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Analyst Meet / AGM
27-Oct-20
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Conference Call
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SBI Life Insurance Company
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Focus to continue on improving cost ratios
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SBI Life Insurance Company conducted a conference call on 26 October 2020 to discuss its financial results for the quarter ended September 2020. Mahesh Kumar Sharma, MD&CEO of the company addressed the call:
Highlights:
- The company is witnessing improving growth momentum on month on month basis. The company has achieved leadership position in new business premium with private market share of 24.5% rising 267 bps over H1FY2020.
- The company continues to drive digital adoption with 98% individual application submitted digitally.
- The VNB margin improved by 70 bps to a 10.8% in H1FY2021 led by business mix improvement in favour of retail protection mix. Overall, the total Protection business contributed 26% to the total VNB in 1HFY2021.
- ULIP products are showing improved traction in Q2FY2021, which would be sizeable proportion of the overall sales. The ticket sizes are also rising in ULIP products, which would aid growth.
- The company has added new banca partner - Yes Bank in Q2FY2021.
- The company is witnessing health growth trends in the agency channel in Q2FY2021, after witnessing negative growth in Q1FY2021.
- The contribution from Yono is very small to overall value of the total business, while the volume of policies is large. The ticket size of the protection policy issued through the Yono is much lower than policies issued through other distribution channels.
- The business generated through platforms such as Policybazar is negligible.
- In value terms, the credit protection business was flat in Q2FY2021 over Q2FY2020, while individual protection grew by 58%. The company expects the credit protect volume to see better traction going forward with bank disbursements improving.
- The protection growth is coming mainly on account of volume growth than through price increase.
- Individual protection and credit protect are higher margin products within the broader protection segment.
- The company moderately re-priced Non-PAR fixed-guarantee product in 2QFY21, which affected growth trends.
- The company uses various hedging techniques such as partly paid bonds, forward rate agreement, etc. to minimize balance sheet risk.
- The company is not interested in selling long-term par products.
- The company has exhibited healthy improvement in cost ratio to 8.6 % in H1FY2021 from 10.4% in H1FY2020. As per the company, some of the operating expenses may return but the overall expense ratio is likely to remain on the lower side compared to peers and the focus would continue on improving cost ratios.
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