SBI Life Insurance Company Limited (SBILIFE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the SBI Life Insurance Company Limited Q1 FY '27 Earnings Conference Call. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Singran, Managing Director and CEO of SBI Life Insurance Company Limited. Thank you, and...

Good afternoon, everyone. It is our privilege to welcome you to the SBI Life Insurance Results Update Call for the period ended June 30, 2026. We sincerely appreciate for your time and efforts in analyzing our performance and your participation in today's earnings call. Updates on our financial results are available on our website as well as on the websites of both the stock exchanges. Along with me, Mr. Sanramji Singh Sarangi, President and CFO; Mr. Kantor Chako, President, Business Strategy; Mr. Subanuwal, President and Chief Risk Officer; Mr. Pritesh Chaube, President and Appointed Actuary; and Ms. Smita Vama, Executive Vice President, Finance and Investor Relations are -- the long-term outlook for the Indian life insurance industry remains encouraging, supported by strong economic fundamentals, a favorable regulatory environment and increasing digital adoption. Against this backdrop, SBI Life continued its growth trajectory from FY 2026 into the first quarter of FY 2027, delivering a 14% increase in individual rated premium, supported by a favorable shift in product mix. All product segments recorded growth on an individual rated premium basis and all key distribution channels achieved double-digit expansion. The increasing contribution from protection solutions and guaranteed non-par saving products reflects evolving customer preferences and our strategic -- looking ahead, the company remains confident in the long-term growth potential of the life insurance sector in India and its ability to navigate the evolving landscape with a continued focus on profitable and sustainable growth. Now let me give you some key highlights for the period ended 30th June 2026. New business premium stands at INR 89.1 billion with a growth of 23% and private market share of 20.5%. Individual rated new business premium stands at INR 39.7 billion with a growth of 13% and private market share of 22.2%. Gross written premium stands at INR 212.9 billion with a growth of 20% -- the company's profit after tax for the quarter stood at INR 7.2 billion, registering a strong growth of 22% over the corresponding quarter of previous year. Value of new business stands at INR 14.1 billion with a growth of 29%. VoNB margin stands at 26.2% for the period ended June 30, 2026. Indian embedded value of the company as on June 30, 2026 stands at INR 852.9 billion. Our assets under management stands at INR 5.2 trillion with a growth of 10% over the corresponding quarter last year. Solvency ratio of 1.6 is as against the regulatory requirement of 1.96. We will now update you on each of the key parameters in detail. Let me start with the premium. Individual rated premium stands at INR 39.7 billion with a year-on-year growth of 14%, while retaining our leadership position with a 22.2% private market share and a 15.2% total market share. The company's 3-year CAGR of individual rated new business premium stands at 14%, outpacing the industry CAGR of 13%. Individual APE stood at INR 39.9 billion, growing by 14% Y-o-Y. Total new business premium is INR 89.1 billion with private market share of 20.5% and total market share of 8.2%. Group new business premium stands at INR 32.9 billion with a contribution of 37% in new business premium and year-on-year growth of 41%. APE stood at INR 53.8 billion, registering a growth of 36% Y-o-Y. Renewal premium grew by 17% to INR 123.8 billion, which accounts for 58% of the gross written premium. To sum up, gross written premium stands at INR 212.9 billion with a growth of 20% over corresponding period last year. During the period, a total of 4.25 lakh new policies were sold covering 8.7 million lives. The growth in sum assured reflects strong consumer confidence and increasing awareness of financial protection. Individual and group new business sum assured grew by 46% and 265%, respectively, year-on-year, while rider sum assured continued to expand, now accounting for 39% of individual sum assured. The company continues to strengthen its product portfolio through focused and customer-centric initiatives. Individual APE for participating products stands at INR 2.4 billion with a growth of 35%. The par segment