SBI Life Insurance hits record high; gains 16% in three months

Analysts believe SBIL is well positioned for long term growth given its strong market position, solid product portfolio, diversified distribution network, healthy capital position.

Shares of SBI Life Insurance (SBIL) hit a record high of Rs 1,049.85, up 1.5 per cent on the BSE in the intra-day trade on Tuesday. The stock of the insurance company surpassed its previous high of Rs 1,040, touched on May 7, 2021.

In the past three months, SBIL has beaten the market by gaining 16 per cent, as compared to an 8 per cent rise in the S&P BSE Sensex. In January-March quarter (Q4FY21), SBIL had reported 31.1 per cent year-over-year (YoY) increase in gross premium to Rs 15,647 crore in Q4FY21, driven by a strong growth in new business premium (NBP) as well as renewal premium. Net premium income (net of reinsurance) grew 31.1 per cent YoY to Rs 15,556 crore million in the quarter.

Brokerage firm Anand Rathi believes SBIL is well positioned for long-term growth given its strong market position, solid product portfolio, diversified distribution network, healthy capital position.

Meanwhile, those at ICICI Securities observed that continued revival in individual business during April-June quarter (Q1FY22), focus on single premium is expected to get partially offset by partial lockdowns keeping NBP at around 5 per cent YoY to Rs 3,197 crore for SBIL. Accretion of regular premium is seen keeping annualised premium equivalent (APE) growth higher at 19.4 per cent YoY to Rs 1535 crore. Pick up in regular premium, offset by lower traction in single premium business, may keep overall premium growth at 4 per cent YoY to Rs 7,867 crore, the brokerage firm said result preview.

Given yields, equities being in narrow range, investment income is seen staying steady quarter on quarter (QoQ). Opex continues to remain a focus area; though claims are seen remaining higher led by second wave, resulting in surplus at Rs 367 crore. Subsequently, earning is expected at Rs 403 crore, up 3 per cent YoY. Management commentary on growth, amount of claim to remain in focus, the brokerage said.

However, Emkay Global Financial Services expects four insurance companies – HDFC Life, ICICI Prudential Life, SBIL and Max Life - to report a decline in NBP on a sequential basis in the June quarter due to seasonally weak Q1 as well as lockdowns. That apart, it expects value of new business (VNB) margins for our insurance coverage to marginally decline compared to Q4FY21 due to the revival of ULIPs. However, it expects NBP and VNB margins will improve on a YoY basis on a low base of last year.

SBIL, analysts at Emkay said, is likely to report a decline of 45 per cent sequentially (up 12 per cent YoY) in gross written premium (GWP) due to weak momentum in group policies. It expects the VNB margin to decline sequentially to 21.8 per cent with shift in product profile.