SBI Life Insurance Review

Company Brief Overview

SBI Life Insurance is a joint venture between SBI and BNP Paribas cardif, SBI Owns 62.1% of its capital while BNP paribhas Cardiff holds 22% of the capital.

While its initial stage business was from bancassurance business in which SBI bank was offering insurance products to its customers, now it is developing its own agency team for selling its life insurance products.

Performance Overview

In Quarter 2 the first premium of company grew by 14.7% YOY while the debt equity mix stood at 77:23 with 90% of debt investment in AAA and sovereign instruments.

Its New business value (VoNB) is increased 33% YOY to Rs. 940 Cr. While New Business margin (VoNB Margin) increased from 19.2% to 20.2% in first half of FY 19-20.

VoNB is the present value of expected future earnings from new policies sold during a period and represents additional value that will be generated to shareholders for this period

Its operating expense ratio is decreased from 7.8% to 6.5% in first half of FY 19-20.

New Business APE (Annual Premium Equivalent) has increased by 26% YOY to Rs. 4670 Cr. in first half of FY 19-20.

Review & Recommendation

SBI as exclusive distributor for SBI Life gives it a unique advantage over other companies. In terms of distribution SBI Life is most strongly positioned insurer.

With the increasing margins and decent growth in new insurance business we have a BUY call on this stock with a target of Rs. 1090/- in next 2-3 months.

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