SBI Life Insurance Company Ltd Management Discussions.

MANAGEMENT REPORT

In accordance with the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002, and circulars/guidelines issued by IRDAI thereafter, the following Management Report is submitted by the Board of Directors for the financial year ended March 31, 2021.

1. Certificate of Registration

The Company is registered with the Insurance Regulatory and Development Authority of India (‘IRDAI) vide registration no. 111 dated March 29, 2001 and is carrying on the business of life insurance. We confirm that the Certificate of Registration granted by the Insurance Regulatory and Development Authority of India (‘IRDAI) to enable the Company to transact life insurance business was valid as at March 31, 2021 and is in force as on the date of this report.

2. Statutory Dues

We certify that all relevant statutory dues payable by the Company have been generally deposited on time except those under dispute or disclosed under contingent liabilities in the notes to accounts forming part of the financial statements.

3. Shareholding Pattern

We confirm that the shareholding pattern of the Company is in accordance with the requirements of the Insurance Act, 1938 (amended by Insurance Laws (Amendment) Act, 2015 and Insurance laws(Amendment) Act, 2021) (‘Act") and the Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations, 2000. Further, transfer of shares during the year have been in compliance with the applicable statutory and regulatory requirement. There was no capital infusion by the promoters during the year. During the year, the Company has allotted Equity shares on exercise of certain stock options granted under SBI Life Employees Stock Option Scheme 2018 (‘the Scheme or ‘ESOS 2018).

The shareholding pattern is available in Schedule 5A which forms part of the financial statements. Further, the shareholding pattern in accordance with the SEBI (Listing Obligation and Disclosure Requirement Regulations) Requirement 2015 is available on the website of the Company (www.sbilife.co.in) and on the website of the Stock exchanges i.e. NSE and BSE.

4. Investment of Funds

We have not directly or indirectly invested the funds of the holders of the policies issued in India in any securities outside India.

5. Solvency Margin

We confirm that the Company has adequate assets to cover both its liabilities and the minimum solvency margin as stipulated in Section 64VA of the Insurance Act, 1938 (as amended by the Insurance Laws (Amendment) Act, 2015 and Insurance Laws (Amendment) Act 2021) and IRDAI (Assets, Liabilities and Solvency Margins of life Insurance Business) Regulations 2016.

The actual solvency ratios as compared to required minimum solvency ratio of 1.50 are as below:

6. Valuation of Assets

We certify that the values of all the assets have been reviewed on the date of Balance Sheet and to best of our knowledge and belief, the amounts reflected under "Loans", "Investments" (excluding debt securities held in the Shareholders account and non-linked Policyholders account which are carried at weighted average amortised cost), "Agents balances", "Outstanding Premium", "Interest, Dividend and Rents outstanding", "Interest, Dividends and Rents accruing but not due", "Amount due from other persons or bodies carrying on insurance business", "Sundry Debtors", "Bills Receivable", "Cash" and the items specified under "Other Accounts" does not exceed their respective realizable or market value.

 

7. Application and Investments of Life Insurance Funds

We certify that no part of the life insurance fund has been directly or indirectly applied in contravention of the provisions of the Insurance Act, 1938 (amended by Insurance Laws (Amendment) Act, 2015 and Insurance Laws (Amendment) Act 2021), and all investments made are in accordance with IRDAI (Investment) Regulations, 2016, and orders/directions issued by IRDAI thereafter.

8. Risk Exposure and Mitigation

The Company has a comprehensive Risk Management Policy covering a wide gamut of risks. The policy is reviewed on an annual basis. Together with policies on all key functions and a system of documented standard operating procedures, the Companys risk management policy ensures a robust risk management framework for its operations. The Risk Management Committee of the Board (RMC-B) is responsible for overseeing the Companys risk management program and for ensuring that significant risks to the Company are monitored and reported to the Board on a timely basis.

The Risk Management Committee of the Executives (RMC-E) and the Asset Liability Committee (ALCO) are jointly responsible for reviewing the risk management framework of the Company and periodically evaluating the various risk management initiatives undertaken by the Company and provide updates to the RMC-B on a regular basis.

At the apex level, the Company has the Corporate Risk Appetite statement basis which it decides the extent of risk it is willing to take in pursuance of its strategic objectives. At the departmental / regional level, the Company has functional risk appetite statements.

