Rides on fund performance, distribution, product strategy
Mumbai, May 10
SBI Life Insurance has posted a net profit of Rs 2.02 crore for fiscal 2005-06, the first private life insurer to break even since the sector was opened up to privatisation in 2001.
Set up in March 2001, SBI Life, a joint venture between SBI and France-based, Cardif SA, has been riding on the bancassurance model to rake in premium.
Mr S. Krishnamurthy, Managing Director and CEO, SBI Life Insurance, said the company's distribution and product strategy as well as fund performance had aided the company's route to profits.
"The bancassurance model has helped us to be more cost-effective," said Mr Gerard Binet, Deputy Managing Director, Cardif.
In FY05-06, bancassurance contributed to 43 per cent of the total premium at Rs 470 crore.
Life insurance being a long gestation business, companies require a minimum of five to six years for profits to accrue. Companies have to make sizeable investments at the outset particularly in terms of employing an agency force.
Seventy per cent of SBI Life's premium from bancassurance comes through the sale of individual and group policies at State Bank of India's 6500 branches.
In the recently concluded fiscal, SBI Life generated new business premium of Rs 828 crore, a growth of 72 per cent from Rs 483 crore in the previous year.
Eyes Rs 2,000-cr bizThe company has set a target of new business premium of Rs 2,000 crore in the current fiscal. At present, the company ranks fourth among private insurers and has a market share of 2.3 per cent.Mr Krishnamurthy said that the 28 per cent of the premium came from credit life products while ULIPs contributed to 23 per cent of the portfolio.He said the company would increase the share of ULIPs to 33-35 per cent of the portfolio with nearly 70 per cent of its agency force being devoted to selling these investment products. The company plans to increase its agency force from the current 8,000 to 20,000 advisors this fiscal, he added.
Buoyant showThe company's fund performance was buoyed by its `Horizon equity fund', which has been showing a return of 136 per cent since its inception in April'05.In terms of new products, SBI Life will launch the pension version of its existing ULIPs and also introduce unit-linked superannuation and gratuity schemes to expand its group corporate business.