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SBI Life to report robust VNB growth; APE broadly in-line

SBI Life and IPRU remain our preferred picks

Life insurance players have reported their monthly numbers for Sep’21, which also marks the closure of 2QFY22/1HFY22. We present a brief comparison of the reported numbers v/s our estimates, as published in our earnings preview (Link). Furthermore, we assess the Value of New Business (VNB) growth that insurers could report over 2QFY22 on the basis of the reported APE growth numbers.

Here are the key highlights:

* In terms of the total New Business Premium (NBP), HDFC Life was higher than our estimates by 9%, followed by SBI Life, which was higher by 5%. On the other hand, IPRU Life and Max Life came in below our estimates by 7–8%.

* However, more importantly, with regard to new business APE:

* SBI Life and HDFC Life came in moderately higher than our estimates (3–4% higher), aided by robust growth in Sep’21.

* IPRU APE estimates stood in-line, even as the company reported 35% YoY growth in new business APE in 2QFY22.

* Max Life came in significantly lower than our estimates, dragged down by muted 8% YoY growth in Sep’21 (12% YoY APE growth in 2QFY22).

New business APE up 12–45% across insurers; total NBP up 13–32%

* New business APE for SBI Life saw robust growth of 45% YoY in 2QFY22. For 1HFY22, SBI Life reported strong growth of 40% and a 9% CAGR over FY19–21. Total NBP grew 17% YoY (14% in 1HFY22).

* New business APE for IPRU Life saw strong growth of 35% YoY in 2QFY22. Over 1HFY22, IPRU Life reported healthy growth of 40% and de-grew at a 9% CAGR over FY19–21. Total NBP grew strongly at 32% YoY (45% in 1HFY22).

* New business APE for HDFC Life grew at 19% YoY in 2QFY22. For 1HFY22, HDFC Life reported growth of 23% and a 16% CAGR over FY19–21. Total NBP growth was modest at 13% YoY (22% in 1HFY22).

* New business APE for Max Life saw modest growth of 12% YoY in 2QFY22. For 1HFY22, Max Life reported growth of 19% and a 12% CAGR over FY19–21. Total NBP grew 17% YoY (25% in 1HFY22).

VNB to grow faster at 21–82%, barring MAX; margins to remain healthy at 25–28%

* For SBI Life, VNB growth is likely to remain robust at ~82% YoY in 2QFY22 (71% in 1HFY22). The VNB margin is likely to expand to 24.9% (+457bp YoY / +77bp QoQ).

* For IPRU Life, VNB growth is likely to remain strong at ~36% YoY in 2QFY22 (50% in 1HFY22). The VNB margin is likely to sustain at ~27.5% (+13bp YoY / -190bp QoQ).

* For HDFC Life, VNB growth is expected to remain modest at ~21% YoY in 2QFY22 (28% in 1HFY22). The VNB margin would contract 20bp QoQ to ~26% (+39bp YoY).

* For Max Life, VNB growth is estimated to remain muted at ~4% YoY in 2QFY22 (17% in 1HFY22). The VNB margin is likely to expand 654bp QoQ to ~26.2% (196bp YoY decline).

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