(I) Risk Mitigation Strategies

Risk mitigation strategies for major risks faced by the Company are as under:

(a) Market risk:

To manage the interest risk, the Company monitors the duration of assets and liabilities for different portfolios on quarterly basis. Also, expected cash-flows of the assets and liabilities are monitored closely to identify any potential re-investment risk.

Investment strategy for each line of business is laid down so that the assets are appropriately matched by the nature and duration of liabilities. A range is provided for each asset class and the investment front office team takes tactical investment decision within the stated range. The Corporate Risk Appetite is the basis on which the risk reward framework is optimized for this purpose.

All investments are made strictly in compliance to the IRDAI Investment Regulations issued from time to time.

Market risk is monitored at the fund level and the Company level. This risk is measured using certain real world stress test scenarios. The results provide insights into the ability the Company has in terms of asset allocation. The limit on some volatile / risky assets is decided based on the risk appetite / limits laid down by the Board. Within these constraints, the Company decides on a strategy so as to improve policyholders and company value.

The Companys product mix is also monitored in the context of the level and concentration of market risk within overall risks of the Company.

(b) Credit risk:

The Company manages the credit risk through the following measures:

(i) Exposure limits for companies, groups and industries are in accordance with IRDAI (Investment) Regulations, 2016, and regulations/orders/directions issued by IRDAI thereafter.

(ii) Internal risk assessment and constant monitoring of the Investment portfolio for change in credit ratings.

(iii) Limit Credit Exposure by setting a range for investments in Corporate Bonds, in the context of risk reward framework.

(iv) Counterparty risk is mitigated by placing reinsurance only with reputed and highly rated reinsurers.

(v) Counterparty credit risk under derivative transactions is mitigated through exchange of margin once MTM threshold is crossed.

(c) Liquidity risk:

The Company faces limited liquidity risk due to the nature of its liabilities & business structure. The cash investment along with expected future premium from existing business provides the liquidity to meet outgoes; this is monitored to be sufficient to cover expected outgo of the Company as forecasted by the ALM team under normal condition as well as under stressed conditions.

(d) Morbidity and Mortality risk:

The Company uses the following approaches to manage its mortality and morbidity risk:

(i) Reinsurance: The Company uses a combination of surplus, quota share and catastrophe reinsurance treaties. The reinsurance treaties are reviewed and compliant with the relevant IRDAI regulations.

(ii) Experience Analysis: The Company monitors the expected vs. actual mortality experience on quarterly basis and takes corrective action, if need be.

(iii) Repricing: The Company reserves the right to review risk charges, in case of adverse experience, with appropriate IRDAI approval.

(iv) Underwriting and claims controls: Underwriting and claims policies and procedures are in place to assess and manage the risks. The Company conducts periodic reviews of both underwriting and claims procedures and policies to ascertain the mortality risk experience. The underwriting norms are generally aligned to pricing basis.

(v) Others: Various measures have been recently introduced to combat fraudulent death claims and as response to the modification of section 45 of the Insurance Act. These include:

a. Monitoring the early claims at agent, unit manager, branch and regional level.

b. Introduction of risk based underwriting through claim analysis.

(e) Persistency risk:

The persistency risk is managed with the following approaches:

(i) Experience analysis: The Company conducts its experience analysis quarterly to ensure that corrective action can be initiated at the earliest opportunity and that assumptions used in product pricing and embedded value are in line with experience.

(ii) Product features: The Company uses features like bonuses, guaranteed additions and additional allocation of units to encourage policyholders to continue with the policy. However, such features are included strictly in compliance with the IRDAI product regulations issued from time to time.

(iii) Service initiatives: The Company uses a combination of proactive and reactive interventions to manage persistency. The interventions could include sending communication via different media like email, mailers, SMS to customers and distributors, reminders and telephonic interviews with customers, and visits to customers. Various customer education initiatives are also taken up for this cause.

(iv) Aligning key performance areas: The Company uses different key performance areas for different levels of hierarchy in Sales and Operations to align interests and ensure adequate focus on persistency. Persistency Managers at regional level help focus on the need and requirements matching of the customers besides contributing to the renewal business.

(f) Expense risk:

The Company actively monitors its expense levels, which are then fed back into new product pricing, calculation of reserves and management reporting. In case of any adverse deviations between actual unit costs and planned unit costs, mitigation measures are taken.

Regular monitoring ensures that the actual expense does not vary a great deal from the budgeted expense level.

