A) Introduction of SBI General Insurance Unlisted Share

SBI General Insurance has been a stalwart in the insurance sector in India, providing a diverse range of general insurance products since its inception in 2009. With its strong foundation and a commitment to trust and security, the company has been making strides year after year. In this blog post, we will delve into the key highlights from SBI General Insurance's 2023 Annual Report and examine the company’s performance, offerings, and future outlook. SBI General is one of the fastest growing private general insurance companies, with the strong parentage of SBI.  Ever since its establishment in 2009, the growth has been exponential in various aspects. They have expanded their presence from 17 branches in 2011 to over 141 branches pan-India. SBI General Insurance demonstrates an astute strategic approach to distribution, leveraging a multi-faceted model that encompasses Bancassurance, Agency Channels, Broking Networks, Retail Direct Outlets, and Digital Collaborations. This wide-ranging network is underpinned by the formidable backbone of over 22,437 SBI branches, augmented by an extensive roster of agents, strategic financial partnerships, and Original Equipment Manufacturers (OEMs). Moreover, the company has intelligently formed multiple digital alliances to broaden its reach.

B) Exponential Growth and Awards

The company has seen exponential growth since its inception, expanding its branch network from 17 in 2011 to over 141 pan-India. In the fiscal year 2022-23 alone, the Gross Written Premium (GWP) stood at INR 10,888 crore, a growth of 17.6%. These figures indicate a robust financial position and promising prospects. SBI General Insurance has been recognized for its performance, winning the 'Insurer of the Year' award in the non-life category at the FICCI Insurance Industry Awards for 2020 and 2021. In 2022, it was named 'Best General Insurance Company of the Year' at the Third Emerging Asia Insurance Awards, a testament to its commitment and excellence.

C) Operational Highlights of SBI General Health Insurance

i) Claims Management

One of the key operational highlights is the handling and settlement of claims. The company received 6,20,651 fresh claim intimations in FY23, down 24% compared to the previous year, largely due to reduced Covid-related claims in Health and negligible CAT-event-related claims in Property Lines. With a commendable claims settlement ratio of 98%, customer satisfaction remains at the forefront.

ii) Motor and Health Insurance

In the Motor OD segment, new claims went up by 12% over the previous year, mainly driven by the two-wheeler (2W) segment. In Health Insurance, the company has achieved a 95% claims settlement ratio, further solidifying its reputation as a reliable insurer.

iii) Commercial Lines

In the Commercial Lines area, the Net Promoter Score stands at 92 as of March 2023. Specialised claims management teams have been formed to handle different types of claims, including liability, trade credit, event, cyber, and crop insurance. 

D) Digital Initiatives and Customer Focus

Digital transformation has been a key driver for SBI General Insurance. It has enabled the company to handle claims more efficiently and offer better services to its customers. These digital initiatives have not only reduced overheads but also increased customer satisfaction, as evidenced by the Net Promoter Scores in various segments.

E) Gross Written Premium SBI General Insurance Growth in Last 5 years

Gross Written Premium is the total premium collected by insurance companies whenever they sell insurance policy. Growth of this figure indicates how well company is growing. 

F) Valuation and Investment Opportunity in SBI General Insurance

Currently, SBI General Insurance Unlisted Share is available in the unlisted market at INR 1150 per share with a Market Capitalization of INR 24,150 crore. The Mcap/GWP ratio stands at 2.2x, indicating that the company is fairly valued. For investors looking for a stable and reliable opportunity, this could be a worthy consideration.

G) Conclusion

SBI General Insurance's performance, as outlined in its 2023 Annual Report, is both promising and inspiring. The company's financial health, robust operational metrics, and customer-centric approach make it a formidable player in the Indian insurance market.

FAQs for Analyzing General Insurance Companies

1. What is Gross Written Premium (GWP) and how is it significant?

Answer: GWP is the total revenue generated from premiums before any deductions like reinsurance costs. It serves as a primary revenue measure and indicates the size and market share of an insurance company.

2. How does Net Written Premium (NWP) differ from GWP?

Answer: NWP is the GWP minus premiums ceded to reinsurers. This metric provides a more accurate depiction of the revenue that the insurance company retains.

3. What does Net Earned Premium (NEP) indicate?

Answer: NEP is the portion of NWP that is earned over a specific period. It accounts for the risk covered during that period and is a better measure of the company's operational efficiency.

4. Why is Claims Settlement Ratio important?

Answer: This ratio indicates the percentage of claims settled by the insurer against the claims received. A higher ratio is generally favorable, as it signifies the company’s reliability in settling claims.

5. What does the Combined Ratio reveal?

Answer: The combined ratio is the sum of the loss ratio and expense ratio. A combined ratio under 100% indicates underwriting profitability, while a ratio over 100% suggests an underwriting loss.

6. What is Mcap/GWP and how does it help in analysis?

Answer: Mcap/GWP is the ratio of the company’s market capitalization to its Gross Written Premium. It helps in evaluating the valuation of the insurance company relative to its premium income.

7. How is Claim Ratio different from Claims Settlement Ratio?

Answer: Claim Ratio is the ratio of claims incurred to the premiums earned. It helps in assessing the profitability and risk associated with the insurance portfolio. Claims Settlement Ratio, on the other hand, focuses on the company's ability to settle claims.

8. How do these metrics interact with each other?

Answer: Understanding the interplay between these metrics can provide a holistic view of the company’s financial health. For example, a high Claims Settlement Ratio coupled with a low Combined Ratio would typically indicate a strong, customer-centric, and profitable insurer.

9. Should all these metrics be used in conjunction for analysis?

Answer: Yes, relying on a single metric may not provide a comprehensive view. Investors should consider all these metrics to make an informed decision.

10. Where can I find the data for these metrics?

Answer: These financial metrics can be found in a company's annual report, financial statements, or through regulatory filings available on stock exchange websites

Disclaimer: This blog post is for informational purposes only and should not be considered as financial advice. Always consult with your financial advisor before making any investment decisions.