also witnessed a considerable growth of 81% in sum assured during the period. For the period June 2026, guaranteed non-par savings have garnered business of INR 9.7 billion with growth of 27%. ULIP stands at INR 24.5 billion, contributing 61% vis-a-vis 65% in Q1 FY 2023. Individual protection APE is at INR 1.9 billion with a growth of 18% as compared to the corresponding quarter ended June 2025. The pure protection category registered a strong growth of 41% on individual APE basis, reflecting rising awareness and demand for comprehensive financial protection, while the individual sum assured in the protection segment grew by 40% Group protection APE stood at INR 12.3 billion, registering a growth of 13% over the corresponding period of the previous year. Retirement plans assist customers in building a substantial corpus of funds to maintain the desired lifestyle and manage expenses in their golden years. Total annuity and pension new business underwritten by the company during the quarter is INR 18.9 billion. Moving to update on our distribution partners. With strength of more than 60,000 PIFs, the bancassurance business of SBI and RRB contributes 47% to the total APE basis. On an individual APE basis, it stands at INR 24.5 billion, reflecting growth of 10%. SBI branch productivity on individual APE term stands at INR 4.5 million for the period ended June 2026, registering a growth of 7%. Non-ULIP product mix has shown improvement by 200 basis points over corresponding period of last year. In the first quarter, agency individual APE stood at INR 13.1 billion, registering a growth of 20% Y-o-Y and agent productivity at INR 2 -- the channels product mix improved with non-ULIP share increasing from 43% to 46%, supported by a robust 63% growth in agency individual sum assured. During the quarter, the company added over 34,000 agents on a gross basis and 11 new branches. The other channels, the direct channel, corporate agents, other banks, brokers, online and web aggregators grew by 160% and contributed 28% of total APE. Banks other than SBI Group are also growing at 31% on total APE basis. Coming to profitability. The profit after tax for the period ended 30th June 2026 stands at INR 7.2 billion with a growth of 2% -- the quarter witnessed supportive market conditions, which aided investment performance and contributed to the overall financial outcome. The GST impact for the quarter is INR 2.3 billion. Our solvency margin remains strong at 1.96% as against regulatory requirement of 1.50. Value of new business stood at INR 14.1 billion, reflecting 29% growth driven by both volume growth and favorable shift in product mix. We have sustained a healthy margin of 26.2% for the quarter ended 30th June 2026. Excluding GST impact, VONB would have been INR 14.7 billion, representing 35% growth with a VNB margin of 27.4% -- the embedded value for the company as on June 30, 2026 stands at INR 85.9 million with a growth of 15% over June 2025. Coming to operational efficiency, OpEx ratio stands at 7.7% and total cost ratio stands at 12% for the quarter ended June 30, 2026, as compared to 6.3% and 10.8%, respectively, for the corresponding period ended June 30, 2025. With respect to persistency of individual regular premiums, 13th and 49th month persistency stands at 57.7% and 69.1%, showing an improvement of 51 and 68 basis points, respectively. As mentioned in my opening remarks, assets under management stand at INR 5.2 trillion as at June 30, 2026, having a growth of 10%. Net claims settlement ratio stands at 98.8% for the period ended June 30, 2026. Our misselling ratio stands at 0.02%, which is one of the lowest in the private industry, and this is achieved through our consistent approach adopted by the company to ensure right selling to the customers. The company continues efficient usage of technology and simplification of processes with 99.9% of the individual proposals being submitted digitally. 67% of the individual proposals are processed through automated underwriting. Inlusion, by embedding resilience and continuous improvement at the core of our culture and by strategically strengthening our key channels, we are well positioned for sustained growth. Our unwavering commitment to delivering exceptional customer service not only deepens client relationships but also reinforces our reputation as a trusted and leading force in the market. Thank you all. And now we are happy to take any questions that you may have.

