SBILIFE — earnings call
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Prepared remarks
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to SBI Life Insurance Company Q2 FY25 Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.
Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touchtone phone.
Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Jhingran, Managing Director & CEO.
Thank you and over to you, sir.
numbers in coming quarters. · Prayesh Jain:
Good evening, everyone.
We are happy to welcome you all to the results update call of SBI Life Insurance for half year ended September 30, 2024.
We appreciate and thank you wholeheartedly for your time for analyzing our results and attending our Earnings Call.
Updates on our financial results can also be accessed on our website as well as on the websites of both the Stock Exchanges.
Along with me, Mr. Sangramjit Sarangi – President & CFO; Mr. Abhijit Gulanikar – President (Business Strategy); Mr. Subhendu Bal – Chief Actuary & Chief Risk Officer; Mr. Prithesh Chaubey – Appointed Actuary and Ms. Smita Verma – SVP (Finance) & Investor Relations are present here on the call.
I am pleased to share that we have seen progress in several key areas as compared to previous corresponding periods, demonstrating the strength and dedication of our teamwork.
We are building a strong base for the year ahead by improving the Banca and agency productivity levels, onboarding new agents and digital initiatives.
This will ensure that in the long run the Company meets its goal.
In response to the evolving needs of our customers, we have taken significant steps to enhance our product offerings.
Over the past period, we successfully relaunched 15 existing products, ensuring they align with regulatory requirements, current market trends and customer expectations.
In addition to our relaunch efforts, we introduced nine new products that cater to the emerging needs of our customers.
Five unit linked insurance products, two term insurance products, one endowment product, etc. Further, in its endeavor to provide retirement solutions to the Company has also launched annuity product.
As of today, the Company has 24 products in its portfolio.
These new offerings reflect our commitment to proactive approach to addressing the changing landscape of customers and regulatory requirements.
By leveraging insights from the market research and customer interactions, we developed these products to provide greater flexibility, improved protection and tailored solutions.
While we have experienced slower growth in premium numbers than anticipated, due to the high base from last year, we are optimistic that our new product SBI Life Insurance October 23, 2024 launches and approach in reaching out to the customers will drive growth moving forward.
Our focus on adapting to customer needs underscores our dedication to delivering value and security.
We believe these initiatives not only strengthen our portfolio but also reinforce our position as a trusted partner in the insurance industry.
Moving forward we remain committed to continuously assessing and refining our offerings, ensuring that we are well equipped to meet the dynamic demands of our customers.
We recognize that staying attuned to customer preferences and market trends is essential for our continuous success.
Now let me give you some key highlights for this half year-ended September 30th, 2024: The New Business Premium stands at Rs.
157.3 billion and maintains private market leadership with share of 21.3%.
Individual New Business Premium stands at Rs.
114.9 billion with a growth of 13% and private market share of 25.7%.
Gross written premium stands at Rs.
359.9 billion, a growth of 7%.
Protection New Business Premium stands at Rs.
17.2 billion.
Profit after tax stands at Rs.
10.5 billion with a strong growth of 38% over the corresponding period of last year.
The value of New Business stands at Rs.
24.2 billion.
The value of the New Business margin stands at 26.8% for the period ending September 30, 2024.
Embedded value stands at Rs.
660.7 billion registering a growth of 29% over Rs.
512.6 billion in the last period.
Our Assets Under Management stand at Rs.
4.39 trillion.
The solvency ratio is at 2.04 as against the regulatory requirement of 1.50.
Individual New Business has grown to Rs.
114.9 billion with a growth of 13% over last period.
Single premium contribution is 33% of individual New Business Premium.
If we exclude the annuity business, single premium contribution is at 17% of Individual Business.
The Company’s private market share stands at 25.7% and industry market share stands at 15.5%.
On Individual Rated New Business Premium, we stand at Rs.
81.0 billion with a growth of 15% over last period and maintain our leadership position with private market share of 22.7% and total market share of 15.4%.
The Company’s two-year CAGR of individual rated New Business Premium stands at 16% out facing the industry CAGR of 14%.
