SBI Life Insurance : Increase in Profit by 5% to Rs. 3.7 billion - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Wednesday, July 24, 2019

SBI Life Insurance : Increase in Profit by 5% to Rs. 3.7 billion


  
Performance for the quarter ended June 30, 2019


·       Increase in New Business Premium (NBP) by 52%
·       Increase in share of protection from 10% to 14% with 106% y-o-y growth
·       Private market leadership in Individual Rated Premium (IRP) with 35% y-o-y growth
·       Decrease in Operating expense ratio from 9.7%to 7.4%
·       Increase in 13th month Persistency ratio by 200 bps from 82.47% to 84.46%
·       Increase in Profit by 5% to Rs. 3.7 billion
·       Value of New Business(VoNB)increased by 49% to` 3.7 billion
·       VoNB margin increased from 19.0% to19.9%

Key measures of performance                                          

         (Rs. in billion)
Particulars
Q1 FY 2020
Q1 FY 2019
YoY
Revenue Parameters



New Business Premium (NBP)
31.5
20.8
52%
Renewal Premium (RP)
35.4
26.8
32%
Gross Written Premium (GWP)
66.9
47.6
41%
Individual New Business Premium
18.7
13.3
41%
Individual Rated Premium (IRP)
16.2
12.1
35%
New Business Annualized Premium Equivalent (APE)
18.6
13.1
41%
Total Protection NBP (Individual + Group)
4.4
2.1
106%
Total Protection NBP Share
13.8%
10.2%
-
Private Market Share based on IRP1
21.5%
19.7%
-
NBP Product mix (%) (Par/Non Par/ULIP)
9/49/42
16/38/46
-
NBP Channel mix (%)(Banca/Agency/others)
57/18/25
61/23/16
-
Financial Parameters



Value of New Business (VoNB) 2
3.3
2.2
49%
New Business Margin (VoNB Margin) 2
17.9%
17.0%
-
VoNB Margin using effective tax rate6



Value of New Business (VoNB) 2
3.7
2.5
49%
New Business Margin (VoNB Margin) 2
19.9%
19.0%
-
Profit after Tax (PAT)
3.7
3.5
5%
Net Worth
79.4
68.2
16%
Assets under Management (AuM)
1,469.5
1,202.8
22%
Key Financial Ratios



Operating expense ratio3
7.4%
9.7%
-
Commission ratio
3.7%
4.1%
-
Total cost ratio4
11.2%
13.8%
-
Persistency Ratios (based on premium) 5



13th month persistency
84.46%
82.47%
-
25th month persistency
75.97%
74.27%
-
37th month persistency
70.57%
71.30%
-
49th month persistency
67.89%
61.35%
-
61st month persistency
56.27%
57.82%
-
Solvency Ratio
 2.17
 2.14
-
Return on Equity (RoE)
19.2%
21.2%
-

1. Source: Life insurance council
2. VNB and VNB margin for Q1 FY20 and Q1 FY19 are based on management estimates
3. Operating expense ratio = Operating expenses / Gross Written Premium (GWP)
4. Total cost ratio = (Operating expenses + Commission + Provision for doubtful debt and bad debt written off) /GWP
5. The persistency ratios are calculated as per IRDA/ACT/CIR/MISC/035/01/2014 circular dated 23rd January 2014. Single Premium and Fully Paid-Up policies are considered in above calculation. Group Business where persistency is measurable is included. Persistency Ratios for the period ended June 30, 2019 and June 30, 2018 are 'For the Quarter' Persistency Ratios are calculated using policies issued in March to May period of the relevant years.
6. Effective tax rate assumes that a proportion of the projected profits are tax exempt on account of tax deductions available on income from dividends and tax free bonds.
N.B: Refer the section on definitions, abbreviations and explanatory notes



The Board of Directors of SBI Life Insurance Company Limited approved and adopted its unaudited financial results for the quarter ended June30, 2019, following its meeting on Tuesday, July 23, 2019 in Mumbai. The disclosure of financial results submitted to exchanges is annexed to this release.

