SBI Life Insurance posts higher Q3 profit on policy renewals, new sales
Business
SBI Life Insurance posts higher Q3 profit on policy renewals, new sales
(Reuters) - India's SBI Life Insurance Company posted a higher third-quarter profit on Friday, led by growth in renewed and new insurance policies.
Its profit rose 71% to 5.51 billion rupees ($63.6 million) for the quarter ended Dec. 31, from 3.22 billion rupees a year earlier.
The insurer's net premium income grew 11% to 248.28 billion rupees, driven by a 13% rise in renewal premiums, or premiums that keep policies active, and a 12% jump in first-year premiums.
Insurance penetration has historically been low in India, but rising financial awareness and accelerated demand for cover - especially for life and health insurance - after the COVID-19 pandemic has led to higher policy sales.
The company's value of new business (VNB), or expected profit from new policies - one of the key metrics for insurers - rose 6% year-on-year to 42.9 billion rupees for the nine months to the end of December.
Its annualised premium equivalent (APE) sales, a closely watched metric that gives the annualised total value of all single and recurring premium policies, was up 11% at 159.7 billion rupees for the nine-month period.
Meanwhile, market- or unit-linked insurance plans (ULIP), which have a lower profit margin than term policies, accounted for 67% of SBI Life's overall product mix by individual APE during the quarter, up from 61% a year ago.
US stocks ended lower on Thursday as investors parsed the latest corporate earnings and economic data, and Big Tech stocks weighed on the Nasdaq.
Demand for ULIPs has been strong, especially in the first half of the current fiscal year, driven by India's buoyant stock market.
The rise in the share of ULIPs, however, led to VNB margins contracting to 26.9% for the April to December period from 28.1% a year earlier. Its VNB margins were largely flat on a sequential basis.
To cushion margins, insurers have pushed for higher sales of high-margin policies.
Peer HDFC Life reported a higher quarterly profit and an improvement in VNB margins on a sequential basis.
SBI Life's shares ended 1.8% higher after the results.