This SBI Life Insurance October 23, 2024 is on backdrop of a consistent growth in performance which Company delivered year- on-year.
We have witnessed some headwinds in group business particularly with our group savings product due to unsustainable rates offered by few in the market.
Group New Business Premium stands at Rs.
42.4 billion with a contribution of 27% in New Business Premium.
Having said that, we have collected a total New Business Premium of Rs.
157.3 billion.
The Company’s Private Market Share stands at 21.3% and total market share stands at 8.3% on the New Business Premium parameter.
Renewal premiums grew by 16% to Rs.
202.6 billion which accounts for 56% of the gross written premium.
To Sum Up
Gross written premium stands at Rs.
359.9 billion with a growth of 7% over corresponding previous period.
In terms of APE, premium stands at Rs.
90.3 billion, registering a growth of 9%.
Out of this, individual APE stands at Rs.
82.6 billion with a growth of 16%.
During the half year ended September 30, 2024, total 9.87 lakhs new policies were issued.
Number of lives covered during the half year ended September 30, 2024, is 11 million.
The growth in sum assured serves as a positive indicator of consumer confidence and the increasing awareness of the importance of financial protection.
This upward trend reflects a shifting mindset among individuals who recognize the need for comprehensive coverage to safeguard their future.
Individual New Business Sum Assured registered a growth of 20% over the corresponding previous period.
Further as we continue to innovate and customize our offerings to meet evolving needs and demands, we anticipate growth in the upcoming period.
This is already evident in our quarterly growth of individual New Business sum assured which stands at 51%.
Let me give you details about the product mix
As on September 30, 2024, our guaranteed non-PAR saving products are contributing 19% on an Individual APE basis.
Individual ULIP New Business Premium is at Rs.
70.4 billion with a growth of 19% over corresponding last year.
And it constitutes 61% of individual New Business Premium.
SBI Life Insurance October 23, 2024 The growth in ULIP can be attributed to the positive movement in equity markets and evolving customer preferences.
This trend is evident across the industry as more customers seek products that blend investment opportunities with protection.
Individual Protection New Business Premium is Rs.
3.2 billion.
Individual Protection Business for Q2FY25 has grown 15% on NBP basis as compared to Q1FY 25.
Group Protection New Business Premium stands at Rs.
13.9 billion.
Credit Life New Business Premium has grown by 3% and stands at Rs.
10.5 billion.
Protection Business Contributes 8% of APE and stands at Rs.
8 billion.
Retirement plans assist customers in building a substantial corpus of funds to maintain the desired lifestyle and manage expenses in their golden years.
Total annuity and pension New Business underwritten by the Company is Rs.
32.8 billion.
Now moving to update on distribution partners With the strength of more than 58,000 CIFs, State Bank of India and RRBs Bancassurance business contributes a share of 58% on total APE basis and on individual APE basis it stands at Rs.
50.9 billion with a growth of 7%.
SBI branch productivity on individual APE terms stands at Rs.
4.3 million for the period and registered a growth of 8%.
In the first half of the year, we witnessed slower growth in our Bancassurance Channel as we are prioritizing on the development of robust digital platforms and advanced data analytics with a clear goal to reinvigorate the business model and enabling the Bancassurance channel to better serve specific customer needs both in person and digitally.
While this may result in a temporary slowdown, we view the phase as a strategic investment for future.
The focus will be on customer-initiated journeys on Yono platform of State Bank of India with little or no manual intervention.
By enhancing these capabilities, we are laying the groundwork for sustainable growth and improved customer engagement in the long run.
With enhanced focus on agency channel and strategic launch of Agency 2.0, we have witnessed improvement in agent activation, agency channel productivity and onboarding of new agents and better collaboration between agents.
Our agent productivity for the period stands at Rs.
2.6 lakhs on individual NBP terms registering a growth of 21% over corresponding previous period.
Agency registered New Business Premium growth of 14% over corresponding previous period and contributes 23%.
