassurance partner of the company provides access to their 42.5 crore customer, while the company has tapped only 2% customers providing strong growth opportunities for future.
Maintaining leadership position, the company has posted 7% growth in sales of individual policies to 15.25 lakh in FY2019, of which 7 lakh policies were ULIPs.
Apart from increasing the share of protection business, the company expects to improve margins through increasing share of single premium products, selling immediate annuity products and non-par guaranteed savings products etc. Within the protection-led strategy, it would try to diversify the product portfolio.
Banca business grew grew 29% on NBP basis, forming 64% of the total NBP. The company added 9,468 CIFs during FY19, taking the total count to 58,995 end March 2019.
NBP through the online channel grew by 29% while number of policies increased by 44% in FY2019.
The company has exhibited improvement in persistency for all cohorts except 61st month persistency which eased on account of declining share of single premium business with 100% persistency.
Of the total group protection APE of Rs 290 crore, Rs 110 crore is attributable to credit protect while the remaining is group term insurance business.
Individual protection is coming largely from the banca channel. Through SBI's Yono app, the company has been able to offer simple term insurance products and issued 50 thousand policies, while expects to gain meaningful traction in the future.
Within individual protection business, pure term insurance was Rs 370 crore on APE basis, while the number of policies were more than 2 lakh. In the protection business, average ticket size is Rs 18000 which is higher than comparable peers.
The company expects to cap the group business at 20%.
The tie up with Allahabad Bank, which is less than 2 months old, is progressing well and the business so far has been about Rs 5.5-6 crore. The tie up with the Syndicate Bank is on pilot basis.

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