SBI Life Insurance reported a near 5 per cent rise in third-quarter profit on Wednesday, aided by higher premium collections as tax cuts spurred retail demand for insurance products.
The insurer’s net profit rose to ₹577 crore ($62.87 million) for the three months ended December 31, from ₹551 crore a year earlier.
Indian insurers saw higher demand in the third quarter after taxes on life insurance products were lowered to zero from 18 per cent earlier, according to analysts.
SBI Life’s net premium income grew 22 per cent to ₹30,245 crore. One-time premiums rose 24 per cent, while premiums from older policies that were renewed jumped nearly 21 per cent.
Its management expenses, however, rose more than 45 per cent to ₹3,519 crore, driven by a 28 per cent rise in commissions paid to agents and a 36.6 per cent rise in employee-related costs.
Annualised premium equivalent sales, a key metric that conveys the annualised total value of all single and recurring premium policies, rose nearly 25 per cent to ₹8,600 crore during the quarter, according to a Reuters calculation.
Analysts at Motilal Oswal expected strong growth in SBI Life, to be driven largely by its bancassurance channel, in which the company sells products through banking partners.
This channel, particularly State Bank of India’s extensive branch network, contributed 62 per cent to the overall APE of the insurer as of December-end.
The GST exemption on individual policies contributed to improved affordability and aided demand during the quarter, SBI Life CEO said in a statement.
SBI Life’s value of new business, or expected profit from new policies, increased 22.5 per cent for the quarter, according to Reuters’ calculation.
However, the government’s move to do away with GST for insurance products hurt margins as insurers can no longer claim input tax credit.
This resulted in margins from new business contracting to 27.2 per cent for the nine months ended December, from 27.8 per cent as of September-end. ($1 = 91.7750 Indian rupees).
