SBI Life Insurance Company Ltd - Jan 2025 Earnings Call Transcript Analysis

January 24, 2025 · 5 min read

Earnings Call Transcript Analysis Report #

New Business Premium (NBP): INR 262.6 billion (9M FY25). Private market leader with 22.4% share.
Individual NBP: INR 198.6 billion (9M FY25), +12% YoY. Private market share 27.8%. Q3 FY25 growth 10% (vs. 6% industry).
Gross Written Premium (GWP): INR 609.8 billion (9M FY25), +9% YoY.
Profit After Tax (PAT): INR 16 billion (9M FY25), +48% YoY. Management attributes strong PAT growth to investment income and a strong backbook (renewal premium +15%).
Value of New Business (VoNB): INR 42.9 billion (9M FY25), +6% YoY.
VoNB Margin: 26.9% (9M FY25). Management notes the shift is “mainly on account of increase in share of ULIP business as compared to previous period.” They also noted a previous margin level around 31% had rationalized down to the current ~27%.
Embedded Value (EV): INR 681.4 billion (as of Dec 31, 2024), +17% vs. March 31, 2024. Management confirmed positive operating variances and EV growth QoQ (3.1% Sep-Dec).
Assets Under Management (AUM): INR 4.42 trillion (as of Dec 31, 2024), +19% YoY.
Solvency Ratio: 2.04 (vs. 1.50 regulatory requirement).
Opex Ratio: 5.3% (9M FY25).
Total Cost Ratio: 10.2% (9M FY25).
Persistency (Individual Regular Premium): 13th Month: 86.10% (+83 bps YoY), 61st Month: 63.29% (+521 bps YoY).

Strong PAT growth (48%) contrasts with modest VoNB growth (6%). Individual business growth (12% NBP, 14% IRP/APE) outpaced overall GWP growth (9%), indicating relative weakness in group business (“headwinds in group business, particularly with our group savings products”). Q3 Individual NBP growth (10%) beat the industry (6%). VoNB margin contracted compared to implied previous levels due to higher ULIP share, though management noted factors like non-par repricing, protection rider attachment, and better credit life reinsurance terms helped stabilize it sequentially in Q3.

Maintains guidance of ~15% Individual Rated Premium (IRP) / Individual APE growth for FY25.
Longer-term IRP/APE growth guidance: 15% to 17%.
VoNB growth for FY25 likely to be lower than APE growth, possibly single-digit or ~10%. Management: “there is a possibility that our VONB growth might be slightly lower than the APE growth.”
Longer-term VoNB margin target range: 27% to 29%. Management: “Our objective is to maintain the margin in the range of 27% to 29% kind of thing.”
Expects PAT growth to be around 10-15% YoY going forward, but highly dependent on product mix and market movements.

Strong growth in Individual business (especially Agency: +36% NBP, +31% Ind APE), ULIPs (+25% Ind NBP), PAT (+48%), AUM (+19%), Persistency. Decline/slowdown noted in Group Savings, overall Protection APE (-18% for 9M, though Individual Protection NBP grew 12% QoQ in Q3 vs Q2), and VoNB margin contraction YoY. Credit Life saw strong sequential (Q3 vs Q2) and YoY (Q3 vs Q3'24: +16%) growth.

Strong focus on strengthening the Agency channel (“Agency 2.0”) through productivity improvements, agent recruitment, and branch expansion. Continued push on digitalization and leveraging the SBI YONO platform.

Launched “Smart Platina Supreme” (non-par guaranteed savings) in December, collecting over INR 2.5 billion premium in ~20 days. Management noted it has “better than the company margins.”
Successfully leveraging the SBI YONO app for a simplified “3-click” protection product, selling over 73,000 policies in ~4 months, with a noticeable customer preference for pure protection over Return of Premium (ROP).
Launched protection riders attached to savings products with “encouraging” attachment rates, helping margins.

Branch Expansion: Opened 46 new branches in FY25 (by Dec ‘24), plan to add another 40 by March ‘25, targeting Tier 1-4 cities to support agency growth.
Agent Definition: Implemented a stricter definition for ‘active agents’, leading to a one-time higher deletion number (~40,000-45,000) in Q3 FY25. Added >75,000 gross agents in 9M FY25.
Digital Processing: 99% individual proposals submitted digitally; 50% processed via automated underwriting.

Agency 2.0 implementation appears ongoing and credited for productivity gains. Digital channel development within the SBI Banca relationship is yielding results (YONO product success).

Growth in ULIPs attributed to equity market movements (“evident across the industry”). Mentioned Swiss Re forecast for Indian industry growth at ~7.3% for the next 5 years. Customer shift towards pure protection observed in their YONO channel sales.

Maintained private market leadership in NBP (22.4%) and Individual NBP (27.8%). Outpacing industry growth in Individual NBP (10% vs 6% in Q3) and 3-year IRP CAGR (17% vs 13%). Largest agency channel in the private sector, second only to LIC overall. Highlighted very low misselling ratio (0.03%).

High base effect from Q3 FY24 acknowledged. Opportunity seen in low insurance penetration within the SBI customer base (~2.5-3%) and overall market. Significant opportunity identified in growing the agency channel. Navigating “noise” around potential bancassurance regulations.

Explicitly stated market leadership in key segments. Management emphasized brand trust as a key advantage in agent recruitment despite not always competing aggressively on commission.

High comparison base from Q3 FY24.
“Headwinds in group business, particularly with our group savings products.”
Potential impact of equity market volatility on ULIP momentum (though management downplayed immediate linkage).

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