SBI Life hits new high on strong Q2 results, rallies 10% in two days

Shares of SBI Life Insurance extended their rally for the second straight day and hit a new high of Rs 928, up 6 per cent on the BSE on Thursday, after the company reported strong earnings in July-September quarter (Q2FY20). The stock of the life insurance company, which has surged 10 per cent in the past two days, was trading at its highest level since listing on October 2017.

SBI Life reported strong growth of 33.3 per cent year on year (YoY) and 17.5 per cent YoY in gross written premium (GWP) and new business annualized premium equivalent (APE), respectively in Q2FY20, led by focus on protection, annuity and individual non-par savings business. Renewals registered 33.2 per cent growth YoY.

“Value of new business (VNB) margin on effective-tax expanded by 100 bps YoY to 20.2 per cent in H1FY20 on a 400 bps positive variance from a change in product mix, neutral effect of change in assumptions (as will be reviewed by year-end) and 300 bps negative impact due to falling interest rates,” Emkay Global Financial Services said in a client note.

“The management has maintained its focus on profitable growth by optimizing the product mix to capture the growth opportunities at the same time, gradually improving profitability. Annuities and Protection (albeit Return of Premium being the majority in individual protection) will continue to lift up VNB margins,” analysts at SBICAP Securities said in result review note.

On the distribution front, the agency channel has started to deliver good results. This coupled with strong and continuously improving banca will enable SBI Life deliver impressive growth – certainly higher than that of the private life insurance industry – despite volatile economic and financial market conditions, it added.

Meanwhile, Australia's IAG plans to sell its 26 per cent stake in SBI General Insurance to Premji Invest and Warburg Pincus, reports suggest. SBI General is a joint venture between State Bank of India (SBI) and Insurance Australia Group (IAG). SBI and IAG currently own 70 per cent and 26 per cent stake, respectively in SBI General Insurance. READ MORE HERE

At 10:56 am, SBI Life was trading 5 per cent higher at Rs 920 on the BSE, as against a 0.21 per cent rise in the Sensex. A combined 1.8 million equity shares have changed hands on the counter on the NSE and BSE so far. In the past six months, the stock has rallied 51 per cent, as compared to a per cent decline in the S&P BSE Sensex.