Bancassurance boost for SBI Life

SBI Life Insurance posted a net profit of Rs 34 crore for the financial year ended March 31, 2008, in its third consecutive year of profitable operations.

While the private insurer grew premium collections by 92% to Rs 5,622 crore in 2007-08, the new business premium grew 87% to Rs 4,792 crore.

The new business annualised premium equivalent (APE) , a standard measure in the industry that takes single premium at 10%, has grown 93% to Rs 3,481 crore.

SBI Life is also readying itself for an initial public offer sometime later this year, once market conditions turn conducive.

"The growth in bancassurance by 108% over the last one year has contributed significantly to growth," SBI Life Insurance managing director and chief executive officer U S Roy told DNA Money. "We have done almost Rs 1,600 crore of premium in 2007-08 in bancassurance from about Rs 800 crore the previous year. In fact, the branches selling SBI Life products have started functioning on their own momentum."

The life insurer has greater hopes from this channel. "Currently, bancassurance contributes to 38% of the total premium and the target is to increase its share to 50% in the coming years," Roy said.

After growing 100% till December 2007 and about 40% in the fourth quarter, the company is looking at a conservative 75-80% growth this year.

And the company has no immediate plans to raise additional equity. "If at all any equity is needed, it will not be before the third quarter of the current year. A capital of Rs 1,000 crore can take along a business of Rs 7,500 crore," Roy said.

On its proposed public float, Roy said, "Our internal exercise on arriving at actuarial ratios is underway and the first round of findings will be vetted by external agencies in June. And with three consecutive years of profit, we are looking forward for an IPO."

SBI Life's assets under management have more than doubled to Rs 10,493 crore.

For the current year, SBI Life is planning a massive expansion plan in tier 4 towns and certain areas where SBI is not present.

It is also planning a bouquet of health insurance plans, of which the first set of products should be launched shortly.

According to Roy, the piloted microfinance insurance plan "Grameen Shakti" in Orissa has met with huge response. The company now plans to take this low cost simple plan to other states as well this year.

Source: DNA