SBI Life Q3 Results: Profit Rises 6%, VNB Margin Down 40 Basis Points

SBI Life Insurance Co.'s third-quarter profit rose, but missed analysts' estimates. The company's value of new business margin fell 40 basis points over last year.

The private insurer's net profit rose 6% year-on-year to Rs 322 crore in the quarter ended December, according to an exchange filing on Thursday. That compares with the Rs 430-crore consensus estimate of analysts tracked by Bloomberg.

Sequentially, the bottom line was down 15%.

The company earned a net premium of Rs 22,316 crore, a 16% increase over a year earlier.

• Revenue rose 46% to Rs 38,803 crore.

• Value of new business—the present value of future profit associated with new business written during the period—rose 11% to Rs 1,680 crore.

• VNB margin declined to 27.4% from 27.8%.

• Annualised premium equivalent rose 13%.

• The 13th month persistency ratio—or customer retention—grew 70 basis points to 85.3%, and improved for the 61st month to 58.1% from 53.6%.

• Solvency ratio—which measures the extent to which assets cover commitments for future liabilities—fell to 209% from 225%. The minimum regulatory requirement is 150%.

• Operating expense ratio was at 5.1% versus 5.2%, while the commission ratio was at 4.8% versus 4.5%. The overall cost ratio rose by 20 basis points to 9.9%.

• Return on equity grew to 10.5% from 10.4% a year ago.

• The share of par in the APE product mix was 4%, down from 5% and non-par fell to 35% from 38%. The share of the unit-linked insurance plan increased to 61% from 57%.

• Annuity grew 12% over last year. Protection new business premium rose 17%, with 25% growth in group protection.

• Assets under management increased 24% to around Rs 3.7 lakh crore.

Shares of SBI Life were trading 3.15% lower at Rs 1,366.55 apiece, after the results were announced, as compared with a 0.93% decline in the benchmark Sensex at 2:49 p.m. on Thursday.