Stress testing for Expense Risk is being done with deterministic shocks as per historical experience given for entire portfolio.

(g) Operational risk:

The Company manages its Operational Risks through-

(i) Risk Registers

Risk Registers document the high level risks for all the offices based on likelihood & impact rating. Controls in place to manage the risks are captured and rated to arrive at the residual risk.

(ii) Risk Control Self-Assessment (RCSA)

RCSA requires each business unit within the Company to identify and assess inherent risks and controls relevant to the risk. The risk events are then mapped to the existing control framework to determine the residual risk. The controls are periodically assessed for its effectiveness.

(iii) Incident Reporting

The Company also has a web-based incident reporting process to collect loss incidents to track the extent of operational risk. The incident reporting tool has helped the company in development of system based modules for operational efficiency and to prevent recurrence. Loss data records may be used to estimate the capital required for operational risk.

(iv) Risk Control Unit (RCU)

A ‘Risk Control Unit (RCU) is in place to undertake proactive measures for detecting process gaps / weakness so as to mitigate frauds / leakages. Lacunae observed are addressed in consultation with the relevant stakeholder. The RCU carries out ‘Risk Assessments, reviews processes and provide inputs to mitigate risks.

(v) Fraud Monitoring

The Company takes a holistic approach to identify, measure, control and monitor fraud risk through the Fraud Prevention Policy. Various measures taken in coordination with the concerned stakeholders to mitigate fraud risk. The Company also participates in Industry forums to proactively obtain information on latest fraud trends.

(vi) Information Security

The Information Security Committee (ISC) monitors information and cyber security risks. The Company complies with relevant regulatory and statutory information security requirements and is ISO 27001 certified. To further enhance the information security, the Company periodically conducts user awareness campaigns across locations.

(vii) Data Protection

The Company employs various data protection solutions to ensure that the data of its customers, employees, vendors and other stakeholders is appropriately handled through its life cycle. A Data Governance Framework is in the process of being formulated by the Company.

(viii) Business Continuity Management

The Company has requisite business continuity and disaster recovery plans in place and is ISO 22301 certified. The Company adheres to the Business Continuity requirements notified by the Authority.

(h) Regulatory risk:

Compliance function monitors regulatory risks and has a sound compliance management and suitable monitoring mechanisms in place. Relevant regulatory requirements and clarifications are communicated to relevant business functions on a timely basis. Suitable training is imparted to ensure adherence to applicable regulations.

(i) Reputational risk:

The Company has a structured process for identifying and managing risks emerging from reputational and other external events. Such events are discussed in the Risk Events Monitoring Committee, which meets on a quarterly basis. Events impacting the reputation are also monitored through the Corporate Risk Appetite statement.

(j) Legal risk:

Litigation cases are reviewed periodically by the senior management and appropriate steps are taken to adequately represent the Company in various forums.

(k) Country Risk:

The Company had obtained necessary regulatory approvals from IRDAI and Central Bank of Bahrain (CBB) for opening branch office in Kingdom of Bahrain to conduct life insurance business. The Board in its meeting held on January 22, 2020 have resolved to surrender the Certificate of Commencement issued by the Central Bank of Bahrain (CBB) and to withdraw all the resources of the Company in accordance to the applicable laws. During the year ended March 31, 2021, the Company has surrendered the Certificate of Commencement and Insurance license issued by CBB for branch office in Kingdom of Bahrain and withdrawn all the resources of the Company from Bahrain branch and do not foresee any Country Risk.

(l) COVID19

The Outbreak of COVID-19 virus continue to spread across the globe including India, resulting in significant impact on global and Indias economic environment including volatility in the capital markets. This outbreak was declared as global pandemic by World Health Organisation (WHO) on March 11, 2020. The Company has assessed the overall impact of this pandemic on its business and financials, including valuation of assets, policy liabilities and solvency for the year ended March 31, 2021. Based on the evaluation, the company have made an additional reserve amounting to INR 1,829,818 thousands towards COVID-19 pandemic and the same has been provided for as at 31/03/2021 in the actuarial policy liability. The Company will continue to closely monitor any future developments relating to COVID-19 which may have any impact on its business and financial position.

(II) Risk Quantification, Capital Allocation and Concentration:

The Company has a mechanism to allocate risk capital to various risks on an economic basis. The exposure level to various risks is monitored so as to ensure that concentration does not happen in any particular area of risk. The Company also ensures that adequate capital is maintained to cover its risks and thereby remain solvent on an economic basis.