Business growth and market share

·       New Business Premium (NBP) has increased by 52% from ` 20.8 billion in Q1 FY 2019 to ` 31.5 billion in Q1 FY 2020.

·       Individual rated premium (IRP) has increased by 35% from ` 12.1 billion in Q1 FY 2019 to ` 16.2 billion in Q1 FY 2020.

·       Individual New Business Premium has shown strong growth and is increased by 41% from `13.3 billion in Q1 FY 2019 to `18.7 billion in Q1 FY 2020.

·       The Company has registered growth in savings and protection business reflecting balanced product mix. Total protection new business premium has increased by 106% from ` 2.1 billion in Q1 FY 2019 to `4.4 billion in Q1 FY 2020. The share of total protection NBP (individual and group) has increased from 10.2% in Q1 FY 2019 to 13.8% in Q1 FY 2020.

·       New Business APE increased by 41% from ` 13.1 billion in Q1 FY 2019 to ` 18.6 billion in Q1 FY 2020.

·       Increase in GWP by 41% to ` 66.9 billion in Q1 FY 2020 mainly due to strong growth in NBP by 52% from ` 20.8 billion in Q1 FY 2019 to ` 31.5 billion Q1 FY 2020.

Cost Efficiency
·       Total Cost ratio has decreased to 11.2% in Q1 FY 2020, from 13.8% in Q1 FY 2019.
§  Commission ratio has decreased to 3.7% in Q1 FY 2020, from 4.1% in Q1 FY 2019.
§  Operating Expense has decreased to7.4% in Q1 FY 2020,from9.7% in FY 2018.

Profitability
·       Value of New Business (VoNB) increased by 49% to ` 3.3 billion in Q1 FY 2020.
·       VoNB margin increased by 90 bps from 17.0% in Q1 FY2019 to 17.9% in Q1 FY 2020.
·       Value of New Business (VoNB) increased by 49% to ` 3.7 billion for FY2020 (with effective tax rate).
·       VoNB margin increased from 19.0% for Q1 FY 2019 to 19.9% for FY2020 (with effective tax rate).
·       PAT increased by 5% from `3.5billion in Q1 FY 2019 to `3.7billion in Q1 FY 2020.

Persistency
·       Robust 13th month persistency of 84.46% in Q1 FY2020 as compared to 82.47% in Q1 FY 2019.
·       Strong growth in 49th month persistency ratio of 67.89% in Q1 FY 2020 as compared to 61.35% in Q1 FY 2019.

Assets under Management 
AuM has grown by 22% from ` 1,202.8 billion as of June 30, 2018 to ` 1,469.5 billion as of June 30, 2019 with debt-equity mix of 77:23. 90% of the debt investments are in AAA and Sovereign instruments.

Net worth and capital position

·       The Company’s net worth increased by 16% from`68.2 billion as at June 30, 2018 to `79.4 billion as at June 30, 2019.
·       The solvency ratio as at June 30, 2019 was at 2.17 as against the regulatory requirement of 1.50.
·       Return on Equity (RoE) of 19.2% in Q1 FY 2020 as compared to 21.2% in Q1 FY 2019.

Distribution network

·       The Company has strong distribution network of 174,753 trained insurance professional and widespread operations with 922 offices across country.

·       The Company has diversified distribution network comprising of strong bancassurance channel, agency channel and others comprising of corporate agents, brokers, micro agents, common service centers, insurance marketing firms, web aggregators and direct business. NBP channel mix for Q1 FY 2020 is bancassurance channel 57%, agency channel 18%, and other channels 25%.


