Akash Jain
SBI Life Insurance is steeply valued in terms of Market Cap/Embedded Value at 4x as compared to its immediate peer ICICI Prudential – 3x. We believe at current market price, there is no margin of safety and it has already discounted FY18-20 earnings growth. No doubt, the fundamentals of this Company are robust.
The company witnessed strong growth of 25.7 percent on YoY basis in premium income which led to Net profit growth of 13.4 percent rise in Q4FY18 to Rs 381.2 crore on YoY basis.
The company registered a 27 percent rise in its annualised premium equivalent (APE) to Rs 8540 crore in FY18 compared to a year ago which was driven by an increase in individual new business premium generated through bancassurance and agency channel.
The 13th month persistency stood rose to 83.03 percent in FY18 compared to 81.07 percent YoY. The insurer’s renewal premium grew by 32.3 percent to Rs 14,390 crore on in FY18.
The company’s value of new business improved by 34 percent to Rs 1,390 crore and value of new business margin improved to 16.2 percent from 15.4 percent.
Embedded value improved by 15 percent to Rs 19,070 crore (Market Cap/EV: ~4x) and net worth rose 18 percent to Rs 6,530 crore. Assets under management rose by 19 percent to Rs 1,16,260 crore as of March 31, 2018. The solvency ratio stood at 2.06 as against the regulatory requirement of 1.50.
Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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