9. Operations in other countries:

The Company had obtained necessary regulatory approvals from IRDAI and Central Bank of Bahrain (CBB) for opening branch office in Kingdom of Bahrain to conduct life insurance business. The Board in its meeting held on January 22, 2020 have resolved to surrender the Certificate of Commencement issued by the Central Bank of Bahrain (CBB) and to withdraw all the resources of the Company in accordance to the applicable laws. During the year ended March 31, 2021, the Company has surrendered the Certificate of Commencement and Insurance license issued by CBB for branch office in Kingdom of Bahrain and withdrawn all the resources of the Company from Bahrain branch.

10. Ageing of Claims

Mortality Claims Average Settlement period for last 5 years

Financial Year Average Claim Settlement Time (in days)
FY 2021 4.26
FY 2020 2.76
FY 2019 2.76
FY 2018 3.71
FY 2017 4.43
FY 2016 4.48

The ageing of claims* registered and not settled are as below:

(i) Traditional Claims

Rs. in lakhs

Year Upto 30 Days 30 Days to 6 Months 6 Months to 1 Year 1 Year to 5 Years 5 Years & Above
Count Amount Count Amount Count Amount Count Amount Count Amount
FY 2021 19,031 19,200 6,520 5,961 52 69 - - - -
FY 2020 17,083 10,979 2,690 1,364 517 146 3 6 - -
FY 2019 779 1,002 2,102 686 1 1 9 19 3 14
FY 2018 1,792 5,000 2,436 3,222 6 60 22 82 2 36
FY 2017 181 311 1,315 1,480 12,410 432 32,982 1,618 199 14
FY 2016 4,677 1,638 20,766 3,545 8,022 354 5,389 1,161 305 19

(ii) Ulip Claims

Rs. in lakhs

Year Upto 30 Days 30 Days to 6 Months 6 Months to 1 Year 1 Year to 5 Years 5 Years & Above
Count Amount Count Amount Count Amount Count Amount Count Amount
FY 2021 7,374 27,327 330 2,436 2 17 1 7 - -
FY 2020 2,417 8,196 197 896 19 339 - - - -
FY 2019 1,022 4,340 179 390 - - - - - -
FY 2018 976 4,042 112 492 3 10 14 47 1 1
FY 2017 2,411 7,926 30 153 13 41 86 376 18 43
FY 2016 3,465 6,819 304 767 169 451 538 1,084 4 17

*Claims includes death, maturity, survival, surrender, withdrawal annuity and health

11. Valuation of Investments

We certify that the investments made out of Shareholders funds and Non-Linked Policyholders funds in debt securities, redeemable preference shares are classified as "held to maturity" and stated at historical cost subject to amortization of premium or accretion of discount over a period of holding / maturity on yield to maturity basis. Fixed Deposit and Reverse Repo are valued at cost.

The book value and the market value of these investments are as follows:

Rs. (000)

Particulars As at March 31, 2021 As at March 31, 2020
Book Value Market Book Value Market Vale
Non-linked and shareholder funds Investments valued at book value subject to amortisation of premium & discount 901,545,567 945,034,826 711,988,243 759,071,200
Non-linked and shareholder funds 114,639,916 145,016,384 125,252,145 105,993,306
Investments valued at market value
Total investments in non-linked and shareholder funds 1,016,185,483 1,090,051,210 837,240,388 865,064,506

i. Valuation - shareholders investments and non-linked policyholders investments Debt securities

Debt securities, including Government securities and money market securities are stated at historical cost subject to amortisation of premium or accretion of discount over a period of holding/ maturity on yield to maturity basis.

Investments in Fixed Deposits with banks and Reverse Repo are valued at cost.

Equity, equity related instruments & preference shares

Listed equity shares, equity related instruments & preference shares are measured at fair value on the Balance Sheet date. For the purpose of determining fair value, the closing price at primary exchange i.e. NSE is considered.

If NSE closing price is not available for any security, then BSE closing price is used for valuation.

Unlisted equity shares, equity related instruments & preference shares are measured at historical cost.

In case of Security Lending & Borrowing (‘SLB), Equity Shares lent are valued as per valuation policy for equity shares as mentioned above.

Additional Tier 1 (Basel III Compliant) Perpetual Bonds classified under "Equity" as specified by IRDAI, are valued at prices obtained from Credit Rating Information Services of India Limited (‘CRISIL).

