India's SBI Life Insurance reports lower new business margin for FY 2024

Sbi Life Insurance

26/04/2024 12:09

BENGALURU, April 26 (Reuters) - India's SBI Life
Insurance  SBIL.NS  reported a weaker new business margin for
the year ended March 31, hurt by a rising share of low-margin
products amid shifting customer preferences.
    The value of new business (VNB) - the expected profit from
new policies - rose 9.5% to 55.50 billion rupees ($666.1
million). The VNB margin contracted to 28.1% from 30.1% a year
earlier.
    Life insurers have seen a rise in the share of low-margin
unit-linked insurance plans (ULIPs) amid a strong domestic
equity market. This has weighed heavily on the insurers' VNB
margins, analysts said.
    The NSE Nifty 50 Index  .NSEI  rose 2.7% in the March
quarter, logging its fourth straight quarterly gain and scaling
record highs.
    SBI Life said its ULIP segment made up 60% of its overall
product mix by annualised premium equivalent (APE). The share
was 55% a year earlier. 
    SBI Life's ULIP share is the highest among its peers but the
company is able to cushion its margins better with its low-cost
structure, analysts have said.
    APE, a key metric for insurers, is a gauge of sales that
gives the annualised total value of all single premium and
recurring premium policies. The company's APE sales rose 17% to
197.20 billion rupees for the year.
    SBI Life posted a net premium income growth of 26% to 251.16
billion rupees for the three months ended March 31. Meanwhile,
investment income had a more than nine-fold jump to 108.12
billion rupees.
    Profit after tax rose 4.4% to 8.11 billion rupees from a
year earlier.
    Rivals HDFC Life Insurance Co  HDFl.NS  and ICICI Prudential
Life Insurance  ICIR.NS  both reported a weaker new business
margin on a higher share of ULIPs.
    Shares closed 2% lower ahead of the results.  


($1 = 83.3200 Indian rupees)

 (Reporting by Dimpal Gulwani in Bengaluru; Editing by Sohini
Goswami)
 ((Dimpal.Gulwani@thomsonreuters.com;))