SBILIFE — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen good day and welcome to SBI Life Insurance Company Q1 FY25

The next question is from the line of Nishchint Chawathe from Kotak Institutional Equities.

Nischint Chawathe

I’m not sure if I really understood the reason for year-on-year decline in margins.

As I understand, your margins in ULIPs at least in the past you’ve had kind of highlighted are higher than margins in the PAR book.

So, what has driven the compression in margins?

SBI Life Insurance Company Limited July 24, 2024

Moderator · Conference Operator

The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services.

Prayesh Jain

A couple of questions.

Firstly, on commission costs that have gone up, what could be the reason for that?

Secondly there is a slowdown in annuities as well.

Could you highlight the reason for that?

What is the outlook there?

Moderator · Conference Operator

The next question is from the line of Shreya Shivani from CLSA.

Shreya Shivani

I have two questions.

First is on the Banca channel, SBI Channel, I know in last quarter also they were slow.

But in general, the trend for this channel last year through the fourth quarter it didn’t decline but the growth sort of slowed down.

So, has there been any SBI stance over insurance or anything that you can share on that?

Second is on the competitive landscape, after last year’s taxation change had entered Tier-III-IV geographies which is your home turf in a way.

So, are we seeing any increased competition in your geographies, any color you can give around that?

Moderator · Conference Operator

The next question is from the line of Supratim Datta from Ambit Capital.

Supratim Datta

My first question is on the agency channel.

Now the agency channel has been growing fairly strongly and one of the key drivers behind that has been the number of agents that you have been adding over the last 2 years.

Just wanted to understand that you know how sustainable is this agent addition and do you have an annual target about how many agents you would like to add every year?

So that would be my first question before I come to my second question.

SBI Life Insurance Company Limited July 24, 2024

Moderator · Conference Operator

The next question is from the line of Dipanjan Ghosh from Citibank.

Dipanjan Ghosh

Just a few questions.

First if you can give some color on the business growth in the others channel which is non-agency, non-SBI.

What are the underlying constituents in terms of both product, and which is the fastest growing subsegment within that particular segment in terms of the channel mix?

Second you mentioned on the protection product pipeline but is there any other products that is expected to be launched in the next few quarters?

Also, will you be re-filing your products before 1st of October and if so, what would be the new contour?

Are you planning for any changes?

And you mentioned you won’t be tweaking the commission structure but is there going SBI Life Insurance Company Limited July 24, 2024 to be any other product structure tweaking that you kind of would be doing?

And lastly, we have seen some dichotomy in the non-PAR growth that we have seen across all the players have reported till now and you have reported a (+20%) sort of YOY growth.

We just wanted to get some color on the policy growth versus the ticket size growth or the quality of customers who are really buying this policy.

Moderator · Conference Operator

The next question is from the line of Aditi Joshi from JP Morgan.

Aditi Joshi

So, two questions from my side.

Firstly, on the composite licensing thing.

So, are you still expecting that this composite licensing might come into play and then if it actually takes into effect then what sort of benefits can you reap out of it?

And from a channel perspective again from a composite licensing perspective which will be a key focus of channel in terms of distribution?

And second on this agency side, do you have any particular product mix on that particular distribution channel in terms of what products you would like your agency to sell?

Because in this quarter we saw that the ULIP growth was pretty much higher even in the agency side.

But going forward do you think that we might see some higher share of protection products coming in from that side?

And just lastly on these new high net worth, higher sum assured products that you mentioned, which distribution channel are you focusing on for this product segment?

Moderator · Conference Operator

The last question is from the line of Sanketh Godha from Avendus Spark.

Sanketh Godha

It’s the same question on Bancassurance channel.

See our APE growth is just 12% in that Banca, that is SBI channel.

So, if you are guiding for 18% to 20% kind of a growth for the full year, then the expected growth from the Banca channel should be at least 15% to 16% for the full year, if the momentum in the agency remains at the current level.

So just wondering whether if it is 12% in the next 9 months you are expecting a growth of around maybe 18%-19% in the Banca channel.

Are you fairly confident that 18% to 19% kind of a growth will happen to deliver that high teen to 20% kind of a growth what you have guided for APE that’s the thing and what will lead to it?

I understand the seasonality part but just want to understand that part little better.

And second is that you said there is a marginal impact you did not quantify the number.

But assuming this current product mix remains true for the entire year, maybe how much that impact would be maybe less than a percentage or 50-60 basis point means if you can give a ballpark number assuming the current product mix will remain true what will be the likely impact on the margins because of the surrender norms?

Those were my questions.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, we will take that as the last question.

I would now like to hand the conference over to Mr. Amit Jhingran – Managing Director and CEO for closing comments.

Amit Jhingran

Thank you very much everybody, ladies and gentlemen for the time and the queries and the interest shown by all of you.

You may get in touch with our investor relations team in case you have any follow up question at any point of time.

Thank you.

God bless.

Moderator · Conference Operator

On behalf of SBI Life Insurance Company, that concludes this conference.

Thank you for joining us and you may now disconnect your lines.

SBI Life Insurance Company Limited July 24, 2024

Safe harbour

Please note that this transcript has been slightly edited for the purpose of clarity.

Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'would', ‘indicating’, ‘expected to’ etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'.

These statements by the Company and its management are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and are not guarantees of future performance.

Because forward- looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control, and actual results could differ materially from those presented in the forward-looking statements.

Questions and answers

20:08:48 +05'30' · Research Analyst

“SBI Life Insurance Company Limited

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

The first question is from the line of Avinash Singh from Emkay Global.

Avinash Singh

A couple of questions.

The first one is more around what will be your strategy around protection, encompassing both the retail protection and credit life?

Because I mean on the credit life side you have a large bank like SBI as a partner and also on the retail side you have a big reach.

But since last almost more than a year, protection somehow seems to be losing momentum, at least on a relative basis to savings.

So, what is going to be the strategy to sort of improve our protection share in the product mix, particularly the retail protection and credit life, GTI separating for the moment?

So that’s first question and the second question if you can sort of outline on your strategy or plans around product design or the commission tweaking post September 30th.Once this new product has to be sort of filed where you have this enhanced special surrender value.

So, what are your thoughts on sort of our impact in terms of how we are going to deal with the you know balancing the margin or payout to the persistent customers at the same time the commission payout?