Unrealised gains or losses arising due to change in the fair value of equity shares are recognised in the Balance Sheet under "Fair value change account".

On each balance sheet date, the Company assess whether impairment of listed equity securities has occurred. Any impairment loss is recognised as an expense in the Revenue or Profit and Loss Account to the extent of the difference between the re-measured fair value of the security or investment and its weighted average cost as reduced by any previous impairment loss recognised as an expense in the Revenue or Profit and Loss Account. Any reversal of impairment loss, earlier recognised in Revenue or Profit and Loss Account, is recognised in the Revenue or Profit and Loss Account.

Mutual funds

Investments in mutual funds are valued at the previous days Net Asset Value (NAV). Unrealised gains or losses arising due to change in the fair value of mutual fund units are recognised in the Balance Sheet under "Fair value change account".

Alternative Investment Funds (AIFs)

Investments in Alternative Investment Funds (AIFs) are valued at latest available NAV. Unrealised gains or losses arising due to change in the fair value of Alternative Investment Funds (AIFs) are recognised in the Balance Sheet under "Fair value change account".

Interest Rate Derivatives (IRDs)

Interest Rate Derivative (IRD) contracts for hedging of highly probable forecasted transactions on insurance contracts and investment cash flows in life, pension and annuity business, are accounted for in the manner specified in accordance with ‘Guidance Note on Accounting for Derivative Contracts issued by the Institute of Chartered Accountants of India (ICAI) in June 2015 effective from FY 2016-17, IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 (‘the IRDAI circular on Interest Rate Derivatives) and IRDAI Investment Master Circular issued in May 2017.

The Company has well defined Board approved interest rate risk hedging Policy and Process document covering various aspects related to functioning of the derivative transactions undertaken to mitigate interest rate risk as per the Interest rate risk hedging strategy. At the inception of the hedge, the Company designates and documents the relationship between the hedging instrument and the hedged item, the risk management objective, strategy for undertaking the hedge and the methods used to assess the hedge effectiveness. Hedge effectiveness is the degree to which changes in the fair value or cash flows of the hedged item that are attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. Hedge effectiveness is ascertained at the time of inception of the hedge and periodically thereafter at Balance Sheet date.

Forward Rate Agreement ("FRA") is a forward contract to hedge the risk of movements in interest rates. In a FRA contract, the Company fixes the yield on the government bond for the period till the maturity of the contract. The Company enters into FRA to hedge interest rate risk on forecasted transactions: a) Reinvestment of maturity proceeds of existing fixed income investments; b) Investment of interest income receivable; and c) Expected policy premium income receivable on insurance contracts which are already underwritten in Life, Pension & Annuity business.

The Company follows "hedge accounting" for accounting of all Interest rate derivative financial instruments as per Guidance Note on Accounting for Derivative Contracts issued by Institute of Chartered Accountants of India (ICAI).

The Forward Rate Agreement (FRA) contract is valued at the difference between the market value of underlying bond at the spot reference yield taken from the SEBI approved rating agency and present value of contracted forward price of underlying bond including present value of intermediate coupon inflows from valuation date till FRA contract settlement date, at applicable INR-OIS rate curve. The fair valuation or Mark to market valuation of the derivative financial instruments is done independently by both the parties i.e. the Company and the counter party. The counter party (bank) valuation is considered for margin settlement as the counter party (bank) is the valuation agent as per forward rate agreement.

Hedging instruments are initially recognised at fair value and are re-measured at fair value at subsequent reporting dates. The effective portion of fair value gain / loss on the interest rate derivative that is determined to be an effective hedge is recognised in equity account i.e.

"Hedge Fluctuation Reserve" or "HFR" under the head ‘Credit/(Debit) Fair Value Change Account in the Balance Sheet and the ineffective portion of the change in fair value of such derivative instruments is recognised in the revenue account or profit and loss account in the period in which they arise. The fair value gain / loss on the interest rate derivative that is determined to be an ineffective hedge is recognised in the revenue account or profit and loss account in the period in which they arise.

The accumulated gains or losses that were recognised in the Hedge Fluctuation Reserve are reclassified into Revenue Account or profit and loss account, in the same period during which the income from investments acquired from underlying forecasted cash flow is recognized in the Revenue Account or profit and loss account. Hedge accounting is discontinued when the hedging instrument is terminated or it becomes probable that the expected forecast transaction will no longer occur or the risk management objective is changed or no longer expected to be met. On such termination, accumulated gains or losses that were recognised in the Hedge Fluctuation Reserve are reclassified into Revenue Account or profit and loss account. Costs associated with derivative contracts are considered as at a point in time cost.

