SBI Life Q3 Results Review - APE Growth Healthy; New Business Margin Moderates To 27.8%: Motilal Oswal

Motilal Oswal Report

SBI Life Insurance Company Ltd. reported a mixed Q3 FY23. Annual premium equivalent grew 19% YoY (7% beat), whereas of new business margins contracted 374 bps QoQ to 27.8% due to higher growth in unit linked insurance plan. Shareholders’ profit after tax declined 16% YoY to Rs 3.0 billion (29% miss).

Among segments, annuity saw a healthy growth of 17% YoY, while non-par savings grew 75% YoY in Q3 FY23. Growth in the protection business was modest at 10% YoY, while the ULIP business saw healthy sequential growth.

We lower our VNB margin estimates by 160-170 bps for FY23-25 and expect VNB margins to remain at ~30% in FY25.

We expect SBI Life to deliver a 25% compound annual growth rate in APE over FY22-25, thus enabling a 32% VNB CAGR. Return on embedded is expected to stay around ~20-22%.

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