(Reuters) – India’s SBI Life Insurance Company posted a higher third-quarter profit on Friday, led by growth in renewed and new insurance policies.
Its profit rose 71% to 5.51 billion rupees ($63.6 million) for the quarter ended Dec. 31, from 3.22 billion rupees a year earlier.
The insurer’s net premium income grew 11% to 248.28 billion rupees, driven by a 13% rise in renewal premiums, or premiums that keep policies active, and a 12% jump in first-year premiums.
Insurance penetration has historically been low in India, but rising financial awareness and accelerated demand for cover – especially for life and health insurance – after the COVID-19 pandemic has led to higher policy sales.
The company’s value of new business (VNB), or expected profit from new policies – one of the key metrics for insurers – rose 6% year-on-year to 42.9 billion rupees for the nine months to the end of December.
Its annualised premium equivalent (APE) sales, a closely watched metric that gives the annualised total value of all single and recurring premium policies, was up 11% at 159.7 billion rupees for the nine month period.
Meanwhile, market- or unit-linked insurance plans (ULIP), which have a lower profit margin compared to term policies, accounted for 67% of SBI Life’s overall product mix by individual APE during the quarter, up from 61% a year ago.
Demand for ULIPs has been strong, especially in the first-half of the current fiscal year, driven by India’s buoyant stock market.
The rise in the share of ULIPs, however, led to VNB margins contracting to 26.9% for the April to December period from 28.1% a year earlier. Its VNB margins were largely flat on a sequential basis.
To cushion margins, insurers have pushed for higher sales of high-margin policies.
Peer HDFC Life reported a higher quarterly profit and an improvement in VNB margins on a sequential basis.
SBI Life’s shares ended 1.8% higher after the results.
($1 = 86.5910 Indian rupees)
(Reporting by Nishit Navin and Kashish Tandon in Bengaluru; Editing by Sonia Cheema)