Real Estate Investment Trusts (REITs)/ Infrastructure Investments Trusts (InvITs)

The Investment in Units of REITs / InvITs are valued at Market Value (last quoted price should not be later than 30 days). For the purpose of determining market value, the closing price at primary exchange i.e. NSE is considered. If NSE closing price is not available for any security, then BSE closing price is used for valuation. Where market quote is not available for the last 30 days, the units are valued as per the latest NAV (not more than 6 months old) of the units published by the trust. Unrealised gains or losses arising due to change in the fair value of Real Estate Investment Trust (REITs)/Infrastructure Investments Trusts (InvITs) are recognised in the Balance Sheet under "Fair value change account".

ii. Valuation - Linked business

Debt securities

Debt securities including Government securities with remaining maturity of more than one year are valued at prices obtained from CRISIL.

Debt securities including government securities with remaining maturity of less than one year are valued on yield to maturity basis, where yield is derived using market price provided by CRISIL on the day when security is classified as short term. If security is purchased during its short term tenor, it is valued at amortized cost using yield to maturity method. In case of securities with options, earliest Call Option / Put Option date will be taken as maturity date for this purpose.

Money market securities are valued at historical cost subject to amortisation of premium or accretion of discount on yield to maturity basis.

Investments in Fixed Deposits with banks and Reverse Repo are valued at cost.

Equity, equity related instruments & preference shares

Listed equity shares, equity related instruments & preference shares are measured at fair value on the Balance Sheet date. For the purpose of determining fair value, closing price at primary exchange i.e. NSE is considered.

If NSE closing price is not available for any security, then BSE closing price is used for valuation.

Unlisted equity shares, equity related instruments & preference shares are measured at historical cost.

In case of Security Lending & Borrowing (SLB), Equity Shares lent are valued as per valuation policy for equity shares as mentioned above.

Additional Tier 1 (Basel III Compliant) Perpetual Bonds classified under "Equity" as specified by IRDAI, are valued at prices obtained from CRISIL.

Unrealised gains or losses arising due to change in the fair value are recognised in the Revenue Account.

Mutual funds

Investments in mutual funds are valued at the previous days Net Asset Value (NAV). Unrealised gains or losses arising due to change in the fair value of mutual fund units are recognised in the Revenue Account.

Real Estate Investment Trusts (REITs)/ Infrastructure Investments Trusts (InvIT)

The Investment in Units of REITs / InvITs are valued at Market Value (last quoted price should not be later than 30 days). For the purpose of determining market value, the closing price at primary exchange i.e. NSE is considered. If NSE closing price is not available for any security, then BSE closing price is used for valuation. Where market quote is not available for the last 30 days, the units are valued as per the latest NAV (not more than 6 months old) of the units published by the trust. Unrealised gains or losses arising due to change in the fair value of REITs units are recognised in the Revenue Account.

12. Review of Asset Quality

The Company invests its funds in Government Securities, bonds & debentures, equity shares, money market instruments, fixed deposits, etc. in accordance with the Investment guidelines prescribed by IRDAI from time to time. The assets held are Rs. 220,871 crores as on March 31, 2021 and is having the following bifurcation:

Investment Category Shareholders Policyholders Funds Total
Funds PH - Non ULIP PH - ULIP
Government Securities 47.82% 56.82% 32.70% 43.78%o
Corporate Bonds:
- AAA 22.84% 20.42% 8.59% 14.29%o
- AA / AA+ 5.47% 2.21% 1.35% 1.89%o
- AA- & Below 2.80% 0.17% 0.48% 0.43%o
Equity Shares^ 18.42% 11.10% 46.17%o 29.84%o
Fixed Deposits with Banks 0.00% 1.83%o 0.32% 0.96%o
Mutual Fund* 0.00% 1.50%o 1.04% 1.20%o
Money Market Instruments 1.99% 4.89%o 8.05% 6.44%o
Others** 0.66% 1.06%o 1.30% 1.17%o
Grand Total 100.00% 100.00% 100.00% 100.00%
Size of Funds (Rs. in Crores) 8,605 96,051 116,215 220,871

^ Includes Investment in Equity Exchange traded funds (ETF), Additional tier 1 (AT1) Bonds.

