SBI Life Insurance Company Ltd.
Private life insurer SBI Life Insurance posted a 40.2 percent year-on-year (YoY) decrease in its profit in the December quarter (Q3) at Rs 232.85 crore on rise in expenses and Coronavirus-linked provisions.
A Reuters estimate had pegged the net profit at Rs 409.9 crore for the third quarter of FY21.
The net premium income rose to Rs 13,766.49 crore in Q3 as against Rs 11,694.51 crore in the year-ago period.
The insurer said it had assessed the overall impact of the COVID-19 pandemic on its business and financials, including valuation of assets, policy liabilities and solvency for the period ended December 31, 2020.
Based on the evaluation, the company has kept additional reserve of Rs 70.38 crore for the pandemic over and above the policy-level liabilities calculated based on prescribed IRDAI regulations.
SBI Life added that it would continue to closely monitor any future developments relating to the pandemic which may have any impact on its business and financial position.
For nine months ended December 31 (9MFY21), the value of SBI Life's new business (VoNB) margin stood at 19.3 percent as against 18.3 percent a year ago.
Effective tax rate assumes that a proportion of the projected profits is tax exempt on account of tax deductions available on income from dividends and tax free bonds.
VoNB is the present value of expected future earnings from new policies written during a specified period and it reflects the additional value to shareholders expected to be generated through the activity of writing new policies during a specified period.
VoNB margin is the ratio of VoNB to the annualised premium equivalent for a specified period and is a measure of the expected profitability of new business.
The annualised premium equivalent (APE), which is 100 percent of regular premiums and 10 percent of single premiums, rose to Rs 7,480 crore for 9MFY21 which was a 7 percent YoY decline.
SBI Life said the total cost ratio had decreased to 5 percent in the first nine months of FY21 compared to 10 percent in the year-ago period.