SBI Life Insurance - Q3FY21 First Cut - ICICI Direct

(CMP - Rs. 866, MCap- Rs. 86630 crore)

SBI Life Insurance reported a mixed performance wherein premium accretion came healthy. However, higher actuarial liability offset investment income, led to lower than expected surplus and earnings.

Q3FY21 Earnings Summary

- Premium growth remained healthy at 18% YoY to Rs. 13766 crore, led by higher traction in renewal (up 24% YoY) and single premium (up 16.5% YoY). Growth in renewal premium continued to remain healthy at ~24% YoY to Rs. 8436 crore, with renewal rate at 85% comparable with Q3FY20. New Business Premium (NBP) witnessed moderation in growth at 9.5% YoY to Rs. 5439 crore, led by flattish group business. In terms of NBP breakup, traction in individual business witnessed gradual pick up at Rs. 3700 crore as against Rs. 3430 crore in Q3FY20, primarily led by ~63% YoY rise in non-par business. Protection business (individual + group) continued to report strong growth at Rs. 710 crore in Q3FY21 vs Rs. 510 crore in Q3FY20. Proportion of total protection NBP to total NBP stood at ~13% in Q3FY21. Group savings products business remained flat YoY at Rs. 1030 crore.

- AUM growth accelerated 28% YoY to Rs. 209500 crore. Shareholders and policyholders (excluding linked liabilities) assets witnessed healthy growth at ~24% and ~21% YoY, respectively. Assets held in lieu of linked products jumped ~33% YoY to Rs. 109448 crore. Recovery in equity market and decline in yields led to strong investment income at Rs. 12777 crore (up 213% YoY) in Q3FY21, supporting total revenue trajectory.

- Commission expenses increased 13.6% YoY to Rs. 517 crore, while commission ratio declined ~80 bps to 4.7%. Consequently, management expense ratio improved by ~100 bps to 8.4% in Q3FY20 (absolute opex at Rs. 1162 crore)

- Steady premium growth coupled with healthy investment income provided a boost to traction in top-line. However, higher actuarial liability led to lower policyholder surplus at Rs. 296 crore (below our estimate). Lower surplus led to muted allocation to shareholders at Rs. 66 crore vs. Rs. 113 crore QoQ and Rs. 217 crore YoY. Subsequently, PAT came lower than estimate at Rs. 233 crore.

- Solvency ratio was healthy at 2.34x as against 2.3x in Q3FY20

We would be shortly coming out with a detailed report.

Shares of SBI Life Insurance Company Ltd was last trading in BSE at Rs.861.6 as compared to the previous close of Rs. 879.25. The total number of shares traded during the day was 174279 in over 10248 trades.

The stock hit an intraday high of Rs. 885.45 and intraday low of 838.2. The net turnover during the day was Rs. 150434947.

Source : Equity Bulls

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