* Mutual Fund includes Liquid schemes and Debt ETF (CPSE bonds as underlying).

** Include Investment in Loans, Loan against policy, REITs, Alternate Investment Funds and Net Current Assets.

The Investments are made with strong research recommendations based on fundamentals, long term view and growth potentials. Around 81% of the equity investments are in large cap Nifty 50 Index stocks and approximately 96% (including Central Government Securities, State Government Securities and Other Approved Securities) of the rated debt investments are in AAA or equivalent rating for long term and A1+ or equivalent rating for short term instruments, which indicates the safe & reliable asset quality. The Company follows the guidelines, prescribed by IRDAI, with respect to strong Investment Risk Management Systems & Processes. Further, all the investment transactions are subject to independent Concurrent Audit.

Returns generated by Unit Linked Funds during the year are given below:

Funds AUM as on 31st March Return for 1 Year Return for 3 Years (CAGR) Return for 5 Years (CAGR)
2021 (Rs. in Crs) Fund Bench mark Fund Bench mark Fund Bench Mark
EQUITY FUNDS
Equity 27,550.96 64.71% 70.87%o 11.69%o 13.25%o 12.95%o 13.68%o
Equity Pension 525.44 68.70% 70.87%o 11.93%o 13.25%o 13.66%o 13.68%o
Equity Pension II 3,654.36 66.63%o 70.87%o 12.27%o 13.25%o 13.87%o 13.68%o
Growth 1,622.91 47.81% 49.59%o 12.40%o 12.50%o 12.91% 12.53%o
Growth Pension 191.11 49.29%o 49.59%o 12.74%o 12.50%o 13.32%o 12.53%o
Equity Optimiser 1,393.72 55.71% 55.37%o 10.87%o 12.19%o 12.21% 12.48%o
Equity Optimiser Pension Fund 153.13 57.65% 55.37%o 13.15% 12.19%o 13.95%o 12.48%o
Equity Elite 10.85 62.35%o 55.37%o 15.32%o 12.19%o 15.52% 12.48%o
Equity Elite Fund II 6,954.81 51.94%o 55.37%o 11.36%o 12.19%o 12.75% 12.48%o
Index 708.94 70.01% 70.87%o 12.72%o 13.25%o 13.02%o 13.68%o
Index Pension 30.75 68.89%o 70.87%o 12.63%o 13.25%o 12.96%o 13.68%o
Top 300 Fund 983.43 56.86% 55.37%o 13.72%o 12.19%o 14.30%o 12.48%o
Top 300 Pension Fund 184.01 56.83% 55.37%o 14.02%o 12.19%o 14.41% 12.48%o
Midcap Fund 4,058.55 77.24% 102.44%o 13.41% 8.10%o NA NA
Pure Fund 399.74 61.59% NA 10.45%o NA NA NA
DEBT FUNDS
Bond Fund 26,075.19 7.08% 7.69%o 8.21% 8.99% 7.97% 8.62%o
Bond Pension Fund 390.46 7.48% 7.69%o 8.99% 8.99% 8.65% 8.62%o
Bond Pension Fund II 10,927.00 6.86% 7.69%o 7.41% 8.99% 7.46% 8.62%o
Group Short Term Plus Fund 0.01 4.13%o 7.69%o 5.62% 8.99% 7.80%o 8.62%o
Group Short Term Plus Fund II 1.42 5.35% 7.69%o 7.38% 8.99% 8.33% 8.62%o
Guaranteed Pension Fund GPF070211 6.76 5.90% NA 7.97% NA 8.03% NA
RGF150611 85.28 5.52% NA 6.95% NA 7.19%o NA
Bond Optimiser Fund 579.69 18.86% 18.61% NA NA NA NA
Corporate Bond Fund 328.26 8.60%o 8.81% NA NA NA NA
BALANCED FUNDS
Balanced 15,732.66 33.52% 36.55%o 10.87%o 11.75% 11.53% 11.58%o
Balanced Pension 87.87 34.75%o 36.55%o 12.52%o 11.75%o 12.69%o 11.58%o
Flexi Protect 0.24 1.29%o NA 3.38%o NA 4.83%o NA
Flexi Protect (Series II) Fund 0.10 1.90%o NA 4.32%o NA 6.50%o NA
Group Balance Plus 101.81 20.28%o 21.47%o 10.56%o 10.52%o 10.43%o 10.20%o
Group Balance Plus II 90.80 19.69%o 21.47%o 10.35%o 10.52%o 10.40%o 10.20%o
Group Debt Plus 3.23 12.61% 13.05%o 9.75%o 9.64%o 9.56%o 9.27%o
Group Debt Plus II 133.38 11.72%o 13.05%o 9.61% 9.64%o 9.37%o 9.27%o
Group Growth Plus Fund 1.70 34.28%o 33.42%o 12.76%o 11.53%o 12.52%o 11.32%o
Group Growth Plus Fund II 3.94 33.04%o 33.42%o 12.33%o 11.53%o 12.21% 11.32%o
Daily Protect Fund I 0.07 5.07%o NA 5.96%o NA 7.39%o NA
Daily Protect Fund II 0.50 3.27%o NA 5.62%o NA 7.18% NA
Daily Protect Fund III 4,972.90 4.71% NA 5.95%o NA 7.53% NA
P/E Managed Fund 330.45 38.59% NA 9.39%o NA 10.69%o NA
LIQUID FUNDS
Money Market 304.18 3.88% 4.10% 5.68%o 5.97%o 6.22%o 6.37%o
Money Market Pension 51.92 3.95% 4.10% 5.69%o 5.97%o 6.24%o 6.37%o
Money Market Pension II 568.87 3.67% 4.10%o 5.39%o 5.97%o 5.96%o 6.37%o
Group Money Market Plus Fund 2.16 3.11% 4.10%o 4.93%o 5.97%o NA NA
Group STO Plus Fund II 0.00 NA NA NA NA NA NA
DISCONTINUED FUNDS
Discontinued Policy Fund 5,932.08 4.87% NA 6.55%o NA 6.38%o NA
Discontinue Pension Fund 1,079.37 5.24% NA 7.04%o NA 6.73%o NA

