SBILIFE — earnings call

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Prepared remarks

Moderator · Conference Operator

Ladies and gentlemen, good day and welcome to SBI Life Insurance Company Limited

Thank you.

We will now begin the question and answer session.

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

Please go ahead.

Avinash Singh

Thanks for the opportunity.

Good set of numbers, particularly considering the backdrop.

A few questions.

The first one would be more that now, I mean, of course, we have crossed the 9 month.

So there should be more clarity around what's happening with your main channel bank SBI Bank and also how agency is performing.

And also the impact of surrender regulation of course it is known in reported numbers.

So if you can just sort of provide your guidance regarding growth and margin for the full year FY '25.

And related to that, if you can just try to quantify if at all, there was some impact from this product filing under new surrender regulations.

That's the question number one.

Second would be agency, of course, the addition and deletion are kind of a pretty regular, but if I see particularly this quarter, somehow agency deletion seems to have picked up, I mean, nearly 50,000-odd.

So addition is like a 25,000 per quarter that has been happening for the last 3 quarters.

But deletion has certainly picked up in Q3. So what is going on there with the agency?

If you can just sort of provide more color.

And lastly one more, protection side again I see that individual protection, the decline had kind of nearly arrested more or less quarter has been flat Y-o-Y basis.

And if we understand the pickup with the product like the Smart Shield Premier and that of product targeted bank customer is good.

But I think the premium growth for individual protection is not kind of still coming into positive.

If you can just help understand if there is a significant change in regular protection vis-a-vis a return of premium product on a year-on-year basis?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Shreya Shivani with CLSA.

Please go ahead.

SBI Life Insurance Company Limited January 17, 2025

Shreya Shivani

Thank you for the opportunity.

My first question is on the individual protection.

So we had mentioned in the last quarterly call that we've launched the 3-click products on YONO and that should see better growth in the quarter to come.

So while there is a good quarter-on-quarter pickup, but wanted to understand is it far more difficult to scale up a product just on YONO app or is this product also available in other channels?

I wanted to understand some color around this product and whether the margins of this product are higher or weaker than our earlier versions of individual protection products that we have.

Second is just an update on the banca channel.

There were quite a bit of noise around the misselling or the concentration risk, etcetera on this channel.

And we've also noticed that the regulator has set up a task force on the banca channel in October 2023.

So if you can give us any update on what came out of it?

Any commentary any interactions that you've had and how should we look at this channel?

I understand you've given us a growth guidance that it should pick up, but from the regulators point of view and the different task force that have been set up around it, what's going on, if you can help us with this?

Moderator · Conference Operator

Thank you.

Next question comes from the line of Supratim Datta with Ambit.

Please go ahead.

Supratim Datta

Thanks for the opportunity.

My question is on the agency side, I understand you have laid out certain plans that you want to do this year, but if I have to take a 5 year view, by when do you think agency can go up to around 50% contribution to the overall APE and what all building blocks we would need to put in place for agency to contribute 50%?

If you could give us some color on that?

And then in that what would be the banca growth we'll have to build in?

If you could give us some color on that, that would be very helpful.

That would be my first question.

Then on the banca growth when do we think the banca growth will get ramp up and get closer to the overall APE growth that we are delivering.

Currently, it's still in the single digit.

So by when do we think that gets up to the double-digit figure that we used to do 1 year back and what again, what all will be the drivers of that?

If you could give us some color on that?

And lastly coming to the new products you launched, a new product in the non par side recently.

If you could give us some color that how that has tracked in December, if you could give how do you see that play out over the remainder of the year?

And two, given ULIP has been a key driver of growth and we are entering a cycle where the overall equity market growth might be muted.

In that scenario, what would be the key products that we would be focusing on to drive growth?

If you could give us some color on that, that also would be very helpful?

Moderator · Conference Operator

Next question comes from the line of Prayesh Jain with Motilal Oswal Financial Services Limited.

Prayesh Jain

A good set of numbers.

Just, sir, one question is on the SBI channel.

We saw, I think, a decent growth coming back in this quarter what different did we do in this particular quarter as compared to the first half, where we had seen some slowdown?

Extending that question, the YONO sales, sales from YONO app, did you classify under SBI Bank itself?

And what about the other group companies of SBI, like SBI Securities or any other companies that kind of sell products of SBI Life.

Would they be classified in SBI?

Would be my first question.

Moderator · Conference Operator

Next question comes from the line of Dipanjan Ghosh with Citi.

Dipanjan Ghosh

Just a few questions from my side.

First, if I look at the embedded value between the third quarter and the second quarter, there seems to be a significant decline.

So, I would assume this would be because of the equity market movements.

If you can just break that up?

I know you gave it on an annual basis.

So, if you can just give some color on the EV movement and if there were any assumption changes or operating variance on the negative side.

And if it was investment variance, if you can break it up between equity and debt.

Second would be your non-PAR growth through the agency was quite strong during the quarter.

SBI Life Insurance Company Limited January 17, 2025 So, is it a function of both term and non-PAR and whether most of it was driven towards last month of the quarter?

And is the new product that is witnessing growth in the fourth quarter also being driven through agency?

If you can give some qualitative understanding on that.

And lastly, one question on your agency.

When you mentioned that your agent activation rates have increased and you are witnessing productivity benefits also, could you share some kind of positive understanding on the differential activation rate or the differential increase in activation rates that you've witnessed between, let's say, newer agents versus higher vintage agents?

And a similar qualitative data on the productivity side?

Moderator · Conference Operator

Next question comes to the line of Sanketh Godha with Avendus Spark.

Sanketh Godha

Sir, my first question is related to individual protection business.