The first question, I mean I would like to get some clarity around -- I mean, of course, the VNB growth of 30% is very strong. But around the margins, of course, there is a GST impact. But importantly, this time, typically, your mix, if I were to look at in terms of individual and group generally, I mean, somewhere between 10%, 12% contrib being -- I mean, your AP being 100% of premium, the margins would certainly be lower than your overall margin. So in that respect, I mean, if I do some math, it suggests that despite GST hit your individual margins or GTI margins imp very strongly. So can you help, I mean, provide some color on, what kind of margins the GTI where has been the overall direction of margins? Because from my understanding, if I were to kind of GTIitors,st of the margins look very, very strong. So that's one, if you can provide some color around this. And second, if I see the growth in channel firing up. Do you expect or like now you have all the ingredients in place to agency to deliver this aggressive growth over the rest of the year and maybe coming years? Initially, will this kind of a shift of business mix gradually away from your core SBI to these channels have kind of any bearing on costs or margins?

So thank you, Arn. See, as a company, we have always communicated that our focus is on individual rated premium. And the guidance for the year also we RP growth and margin. We are happy that on both the fronts, IRP as well as margin, we have delivered what we had promised around 14% to 15% growth and our IRP growth is in that range. The margin guidance was 26% to 28%, and we are within the range, although at a lower end of that. But coming to your specific question, yes, the overall APE mix during the first quarter where we have always said that group business is a lumpy kind of business and we had a higher share of group business in the -- that has affected margin overall, and it has brought down as compared to last year. But going forward, we are sure that this lumpy kind of business doesn't happen very frequently. And our growth projections for the year on IRP basis remains at 14%, 15%. And on the margin front, we have definitely seen the bottom in the first quarter itself. And going forward, with higher focus on individual policies, the margin is going to be towards the upper range of our guidance...

My question on…

Your second question was regarding growth in agency. So as you are aware that company has been focusing for the last 3 years in strengthening our agency channel. We have opened more than 100 branches in last 2 years, last 3 years. And our addition of agents, along with the productivity of agents has been going up because of the sustained efforts, what we earlier called Agency 2.0 and then the agency -- next program was launched, and this has resulted good growth in agency. If you look at the figures for '24, '25 also, the agency growth was pretty strong. And last year also agency grew despite that very high base of FY -- the agency continues to deliver a strong number in the current year also and the current quarter has seen 19% plus kind of growth. We are sure that the agency in the remaining 3 quarters will also be submitting -- will also be contributing even stronger number. As far as the business mix is concerned, SBI remains our strong point, and we have -- we are delivering strong growth numbers on the Banca side, SBI side also. This quarter also, the growth was around 10%. But having said so, we have in the past also said that we want to explore the potential that is available on the agency side, and we are happy that our strategies on the agency side are delivering results. So going forward, a very healthy contribution from Banca as well as agency will drive overall company's growth.

We will take the next question from the line of Shreya Shivani from Nomura.

Sir, I have 2 questions. First is on the GST drag. So it was about 1.1 percentage than 1.5 percent in first quarter another would have thought that by the time you are in the third quarter dealing with GST, that impact would have gone away as you would have revised many of your expenses, et cetera. But it still seems to be at similar trend as of last 2 quarters. And should we expect the next quarter again, there will be a drag of 110 or 120 bps or so? That's my first question. Sir, my second question is on your other expenses. There has been a pickup in -- there's a slight pickup in your other expenses even if we adjust for the GST impact. So any color around this? Is this because we are investing in the agency channel, et cetera, has dropped? Speaker 4 GST part, what you're seeing the 1.1% drag in the margin is on account of GST only because last quarter, we -- and what we keep mentioning that our expenses and commission ratio is much even on lower side. So we are not looking to reduce our expenses or commissions already a lower side, but we keep maintaining that our product mix will able to mitigate these things. And that we see in the year in FY '26 as well, we almost left with a 20, 30 basis points. So even this quarter as well, while the product mix in individual side is much more than offsetting this GST impact because we have got a good profitable group business. As a result, we see the margin. But when you go to next quarter, you will see some impact on the GST. And thereafter, we see GST...

On the expense side, as you said, overall, I think you can see that the sum assured have been increasing for SBI Life significantly. So the direct corresponding to that. So that is one-off item which has been the impact in the first quarter. And secondly, also, if you see sometime between the June '25 to June '26, the labor impact to a certain extent because of the number of employees, and this is the first quarter where we are seeing this impact. So overall, I think it is in the line what we anticipated and which will continue and the next 3 quarters, you will see it will streamline as per plan.