NA- indicates that the fund has not completed the relevant period under consideration

Returns generated by Conventional portfolios and shareholders portfolio during the year are given below:

Particulars

Assets Held ^ 000)

Returns on Assets * (%)

March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020
Participating Policyholders Funds 403,896,099 308,989,714 8.73% 8.76%o
Non Participation Policyholders Funds 556,618,761 440,712,373 8.15% 8.92%o
Shareholders Funds 86,047,092 68,279,462 8.58%o 7.10%o

* Returns are based on realized income i.e. without considering the unrealised gains and losses.

13. Managements Responsibility Statement

The Management of the Company also confirm that:

(a) in the preparation of financial statements, the applicable accounting standards, principles and policies have been followed along with proper explanations relating to material departures, if any;

(b) the management has adopted accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the operating profit and of the profit of the company for the year;

(c) the management has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the applicable provisions of the Insurance Act, 1938 (4 of 1938) (amended by Insurance Laws (Amendment) Act, 2015 and Insurance Laws (Amendment) Act 2021), Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the management has prepared the financial statements on a going concern basis;

(e) the management has ensured that an internal audit system commensurate with the size and nature of the business exists and is operating effectively.

14. Payments made to individuals, firms, companies and organisations in which directors are interested

The details of payments made to individuals, firms, companies and organizations in which directors are interested are as follows:

Rs. (000)

Name of Director Entity in which Director is interested Interested as FY 2021 FY 2020
1 Mr. Rajnish State Bank of India Chairman 12,446,936 9,926,760
SBI Cards and Payment Services Pvt. Ltd. Chairman 235 226
SBI General Insurance Company Ltd. Director 6,507 12,259
SBI Foundation Chairman - -
SBI Capital Markets Ltd. Chairman - -
2 Mr. Dinesh State Bank of India Chairman 12,446,936 9,926,760
SBI Cards and Payment Services Pvt. Ltd. Chairman 235 226
SBI General Insurance Company Ltd. Chairman 6,507 12,259
SBICAPS Securities Pvt. Ltd Chairman 32,326 25,637
SBI DFHI Ltd. Chairman - -
SBI Global Factors Ltd. Chairman - -
SBI Foundation Chairman - -
SBI Capital Markets Ltd. Chairman - -
SBI Fund Management Pvt. Ltd. Director - -
SBI Pension Funds Private Ltd. Director - -
SBI CAP Ventures Limited Director - -
SBI CAPS Singapore Limited Director - -

* Mr. Rajnish Kumar resigned on October 06, 2020.