SBI Life reported improvement in Value of New Business (VNB) margins at 18.7 per cent (+102bps yoy), with a shift in the product mix toward the non-par business as well as a gradual rise in protection plans.
Analysts at Emkay Global Financial Services expect the trend to improve further, with the rising share of protection plans as well as the elevated share of non-par businesses. The management, they caution, needs to re-price its existing protection plans since most of reinsurance companies have already opted for a price hike.
"Management has confirmed that the current protection plans are being priced cheaper to HDFC Life. However after the price hike, the competition from it would surely play an important role," the brokerage firm said in company update.
“Though persistency trends have generally held up for FY20, along with improvement across cohorts, we think that FY21 would be a challenging year in terms of maintaining the renewal pipeline. With customers going into cash conservation mode and a weak economic outlook, drop in persistency could be a risk to margin, embedded value (EV) and fair value estimates,” analysts at Nirmal Bang Institutional Equities said in a post result note.