SBI Life Q4 Review - Premium Growth Inline; Value Of New Business Margin Expands To 31.6%: Motilal Oswal

Motilal Oswal Report

SBI Life Insurance Company Ltd. reported an inline Q4FY23. Annual premium equivalent grew 10% YoY (inline), while value of new business grew 23% YoY, as margins expanded 380 basis points QoQ to 31.6%, driven by higher growth in non-Par. Profit after tax grew 16% YoY to Rs 7.8 billion (10% beat).

Among segments, annuity saw a healthy growth of 78% YoY, while non-Par savings grew 65% YoY in Q4 FY23. Growth in the protection business was modest at 12% YoY, while the unit linked insurance plan business saw a decline.

We slightly lower our VNB margin estimates and expect VNB margins to remain at ~30% in FY25.

We expect SBI Life to deliver a 20% compound annual growth rate in annual premium equivalent over FY23-25, thus enabling a 20% VNB CAGR. Return on embedded value is expected to hover around ~22-23%.

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