SBI Life shares jump 5% on strong February growth trends

Shares of SBI Life Insurance jumped 5 percent to hit a 52-week high on Tuesday after the insurer reported robust growth in new business premiums (NBP) and improved annual premium equivalent (APE) trends for February.

It posted an over 60 percent growth in its NBP for the month. NBP is the premium acquired from new policies for a particular year. It also reported 53 percent YoY growth in individual APE in February 2021.

Post-unlock, SBI Life’s APE trends have improved materially with just a 4 percent YoY drop in the 11 months of FY21, brokerage house CLSA noted in a report. It added that SBI Life’s term life trends are also better than peers (100 percent YoY growth in Q3FY21).

The stock rose as much as 5.2 percent to its 52-week high of Rs 972 per share on the BSE.

While the brokerage maintains a 'buy' rating on SBI Life but adds that it prefers private banks to life insurers.

It also likes Max Life in this space. Max Life reported a 32 percent YoY growth in new business APE in Feb-21 and Max Life has been one of the most consistent performers, it added.

It further noted that the recently downgraded ICICI Prudential and HDFC Life are likely to outperform.

HDFC Life reported strong 16 percent YoY growth in individual APE in Feb-21 whereas ICICI Prudential Life’s individual APE rose 6 percent YoY in Feb-21, aided by a weak base in Feb-20.

Overall, February 2021 saw life insurers recording impressive 21 percent growth in NBP to Rs 22,425 crore, compared with Rs 18,533 crore in the same period, a year ago.

Private insurers' NBP rose 16 percent in February to Rs 9,505 crore, as compared to Rs 8,129 crore YoY.

On the other hand, private insurers reported 23 percent YoY growth in individual APE for February 2021. SBI Life and Max Life led private listed players with 53 percent and 32 percent YoY growth in February.

"A reinsurer-driven price hike and stricter underwriting criteria should lead to a transition period for the protection business, during which there likely will be uncertain protection growth/margins," noted CLSA.