Recommendation from Insurance Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year.

SBI Life Insurance Company: TRUSTED GROWTH IN A BOOMING INSURANCE MARKET

HERE IS WHY
Riding India's insurance sector boom.
Leading private market share with strong growth.
Expanding through SBI’s bancassurance network.

I ndia's insurance industry is one of the premium sectors experiencing upward growth. This upward growth of the insurance industry can be attributed to growing incomes and increasing awareness in the industry. India is the fifth largest life insurance market in the world's emerging insurance markets, growing at a rate of 32-34 per cent each year. Considering the growth of insurance companies in India, our Choice Scrip recommendation for this issue of the magazine is SBI Life Insurance Company. It started as a joint venture between the State Bank of India, India's largest bank, and BNP Paribas Cardif, a global insurance expert. SBI holds a significant stake in the company. SBI Life offers a comprehensive range of life insurance, pension, savings, and health products to individuals and groups. The company operates through a multi-channel distribution network, including bancassurance, agency, digital, corporate agents, and brokers.

In Q4FY25, the net revenue of the company decreased by 5 per cent YoY to ₹23,860.71 crore compared to ₹25,116.47 crore from the previous year's same quarter. On a sequential basis, revenue decreased by 3.89 per cent from ₹24,827.54 crore. PAT remained almost flat with an increase of 0.33 per cent, standing at ₹813.51 crore from ₹810.80 crore in the previous year's same quarter. On a sequential basis, PAT increased by 47.69 and stands at ₹550.82 crore.

PAT for FY25 surged by 27 per cent YoY to ₹2,410 crore, driven by a 14 per cent increase in renewal premiums, and stands at ₹49,410 crore. Annualized Premium Equivalent (APE) rose 9 per cent YoY to ₹21,420 crore, signaling sustained demand for insurance products. The company has maintained its leadership position in Individual Rated Premium of ₹19,350 crore with 22.8 per cent private market share in FY25. Growth in Individual New Business Premium increased by 11 per cent to ₹26,360 crore in FY25. Protection New Business Premium stands at ₹4,100 crore in FY25. Gross Written Premium (GWP) grew by 4 per cent to ₹84,980 crore in FY25, mainly due to 11 per cent growth in New Business Regular Premium (RP) and 14 per cent growth in RP in FY25.

APE channel mix for FY25: the bancassurance channel stands at 61 per cent leveraging SBI’s extensive banking network, while the agency channel was at 28 per cent, and other channels at 11 per cent. Assets under Management grew by 15 per cent from ₹3,88,920 crore as on March 31, 2024, to ₹4,48,040 crore as on March 31, 2025, with a debt-equity mix of 61:39, and 94 per cent of the debt investments are in AAA and Sovereign instruments. Claim settlement ratio stood at 99.40 per cent, boosting trust. ULIP products dominated with a 64 per cent APE share, followed by non-participating 18 per cent and the remaining by others, catering to diverse customer preferences.

In FY25, SBI Life reported its Indian Embedded Value at ₹70,250 crore, reflecting a 21 per cent year-on-year growth from ₹58,260 crore in FY24. This growth highlights the increasing value of its existing policy portfolio and strong new business generation. Operating Return on Embedded Value stood at 20.2 per cent, showcasing efficient capital utilization. SBI Life Insurance Company has demonstrated a robust business model and consistent financial growth. Considering the company's business, we recommend BUY.