SBI Life Insurance - Q2FY21 First Cut - ICICI Securities

(CMP - Rs. 779, MCap- Rs. 77894 crore)

SBI Life Insurance reported a healthy set of Q2FY21 numbers led by strong renewal premium accretion and investment income. Higher actuarial liability and elevated claims was offset by steady opex which led to reasonable PAT growth.

Q2FY21 Earnings Summary

- Premium growth was strong at 27.2% YoY to Rs. 12858 crore, led by higher traction in renewal (up 28% YoY) and single premium (up 71% YoY). Growth in renewal premium continued to remain healthy at ~28.1% YoY to Rs. 7150 crore, with renewal rate at 88% in Q2FY21. Despite Covid-19, new business premium growth was healthy at 27.4% YoY to Rs. 5940 crore led by strong accretion of protection and group premiums. In terms of NBP breakup, traction in individual business was muted at Rs. 2680 crore as against Rs. 2850 crore in Q2FY20, primarily led by decline in premium in unit linked products and non-par products. However, protection business (individual + group) reported strong growth at Rs. 620 crore in Q2FY21 vs Rs. 490 crore in Q2FY20. Proportion of total protection NBP to total NBP stood at ~10.4% in Q2FY21. Group savings products reported strong growth at Rs. 2650 crore, up 100.8% YoY

- AUM growth accelerated to Rs. 186360 crore. Shareholders and policyholders (excluding linked liabilities) assets witnessed healthy growth at ~21% and ~19% YoY, respectively. Assets held in lieu of linked products jumped ~22% YoY to Rs. 93476 crore. Recovery in equity market and decline in yields led to strong investment income at Rs. 5590 crore (up 113% YoY) in Q2FY21, supporting total revenue trajectory

- Healthy NBP accretion led to elevated commission expenses at Rs. 414 crore, up 1.5% YoY and 83.9% QoQ. However, higher commissions expenses were offset by steady opex, leading to overall opex (commission and opex related to insurance business) to come in at Rs. 1003 crore as against Rs. 1014 crore in Q2FY20. Subsequently, reported opex ratio came in at 4.6% in Q2FY21 vs 6% in Q2FY20

- Strong premium growth coupled with healthy investment income provided a boost to traction in top-line. However, higher actuarial liability and elevated claims (benefits paid) led to sequentially lower policyholder surplus at Rs. 410 crore (below our estimate). Lower surplus led to muted allocation to shareholders at Rs. 113 crore vs. Rs. 282 crore QoQ and Rs. 56 crore YoY. Subsequently, PAT came slightly lower than estimate at Rs. 300 crore but was strong on a YoY basis) Rs. 130 crore in Q2FY20)

- Solvency ratio was healthy at 2.45x as against 2.20x in Q2FY20

We would be shortly coming out with a detailed report.

Shares of SBI Life Insurance Company Ltd was last trading in BSE at Rs.778.75 as compared to the previous close of Rs. 770.3. The total number of shares traded during the day was 54462 in over 3346 trades.

The stock hit an intraday high of Rs. 784.95 and intraday low of 765.3. The net turnover during the day was Rs. 42317281.

Source : Equity Bulls

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