Agency channel individual APE showed a growth of 36% over last period and stands at Rs.
27.9 billion.
As on September 30, 2024, the total number of agents for the Company stand at 2,64,058, a growth of 11% over the previous period.
During the half year end, the Company added more than 50,000 agents, a fair SBI Life Insurance October 23, 2024 mix of both urban and rural areas.
The share of agency channel in individual rated premium has increased from 29% in previous period to 33% in current period.
During the half year ended September 30, 2024, other channels that comprise of direct channel, corporate agents, brokers, online web aggregators etc. grew by 28% in terms of Individual New Business Premium.
Linked business through other channel registered a growth of 59% on APE basis.
We are investing in building our online business channel.
Individual rated premium through this channel has grown by 73% for the current period as compared to the previous period.
Last year and protection business through this channel on IRP terms grew by 10% as compared to previous period.
We are focused to strike optimum balance among various distribution channels and we expect to grow by leveraging these multiple drivers and further strengthen our distribution network.
numbers in coming quarters. · Prayesh Jain:
The Company’s profit after tax for the half year ended September 30, 2024, stands at Rs.
10.5 billion with a robust growth of 38% as compared to previous period.
Our solvency margin remained strong at 204% as against regulatory requirement of 150%.
Value of New Business stands at Rs.
24.2 billion with a growth of 2%.
VONB margin stands at 26.8% for the half year ended September 24.
The shift in VONB is mainly on account of increase in share of ULIP business as compared to previous period.
Embedded value stands at Rs.
660.7 billion, a growth of 29% over previous period.
Embedded value operating profit stands at Rs.
54.4 billion and operating return on embedded value is 19.5%.
OPEX ratio stands at 5.8% and total cost ratio stands at 10.6% for the half year ended September 30th.
With respect to persistency of individual regular premium, 13th month persistency stands at 86.4%, an improvement of 98 basis points and 61st month persistency stands at 61.9%, an improvement of 438 basis points.
As mentioned in my opening remarks, Assets Under Management stands at Rs.
4.39 trillion as at September 30th having grown at a rate of 27% over corresponding period.
Death Claim Settlement Ratio stands at 99.2%.
The Company has registered an improvement of 68 basis points over last year.
An unwavering commitment to our customer-centric approach remains at the heart of everything we do.
Our mis-selling ratio stands at 0.03%, which is one of the lowest in the industry.
SBI Life Insurance October 23, 2024 Digitization is transforming the life insurance industry, enabling us to deliver enhanced services and a more seamless experience for our customers.
As we embrace this digital transformation, we remain committed to innovation and excellence, ensuring that we stay ahead in an increasingly competitive landscape.
The Company continues efficient usage of technology for simplification of processes, with 99% of individual proposals being submitted digitally.
44% of individual proposals are processed through automated underwriting.
We have aligned our business strategies with IRDAI vision and other regulatory initiatives, emphasizing the importance of customer empowerment in driving growth of the industry.
To conclude
By fostering a culture of resilience and continuous improvement supported by our multi- distribution network and dedicated team, we are confidently positioned for the future.
Our commitment to exceptional customer service strengthens client relationships and reinforces our status as a trusted leader in the market.
With a focus on long-term, sustainable and profitable growth, we aim to create lasting value for our customers, shareholders and communities paving the way for a prosperous future together.
Thank you all and now we are happy to ask any questions that you may have.
Moderator · Conference Operator
Thank you.
The next question is from the line of Nischint Chawathe from Kotak Institutional Equities.
Please go ahead.
numbers in coming quarters. · Prayesh Jain:
First of all, if I look at the business trends on a sequential basis, have we seen margin changing at a product level, which means that either you let margins going up or down on sequential basis or non-PAR margins going up or down on sequential basis?
So, what you are essentially trying to say is that non-par margins were probably a little lower in 2nd Quarter.
I think that is what you are trying to say?
Another data, essentially on operating variances change in assumptions, you know in EV walk and VNB walk if you could just kind of fill out the components?