So the individual protection business in APE terms have declined by 18% for 9 months.

But you said that the mix changed towards what you call pure protection business as compared to ROP led to that decline.

So, if I do a NOP calculation, that is a number of policies calculation growth.

Whether we have seen the growth -- and this mix, 57-43, what you alluded to, is now have stabled.

So going ahead, we can see a growth coming back to protection business?

Or you believe this mix will keep on changing?

And the growth will remain muted probably till a optimal mix, what you want to have will impact the protection business now?

So that's my first question?

Moderator · Conference Operator

Next question comes to the line of Rishi Jhunjhunwala with IIFL Institutional Equities.

Rishi Jhunjhunwala

Just a couple of questions.

Firstly, on the margin side.

I just wanted to understand, you've been able to maintain margins sequentially, whereas the product mix has gotten tilted more towards ULIPs in this quarter.

So what were the tailwinds that helped you in this quarter?

And also, you mentioned 27% to 29% in the long term.

Then outside of a change in product mix where, say, ULIP comes down and traditional goes up and protection goes up in the future, are there any other levers that you can call out?

Moderator · Conference Operator

Next question comes from the line of Raghvesh with GM Financial.

Raghvesh

Congratulations on a strong set of numbers.

Sir, just a couple of questions.

First, on the protection piece.

I'm just doing some math around INR100 would have come directly from the new protection plan that you're selling through.

So, is there a conscious decision to stop selling ROP products?

And is it because there has been poor mortality experience in that segment, understanding is ROP is typically sent to sold to a less affluent segment.

So, have we seen some negative mortality experience on that?

Moderator · Conference Operator

Next question comes from the line of Neeraj Toshniwal with UBS Securities.

SBI Life Insurance Company Limited January 17, 2025

Neeraj Toshniwal

Sir, just one question on Credit Life.

I have missed the number.

How is the growth in this quarter on Y-o-Y in APE terms?

Moderator · Conference Operator

Next question comes from the line of Gaurav Jain with ICICI Prudential Mutual Funds.

Gaurav Jain

Congratulations on a good set of numbers.

And also, sir, helpful to see that you started giving EV disclosure on a quarterly basis.

That is also helpful.

Sir, two questions from my side.

One is on reported profit after tax, we are seeing very strong growth both on a quarterly basis and on the 9-month basis.

So if you can share some light as to, is it the new normal?

We can expect PAT to really grow in this manner?

Or is it this year phenomenon?

If you can help us understand what exactly helps the PAT growth.

Second, sir, on this new non-PAR product that we had launched and growing and also maybe on the existing products that we have, have we set the clawback provision or the deferred commission payout structure, etcetera, in place?

Mangement

So, coming to your first part, which is profit after tax.

So this is a reflection of multiple things.

One is that the major contributor of the profit is coming from the investment income.

So, investment income from both from our traditional portfolio, which is excluding PAR, so non-PAR and shareholders has contributed the profit for the company.

And secondly, the backbook also is very strong for us.

So, renewal premium has grown by 15%.

So, there is a big backbook available for us through which we are garnering good numbers as far as the total PAT is concerned.

SBI Life Insurance Company Limited January 17, 2025 And secondly, the profit growth projection which is currently seen, we will not give you any kind of guidance because it depends on the product mix and the kind of market movement during that period of time.

So, because today, we have made profit because of the lesser growth in my traditional business as compared to ULIP early business.

So, if tomorrow the product mix shifts towards more on non-PAR and PAR, so there will be a strain on the PAT.

So at this moment, we expect that it will be in the range of around 10% to 15% growth for the year-on-year as far as PAT is concerned.

And on the new product, the new non-PAR which you asked, I think I'll request Prithesh to answer.

Moderator · Conference Operator

Our next question comes from the line of Madhukar Ladha with Nuvama Wealth Management Limited.

Madhukar Ladha

Congratulations on good set of numbers.

Just a couple of questions.

See, the medium- term growth you're still guiding for is 15% to 17%.

Now banca channel, as I understood, is not expected to grow that fast.

So it'll probably grow at the, whatever, 8% to 11% sort of a range.

And it's contributing almost about 65% to individual APE.

That basically means that the other channels have to grow at almost probably 25% sort of a number.

Now my question is that what is our right to win?

How will we be able to recruit that productive and agency channel?

And we are also not that competitive when it comes to commission payouts.

So would that mean that in order to grow at this rate, we would have to like aggressively also increase our commission payouts?

And that would then also result probably in an impact on the margins coming from this channel.

So, some sort of clarification.

And like what confidence do you have that you will be able to grow that other channel at that faster rate and the margins on that channel?

So that would be my question.

Yes, if you can give me some color on this?

Moderator · Conference Operator

The last question comes from the line of Supratim Datta with Ambit.

Supratim Datta

I have just one follow-up.

So if you could give us some clarity around how the cost structure in bank versus agency differ?

And hence, given we are now going to grow in agency, we have been growing faster, but that proportion is going to go up.

Then how does that impact the VNB margin?

Because I just wanted to understand if 1 ULIP or 1 non-PAR is sold versus in the agency?

How does the margin or cost structure differ there?

If you could help me understand that, that would be very helpful?

Moderator · Conference Operator

Thank you.

Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session.

I would now like to hand the conference over to Amit Jhingran for closing comments.

Amit Jhingran

Thank you, everyone, for the time and all the queries.

I hope that all the queries were responded to by our team and me in a satisfactory manner.

But just in case you have anything else, you can get in touch with our Investor Relations team with any follow-up questions.

Thank you once again.

God bless.

Moderator · Conference Operator

Thank you.

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

Thank you for joining us.

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.

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