SBI Life’s Q4 gives credence to valuation boost amid COVID-19 pandemic

SBI Life Insurance reported 63% growth in value of new business (VNB) and an expansion of VNB margin to 22.2%. On both these metrics, the company exceeded analysts’ expectations.

SBI Life reported 46% growth in business on an annualised premium equivalent (APE) basis for FY21. The March quarter growth figures are inflated largely due to a low base. For instance, the 46% increase in retail APE for March quarter is due to the 13% contraction in the corresponding quarter last year. Nevertheless, analysts at Jefferies India Pvt Ltd point out that on a compounded annual growth rate basis, SBI Life saw a healthy 13% growth in total APE over the past two fiscal years.

A healthy portion of the growth has come in from a surge in non-participatory products while the share of protection has remained unchanged. Market linked products too have shown a strong 47% growth for FY21, and they remain the biggest segment in the portfolio.

While the pandemic may have made Indians more mindful of life insurance, there is still a challenge in terms of pushing products to more customers beyond bank branches. Restrictions due to the second wave of COVID-19 have widened in many states, limiting operations. That said, SBI Life’s profitability metrics have all the ingredients in place for improvement, analysts said.