And the economic assumption between debt and equity, it’s a fairly large number for you this quarter?
And just one last qualitative question is on the agency business.
You reported almost a 25% growth on the agency’s side.
So, how should we think about this going forward and what gives you confidence on sustaining such a high growth rate?
And are you facing any pushback or resistance from agents as you implement the new, the surrender value guidelines that you’ll probably share some part of the burden with them?
Moderator · Conference Operator
Thank you.
The next question is from the line of Shreya Shivani from CLSA.
Please go ahead.
Shreya Shivani
My question is on the protection segment.
So, last quarter, we had mentioned about launching a new product on the YONO app and an HNI product from August.
So, in spite of that, the growth is not very strong for the quarter.
Is it purely a function of that digital transformation happening in the YONO side?
Or if you could give some color on how has the uptick been on that product given that it’s been around for two months to three months at least.
And so my on the second question is on the topic of surrender value itself.
So, you’d mentioned last time that if at all there’s whatever impact there is from surrender value maybe up to 50 bps for us, so is it fair to say that the 26.8% VNB margin that we are at right now will decline to a 26.3% in the second half or keeping everything else constant that is, so some color on that will be useful.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Supratim Datta from Ambit Capital.
Please go ahead.
Supratim Datta
I have two questions, and both are on the growth side.
So, I wanted to understand the strategy that you are taking within the banca channel a bit more.
So one, in the previous quarter, you have indicated that there is a lot of opportunities still to penetrate within the bank branches.
Now, I wanted to understand if there is still so much opportunity within the bank branches, why are you looking at YONO, the digital platform as a key source of growth going forward.
That’s one reason why we pivot towards YONO.
And the second one was on the YONO, the self-drive business we have seen aggregators also move from a self-drive model to an assisted model when it comes to growth through digital channels.
Now, I wanted to understand that, would you be supporting the YONO channel with your own direct sales team?
Or how do you, once it reaches a certain size, how do you plan to drive growth after that?
So, those were my two questions.
Thank you.
Moderator · Conference Operator
Thank you.
The next question is from the line of Manas Agarwal from Sanford-C.
Bernstein.
Please go ahead.
Manas Agarwal
Sorry to harp on this again, some things are not making sense.
So, I’ll ask it in a different way.
Has there been any change in the channel dynamics with SBI?
I’ll lay the context before you answer.
ULIP is doing very well for the market and you guys are the leader in that.
Banca channel is very skewed towards ULIP.
2Q and 3Q is seasonally strong for Banca for us historically.
So, all of that does not tie in with the fact that our growth in the Banca channel is not doing well.
Your comment on investing in the digital sales on the bank side is an incremental effort.
I don’t understand why that should harm your BAU sales.
So, is there any change in how SBI is approaching SBI life sales?
That’s the question.
Moderator · Conference Operator
Thank you.
The next question is from the line of Madhukar Ladha from Nuvama Wealth.
Please go ahead.
SBI Life Insurance October 23, 2024
Madhukar Ladha
Again, on the same point actually.
So, what exactly are you doing in the SBI channel?
Because I think you mentioned that you are trying to move that channel into digital.
Does that mean that you are trying to also change the way a walk-in customer buys insurance from you, and is that what is impacting your sales?
So, I think that has not come out clearly as to, how the digital channel is actually impacting your overall sales from the SBI channel.
So, maybe if you can elaborate on that a little bit that would be useful.
And second, you mentioned that your VNB margins will be in the range of 26% to 27% for the full year.
In the first half, you are already at 26.8%.
I understand that there may be some negative impact because of surrender value changes, but that you are yourself also saying that will be minimal.
But shouldn’t then with operating leverage, the margin then for the year should be higher than the current number?
That’s my second question.
So, yes, so these would be my two questions right now.
Moderator · Conference Operator
Thank you.
The next question is from the line of Sanketh Godha from Avendus Park.
Please go ahead.
Sanketh Godha
Sir, again, sorry to ask the question on bank.
But just the growth for half is 7% from the bank channel.
