SBI Life Insurance Company (SBIL.NS) reported a substantial rise in third-quarter profit, driven by increased sales of new and renewed insurance policies.
For the quarter that ended on December 31st, the company’s profit soared 71% to 5.51 billion rupees ($63.6 million), a notable increase from the 3.22 billion rupees recorded a year earlier.
Key Financial Highlights
Strong premium income contributed significantly to the positive results. SBI Life’s net premium income experienced an 11% growth, reaching 248.28 billion rupees. This growth was fueled by a 13% increase in renewal premiums and a 12% jump in premiums from new policies.
This strong performance comes as insurance penetration in India continues to rise. Factors such as increased financial awareness and heightened demand for life and health insurance, particularly following the COVID-19 pandemic, have boosted policy sales.
Value of New Business and Sales
The company’s value of new business (VNB), which reflects the expected profit from new policies, also saw an increase. For the nine months leading up to the end of December, VNB went up 6% year-on-year to 42.9 billion rupees.
Furthermore, the annualised premium equivalent (APE) sales, a crucial metric representing the total value of single and recurring premium policies on an annual basis, rose by 11% to 159.7 billion rupees for the nine-month period.
ULIPs and Margin Impact
Market- or unit-linked insurance plans (ULIPs) accounted for a larger portion of SBI Life’s product mix during the quarter. ULIPs, which typically have lower profit margins than term policies, constituted 67% of the company’s overall product mix based on individual APE, up from 61% a year ago.
The demand for ULIPs has been particularly strong, especially in the first half of the current fiscal year, largely due to India’s thriving stock market.
However, the increase in ULIPs led to a contraction in VNB margins, which declined to 26.9% for the April to December period, down from 28.1% a year prior. On a sequential basis, its VNB margins remained largely stable.
To counteract the impact on margins, insurers have been actively promoting higher-margin policies.
SBI Life’s shares saw a 1.8% increase following the release of the results.
($1 = 86.5910 Indian rupees)
