SBI Life Insurance Plans To Hike Paid-Up Capital

Bangalore: SBI Life Insurance Company Ltd proposes to hike its paid-up capital by another Rs 300 crore by this year-end to meet its business requirements.

The Managing Director, Uday Shanker Roy, told presspersons today that “We are maintaining a healthy growth and hope to sustain it.”

SBI Life is a joint venture between State Bank of India and Cardiff SA of France, where the French insurer holds 26 per cent stake. The company currently has a paid-up capital of Rs 500 crore and an authorised capital of Rs 1,000 crore.

Premium accretions

Till August, SBI Life had gross premium accretions of Rs 868.11 crore, or a growth of 71 per cent, over the previous year, according to data available with the Insurance Regulatory and Development Authority.

For the financial year ended March 2007, the company earned a premium of Rs 2,566 crore registering a growth of 210 per cent compared to the corresponding period last year.

Roy said that SBI Life had sustained this growth momentum in the second quarter, though he declined to give any numbers. He said that most of the premium accretions were contributed by SBI Life’s bancassurance arrangements with the parent bank and its associates/subsidiaries.

Doubling sales force

This year, he said that the company also intended to expand its agency force and double it by year-end. Currently it has a sales force of about 24,000 agents spread around the country. He said: “We plan to expand this to about 50,000 agents this year-end.”

Bulk of the premium accretions has been in the Unit Linked Insurance Policies (ULIPs), with a bias to growth funds. “With the Sensex soaring, customers have looked for greater returns,” he said. Yet, he said, ULIPs accounted for just about 65 per cent of the gross premiums. The rest was in the form of traditional products - both savings linked insurance plans and term plans. For most new insurers, ULIPs accounted for over 80 per cent of the premium accretions.

SBI Life, as part of plans to grow new business, launched a fixed deposit-linked insurance product along with State Bank of Mysore (SBM), branded Mybank Suraksha.

Fixed deposits in multiples of Rs 50,000 placed with SBM for a minimum period of 5 years would be paid an interest of 8.25 per cent and simultaneously covered by SBI Life for an equivalent amount.

This product is targeted at depositors aged between 18 and 55. The minimum prescribed deposit is Rs 50,000 and would have an insurance cover from SBI Life for an equivalent amount.

The SBM Managing Director, P.P. Pattanayak, said: “SBM will bear the premium costs for this product.”

Asked whether this would increase the cost of liabilities, he said it would not have any major cost impact.

The upper limit for the cover is Rs 5 lakh, for depositors up to 39 years. For those depositors above 40 years, but less than 55 years, the ceiling is Rs 3 lakh.

Pattanayak said that Mybank Suraksha was the first in the banking industry and intended to improve SBM’s long-term fund base.