Do you expect the growth from State Bank of India to be in teens, at least in the current year, given the current growth trajectory?
And probably we’ll have a little favorable base in fourth quarter.
So, just wanted to understand how you are looking from a full year perspective, the growth to play out.
And accordingly, you can also give us a guidance how agency will do going ahead, because that number is pretty strong, 36 percentage.
So, how do you expect this number to play out in numbers?
And the second thing is basically, they just wanted to check whether in non-PAR products have SBI Life Insurance October 23, 2024 you made any IRR change to just accommodate higher surrender value?
You said that you did not change any in commissions, but any IRR meaningful change you have made just to accommodate surrender low limited impact on the non-PAR business?
Moderator · Conference Operator
Thank you.
The next question is from the line of Aditi Joshi from J.P.
Morgan.
Please go ahead.
Aditi Joshi
The first question is actually related to the product mix.
Just some details will be helpful.
I mean, firstly, why the annuity product was slightly weaker in the 2nd Quarter.
And SBI Life Insurance October 23, 2024 also, can you explain as in especially related to the participating products?
We saw very strong growth in the 2nd Quarter.
So, just from a product proposition perspective, what is attractive to the customer and how are you trying to sell it because just very strong growth in that particular segment?
And a related question is that if we are able to provide some mixed outlook for the second half will be helpful?
Just one clarification is needed if I can ask that on the YONO, is it just select products that are gaining traction in the YONO especially only on the protection side because as you said that when the customer walks in, the employees in the banks or the CIF, they ask the customers to check the app and buy the product.
Is my understanding correct?
Thanks so much.
Moderator · Conference Operator
Thank you.
The next question is from the line of Dipanjan Ghosh from Citi.
Please go ahead.
Dipanjan Ghosh
Just two questions from my side.
First, can you shed some color on your growth across the non-SBI banca partnerships?
And do you see traction in some of these channels or your counter-share across those channels?
And second, while you’ve seen improvement in persistency across most of the buckets on 1H or 2Q, I just want to get some color on, is it more a function of back book product mix?
Are we seeing SBI Life Insurance October 23, 2024 improvement in persistency across each of the product classes?
So, if you can give some color on the product level persistency trends?
Moderator · Conference Operator
Thank you.
The next question is from the line of Nitesh from Investec.
Please go ahead.
Nitesh
First, the data keeping question.
What percentage of the retail protection is ROP for Q2?
Moderator · Conference Operator
Thank you.
The next question is from line of Harshit Toshniwal from Premji Invest.
Please go ahead.
Harshit Toshniwal
I think on that Banca channel part itself, clearly that base effect fatigue is something which we saw probably this year in 10% YoY growth.
But I just had two questions.
One is that when we see this year, would it be good that at least from life insurance perspective, SBI Life perspective, that this is a year of reset of the base?
But that 15%, the ability of SBI banks to be able to grow 15%, that still remains there.
Or do you think that the base is becoming large incrementally every year to justify a 10% to 12% kind of a banca growth?
That’s the first question.
And the second part is, so insurance as a product to what we have seen is that needs that physical element of understanding physical push.
So, to that extent, do you think that so high focus on YONO, at least for a product like life insurance, can that lead to the CIF’s distraction in terms of the ability to cross-sell their targets?
If you can throw some light there from their KRA perspective, how have things changed versus a YONO distribution or selling through YONO or selling through a normal Banca channel?
Is it the same for them or are they incentivized more if there is a KRA difference between the two channels per se?
But I think the first part also if you can also help that if this 10% is a one-off as a reset of the base or the ability of bank to grow at this base is 10%-12% itself?
Moderator · Conference Operator
Thank you.
Next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities.
Please go ahead.
SBI Life Insurance October 23, 2024
Rishi Jhunjhunwala
Most of my questions have been answered.
Just one thing, historically, if we see our business from a retail premium perspective used to be equally divided between 3Q and 4Q, it’s probably 3Q being slightly better than 4Q in terms of absolute size.
