Result Analysis: Life Insurance Companies Result Update: Q4FY21 and FY21

Result-Analysis

Particulars SBI Life YoY HDFC Life YoY ICICI Pru. Life YoY
 (Rs. Cr.) FY21 FY20 (%) FY21 FY20 (%) FY21 FY20 (%)
Net Premium Income 49,768 40,324 23% 38,122 32,224 18% 34,973 32,879 6%
New Business Premium 20624 16592 24% 20107 17238 17% 13,226 12,488 6%
APE 11367 10505 8% 8183 7164 14% 5991 7106 -16%
Profit after Tax 1456 1422 2.4% 1360 1295 5% 960 1069 -10%
Persistency Ratio bps/% bps/% bps/%
13 month 87.9% 86.1% 178 91.7% 90.1% 160 86.90% 86.80% 10
Expense Ratio 8.34% 9.94% -160 16.30% 17.60% -130 11.70% 13.30% -160
Value of New Business (Rs. Bn) 23.3 20.1 16% 21.85 19.19 14% 16.21 16.05 1%
VNB margin 23.20% 20.70% 250 26.10% 25.90% 20 25.10% 21.7% 340
AUM (Rs Bn.) 2208 1603 38% 1738 1272 37% 1530 2142 -29%
Solvency Ratio 215% 195% 2000 201% 184% 1700 217% 194% 2300

 

Q4FY21 Premium Income Growth

Particulars SBI Life HDFC Life ICICI Prudential Life
(In Rs. Cr.) Q4FY21 Q4FY20 YoY Q4FY21 Q4FY20 YoY Q4FY21 Q4FY20 YoY
First Year Premium 3,660 2,522 45% 2,389 1,722 39% 2,029 1,645 23%
Renewal Premium 9460 8132 16% 6350 5526 15% 6,913 5,680 22%
Single Premium 2527 1283 97% 4171 3367 24% 3159 2567 23%
NBP 6187 3805 63% 6560 5089 29% 5188 4212 23%
APE 3913 2651 48% 2806 2059 36% 2345 1902 23%
Net Premium Income 15556 11863 31% 12868 10464 23% 11879 10475 13%

Result Analysis – FY21:

  • Net Premium Income of SBI Life Insurance rose highest at 23% in FY2 as compare to Net premium income of HDFC Life and ICICI Prudential.
  • HDFC Life holds the highest VNB margin among them however ICICI Prudential showed 340 bps strong improvement in VNB margin in FY21. VNB margin of SBI life too increases by 250 bps to 23.2%.
  • Profit of HDFC Life increases by 5% highest, however SBI life showed Good growth both in term of Net Premium income and Net Profit.
  • New Business Premium rose highest for SBI life at 24% in FY21.
  • ICICI Prudential Life Possess the highest solvency ratio at 217% with other players also have strong Solvency Ratio (HDFC Life at 201% and SBI life at 215%)
  • 13-month Persistency Ratio of SBI Life increases by 178 bps to 87.9% whereas Persistency ratio of HDFC Life increases by 160 bps to 91.7%.
  • Assets under management of SBI Life increases by 38% YoY to Rs. 1753 crore.
  • SBI Life holds Private market leadership in Total New Business Premium (NBP) with 22.6% market share.
  • HDFC Life market share expanded by 130 bps from 14.2% to 15.5% in FY21 in Individual WRP (weighted received premium).
  • ICICI Prudential Life strengthen its position as the private sector market leader in terms of new business sum assured, with a market share of 13% in 11M-FY2021, up from 11.8% for FY2020
  • Expense ratio of SBI Life is lowest at 8.34% as compared to ICICI Prudential Life and HDFC Life.
  • Net Premium Growth in Q4FY21 is highest for SBI Life at 31%.
  • SBILIFE continues to maintain its cost leadership among listed private Players. The company Reported strong growth in Q4FY21 with improved VNB margin.

Glossary

New Business Premium (NBP):

New business premium collected from all the new policies sold in that year (or given period) is called as NBP. All the policies are considered. Hence

NBP = FYP + SP

FYP – First year Premium

SP – Single Premium

Persistency ratio measures how long customers stay with their policies. Life Insurance companies incur huge acquisition costs, owing to marketing and commission payouts, and then earn over the policy period too. The higher the number of years the policy continues, the higher the profitability. It is measured at different intervals —13th month, 25th month, 37th month and 61st month.

Solvency ratio

It defines how good or bad an insurance company’s financial situation is on defined solvency norms. According to Irdai guidelines, all companies are required to maintain a solvency ratio of 150% to minimise bankruptcy risk.

Value of New Business (VNB)

The profitability of a New Business underwritten is measured by the expected value realisable from the newly underwritten policies. This is called Value of New Business (VNB). It is based on assumptions of persistency, mortality and cost structure. 

Value of New Business (VNB) Margin

The profitability parameter is called Value of New Business (VNB) Margin which is Value of New Business divided by Annual premium equivalent (APE) (Regular Premium +10% of Single Premium).

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