Definitions, abbreviations and explanatory notes

·    New Business Premium (NBP): Insurance premium that is due in the first policy year of a life insurance contract or a single lump sum payment from the policyholder

·    New Business Annualized Premium Equivalent (APE): The sum of annualized first year premiums on regular premium policies, and 10% of single premiums, written by the Company during the fiscal year from both retail and group customers

·    Individual New Business Premium:Insurance premium that is due in the first policy year of an individual life insurance contract

·    Individual Rated Premium (IRP): New business premiums written by the Company under individual products and weighted at the rate of 10% for single premiums

·    Renewal Premium: Life insurance premiums falling due in the years subsequent to the first year of the policy

·    Value of New Business (VoNB): VoNB is the present value of expected future earnings from new policies written during a specified period and it reflects the additional value to shareholders expected to be generated through the activity of writing new policies during a specified period.

·    Value of New Business Margin / VoNB Margin: VoNB Margin is the ratio of VoNB to New Business Annualized Premium Equivalent for a specified period and is a measure of the expected profitability of new business

·    Solvency Ratio: Solvency ratio means ratio of the amount of Available Solvency Margin to the amount of Required Solvency Margin as specified in form-KT-3 of IRDAI Actuarial Report and Abstracts for Life Insurance Business Regulations

·    Net worth: Net worth represents the shareholders’ funds and is computed as sum of share capital and reserves including share premium, share application money and fair value change account net of debit balance in profit and loss account

About SBI Life Insurance
SBI Life Insurance Company Limited (“SBI Life”/ “the Company”), established in 2001, is a joint venture between State Bank of India and BNP Paribas Cardif S.A. and is one of the leading life Insurance companies in India. SBI Life has an authorized capital of ` 20.0 billion and a paid up capital of ` 10.0 billion.
SBI Life offers a comprehensive range of life insurance and pension products at competitive prices, ensuring high standards of customer service and world class operating efficiency. The Company offers individual and group products which include savings and protection plans to address the insurance needs of diverse customer segments.
SBI Life has a multi-channel distribution network comprising of an expansive Bancassurance channel with SBI, which has an unrivalled strength of over 22,000 branches across the country. SBI Life also has a large and productive agent network comprising of 121,137 agents, as on June 30, 2019. The Company’s other distribution channels include direct sales and sales through corporate agents, brokers, insurance marketing firms and other intermediaries. As on June 30, 2019, the Company has a widespread network of 922 offices across the Country to address customer needs effectively and efficiently. The Company had an AuM of ` 1,469.5 billion as of June30, 2019.

The Company is listed on National Stock Exchange (“NSE”) and The Bombay Stock Exchange (“BSE”).


BSE Code: 540719                                                                        

NSE Code: SBILIFE


Disclaimer

Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', ‘expected to’, etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the actual growth in demand for insurance and other financial products and services in the countries that we operate or where a material number of our customers reside, our ability to successfully implement our strategy, including our use of the Internet and other technology our exploration of merger and acquisition opportunities, our ability to integrate mergers or acquisitions into our operations and manage the risks associated with such acquisitions to achieve our strategic and financial objectives, our growth and expansion in domestic and overseas markets, technological changes, our ability to market new products, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions we are or become a party to, the future impact of new accounting standards, our ability to implement our dividend policy, the impact of changes in insurance regulations and other regulatory changes in India and other jurisdictions on us. SBI Life Insurance Company Limited undertakes no obligation to update forward looking statements to reflect events or circumstances after the date thereof.
This release does not constitute an offer of securities.
For investor queries please call Sangramjit Sarangi at + 91 22 6191 0281or email investorrelations@sbilife.co.in

For further press queries please call Santosh Settyat +91-22-6191 0034 / Minakshi Mishra at +91-22-6191 0140 or email santosh.setty@sbilife.co.in/  minakshi.mishra@sbilife.co.in

(Rs.1 billion = Rs, 100 crore)


SBI Life Insurance : Increase in Profit by 5% to Rs. 3.7 billion Reviewed by Investment Guru on July 24, 2019 Rating: 5     Performance for the quarter ended June 30, 2019 ·        Increase in New Business Premium (NBP) by 52% ·        Increase in ...

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