Sorry, just to understand that, you are saying that this elevated other expenses will continue for this year as well. Did I read that correctly? Did I hear that correctly?

See, the other expenses will continue in tandem with the sum assured. -- higher sum assured. So you can assess that the stamp duty is also corresponding to that. We are writing good protection business. So plus -- in the ULIP in other products also, we are attaching a lot of protection. So that is the reason the sum assured has been significantly increasing for us. So that gives us some spike in the other expenses. Otherwise, it is corresponding to what we plan.

We will take the next question from the line of from...

My first question is on the sum assured. So just wanted to understand what proportion of ULIP that you are selling are now having assured -- if you could give us some color on that, how is it today and what it was 1 year back? That would be helpful. And on the share has gone up. I just wanted to understand is this related to a certain company or what is the nature of this contract? If you could give us some color on that because it's pretty large.

So we do not have a high sum assured kind of ULIP. We have normal ULIP products in our portfolio. But rider attachment, we have increased in the ULIP and now almost 45% to 50% policies are being sold along with the rider attachment. So that is helping in higher sum assured at the company level.

Sir, what happened last year, if you could give us...

So last year, we just started attaching riders in the...

ULIP.

And as far as the GTI business is concerned, we do not comment on individual...

Understood, sir. And lastly, sir, on the persistency. So the 61st month persistency has gone down versus last year. I just wanted to understand what is driving that?

So if you are tracking company's persistency, you would have seen that there is what we -- in the company are calling COVID cohort and that cohort is moving over the years from 315 to 37, 49, and now that cohort has reached 61st month, and that has resulted in a dip in 61st month persistency. So this cohort will move away from the 61st month by end of third quarter. So by end of the year, the 61st month persistency will -- again, we are expecting we will come back to normal...

We take the next question from the line of Madhu from JPMorgan.

Congratulations on a good set of numbers.

So first on the VNB margin. And so margin has come off despite we see par, non-par et cetera, those lines of business doing well. I suspect this is because of the GTI business. Can you quantify like of this negative 0.6% that is the margin impact, right, on overall VNB, -- how much is it because of GTI? And then what was the positive impact in the give us some color in terms of how do we think about normalized margins? Second, individual protection growth, that seems a little bit softer. So if I'm right, this number on an APE basis is about 16%. That also includes the ROE. So what's -- why are we like growing a little bit lower than competition? That's the question...

Thank you, for your wishes on the number. So as far as margin is concerned, there is nothing to suspect in response to the first question itself, we had said that the contribution of overall group business to the total APE in the total APE was higher during this quarter, and that has resulted in a drag on the overall margin of the company because the margin on group business is lower compared to the individual business. Going forward, as the IRP contribution in total business normalizes, the margin is expected to come back to...

Can you quantify that? I mean that was what I right.

We don't generally discuss product-wise margins. We don't disclose those numbers. So I'll refrain from that. Your second question was regarding protection growth. So we had a strong protection growth of 22% during the quarter and against the IRP growth of 14.5%, 15% only. So the protection growth is higher than individual protection growth is higher than the IRP growth.

Right. And how much is ROT and non-ROP if that's it? And the pure protection, what is the growth of that? I think last quarter, you had given the…

I'll come back with the number -- so the overall, the protection growth, if you see individual and group together, it is coming obviously because of this GTI business is around 200%. But as far as the individual protection is concerned, if you see the ROP from non-ROP, actually, it has improved as compared to last. So now it is 68% against 73% of last year and up 68% and non-ROP is 32% -- and the pure protection actually has -- just to add, the pure protection within the individual protection has actually significantly improved by 55%, 52%. So non-ROP is improving as compared to -- your voice is not very clear. Can you repeat?

How much is the impact.

GST was waived September. So there will be some impact for 2.5 months in the current quarter you asked, it is flat as compared to the last year. And -- but it is going as per the plan. So we will see some good uptick in the coming quarters.

Should...