SBI Life Insurance has strengthened its product portfolio in the traditional segment as it witnessed a shift of product mix more towards non-ULIPs, says MD & CEO Amit Jhingran. In an interview with businessline, Jhingran says the insurer is looking at a ULIP to non-ULIP ratio of 65:35 this fiscal against the ratio of around 70:30 last fiscal. Edited excerpts:
SBI Life Insurance’s annualised premium equivalent (APE) for the first quarter grew around 9 per cent year-on-year. During the quarter, how did group insurance business perform compared to individual insurance business?
The Individual Rated Premium (IRP) is something where we continue to concentrate upon. On an IRP basis, industry was growing at 5 per cent in Q1, and private players were growing at 8 per cent. We are happy that our IRP growth was also at 8 per cent level. So, we are at par with the industry. The positive feature is that, within this growth, our product mix improved to the way we wanted it to improve. The contribution from non-ULIP during the quarter has gone up. And ULIP contribution is now more aligned to what we aspire for the year. For the group, the growth was not that good, other than the Group Protection business. In the Group Protection business, we did well both on the credit life side and other side, but the fund business was somewhat subbed. In the last six months of FY25, in the group business, we found that interest rates being offered by competitors were somewhat higher and not aligned to the yield movement. So, as a principle, we do not sacrifice our margin for sake of topline. That is why in the group fund business, basically pertaining to annuities and gratuities, among others, our growth was somewhat subdued for the last six to nine months.
The full-year APE growth guidance for FY26 was around 12 per cent. How are you planning to increase the APE growth going forward?
For the insurance industry, the first quarter is generally subdued. There are a lot of seasonal variations in the sales. We are sure that in Q2 and Q3, which have usually been strong for the company, we will perform as per expectation. We are also improving our product portfolio. From past two quarters, all new product launches were under non-ULIP segments. In the coming months, we are going to launch a few more products in the Participating and Protection segments. In the Par segment, it will be a money back kind of product, which generally has very good traction in the market, and we expect that our product will cater to the needs of the customers and will provide us with good volumes.
In the Protection segment, we had already launched a product in the higher sum assured segment which is above ₹2 crore. We are happy that we are receiving a very good response for that product.
The traditional segment, which is non-participating, participating and protection plans, will provide us with good volumes in the remaining quarters, and that will support our growth. In the agency channel, where we are tapping all available opportunities, we recruited more than 31,000 Life Mitras (agents) at the gross level in Q1. We expect these agents will get active in the coming quarters and provide a substantial boost to our agency segment sales. So, all these factors coming together will provide us the necessary boost to achieve our guidance level.
Single premium during Q1FY26 fell by 4.08 per cent y-o-y at ₹3,728.14 crore. What are the reasons? And what measures will the insurer be taking going forward?
Single premium, for the company, was mostly in the group fund management segment, and we have seen that the pricing was slightly irrational, and this business is quite lumpy in nature. So, we have seen that all this has resulted in slightly de-growth in the single premium segment. Our focus is more on the Rated Premium kind of segment.
Also, another focus from single premium is Annuity business, we are bullish because the annuity is something where are seeing the demand in coming days and in view of the social security that is prevailing in India. We do want to provide good options of the product in the Annuity segment because many people do not have any support in the later stage of their life. So that provides a lot of opportunity for the Annuity segment. But we would like the customers to grow their corpus over a longer period, and that is why we are changing and focusing more on that.
Commenting on the results, you said in Q1FY26 the company was able to achieve a favourable shift in its product mix towards protection solutions and guaranteed non-Par savings. Please elaborate.
As per our company philosophy, we look at the growth numbers which are optimally balanced for the topline as well as for the bottom-line. We would like to sell a bouquet of products to the customers, which are beneficial, and which are as per the need and financial goals of the customers, as well as they are also margin-accretive for the company. What we have seen is that the shift of the product mix was more towards non-ULIPs. So, we strengthened our product portfolio in the traditional segment so that there is always an optimum mix of ULIP and non-ULIP sales.
We are happy that in the agency channel the product mix shifted by almost 900 basis points towards non-ULIP products. The contribution of ULIPs came down to almost 60 per cent. In the bancassurance channel also, the ULIP sales came down by 2 per cent. I will rather say that the non-ULIP sales improved much higher so that the ULIP contribution came down.
So, this is what we are aiming for, and we will be driving in the remaining three quarters also. We are looking at a ULIP to non-ULIP ratio of 65:35 for FY26 for the company. In the last financial year, the ratio was around 70:30.
Will this measure to bringing down ULIP’s contribution to the product mix continue?
Yes, that is what we are aiming for. The 65:35 kind of ratio for this fiscal will provide a boost to our VNB (Value of New Business) margin also. It was also reflected in the first quarter sales, where the margin improved by around 60 basis points at 27.4 per cent. The way the products are structured in the life insurance industry, the margin in ULIPs products is lower and margin in non-ULIP products is higher, especially in the non-Participating guaranteed and the Protection segments.
During the earnings conference call, you said the bancassurance business of SBI and RRBs contributed 58 per cent to total APE business. What was the percentage last fiscal? And what is the outlook going ahead?
At the end of the first quarter of last fiscal, the bancassurance was giving 59 per cent to the company, while the agency was giving 30 per cent. The other channels, which include banking partners other than SBI, web channel and web aggregators, were providing 11 per cent. Now, during the first quarter of this financial year, this channel mix has changed to around 58 per cent, 27 per cent and 14 per cent, respectively. It shows that our penetration through web channel, direct channel and brokers has also further strengthened.
What is the outlook for this fiscal for the VNB margin?
At the start of this financial year, we had given a guidance of 26-28 per cent. We are happy that in Q1 we have been able to generate a margin, which is in the range as per our guidance with some improvement over previous year. The margin, of course, depends on the seasonality. So, we expect that during FY26 we will be able to deliver as per our earlier guidance with positive bias.