We saw that trend breaking down in the past couple of years and to some extent it was also driven by potentially SBI’s focus a little bit more around CASA in the last quarter of the year.
Given our guidance of 15% of growth on APE for the full year, it requires that trend to break and go back to a level where 4Q can match 3Q on absolute basis.
Just wanted to understand, do we have any kind of visibility there?
Is there a reason why the trends of the past two years may not continue this year?
Moderator · Conference Operator
Thank you.
The next question is from the line of Subramanian Nair from Morgan Stanley.
Please go ahead.
Subramanian Nair
So, my question was on VNB margin.
So, essentially you are talking about 26% to 27% margin percent for the second half.
Now you already have 27% for the first half.
And if you are targeting a 60-40 mix, it’s actually going to be better in terms of margin accretive products in the second half, and plus you are also talking about a higher protection mix as well.
So, is there anything else that is holding you back from guiding for a margin higher than 27%?
Because mathematically, the margin has to be higher in the second half, assuming the product mix.
So, yes, that’s my first question.
You can answer that.
Moderator · Conference Operator
Thank you.
Next question is from the line of Raghvesh from JM Financial.
Please go ahead.
Raghvesh
I have some questions on the credit life business.
So, I mean, it was sluggish for us.
The understanding is the broader market, personal zones and MFI is going down.
But SBI Life has traditionally had a, I think, an 80% share coming from home loans.
So, why is credit life not growing for us?
Moderator · Conference Operator
Thank you.
The last question is from the line of Prayesh Jain from Motilal Oswal.
Please go ahead.
numbers in coming quarters. · Prayesh Jain:
Just wanted to understand, on the HNI protection plan that you have been selling, what is the kind of premium that we’ve collected in this quarter or quarters?
SBI Life Insurance October 23, 2024
And the profitability of the product would be similar to the retail protection plans?
Last question, how has October result been so far?
Any trends that re-trends on the new product with respect to growth or product mix?
Moderator · Conference Operator
Thank you.
Ladies and gentlemen, that was the last question for the day.
I would now like to end the conference over to Mr. Amit Jhingran – Managing Director & CEO for
numbers in coming quarters. · Prayesh Jain:
So, thanks to all the analysts who are present here and thank you for giving this time and for all your queries.
If you have any other questions you may get in touch with our investor relations team, and we will provide you the requisite clarification.
Thank you.
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.
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
“SBI Life Insurance Company Q2FY25 Conference Call” October 23, 2024
Moderator · Conference Operator
Thank you very much sir.
We will now begin the question-and-answer session.
First question is from the line of Avinash Singh from Emkay Global.
Please go ahead.
numbers in coming quarters. · Prayesh Jain:
Two questions.
First one, broadly on the growth outlook, we heard you outlining your priorities.
Now, if we see the reality, I mean, even the first half, 15% retail APE growth has broadly come, the challenges were partly also on the group side and even retail within your bank SBI.
And you sort of suggested some kind of a strategic shift you are doing within that channel.
Now in this backdrop, I mean, the reality of what is happening in the group saving markets or the pricing pressure on GTI, that’s all affecting, credit life depending upon off take of loans, entirely affecting the group business.
And on the retail side, what you are sort of doing within banks.
So, now, how do you see the growth panning out and also, we have this new surrender that led to some bit of disruption and also, we are getting festive months.
So, a lot of externalities as well.
How do you see sort of a growth panning out in H2?
And within bank, I mean, how will it take this transition and how long this phase will last?
I mean, when can we expect sort of a growth to ramp up within banks also?
So, a broader sort of your commentary on growth.
And second, again, related to the margin, now ULIP, of course, has grown, and thankfully for you also, non-PAR has grown, and that is where the margin has come relatively better.
But again, the credit life has been slower, probably group term SBI Life Insurance October 23, 2024 insurance pricing seeing some pressure, and now you have this surrender regulation.
So, how do you sort of, in this backdrop, with changing sort of your product distribution mix and growth trajectory, how do you see that margin to be playing out?
So, these are my two questions, thank you.