SBI Life Insuran

SBI Life Insurance Company is Indias largest private life insurer in terms of new business premium (NBP) and a subsidiary of Indias largest bank - State Bank of India in terms of deposits, advances and number of branches, which is also among worlds top 50 banks in terms of assets. The company was established as a joint venture between the State Bank of India and BNP Paribas Cardif (BNPPC) in 2001. The promoter shareholder State Bank of India has 24,017 branches and 195 international offices in 36 countries and more than 420 million customers as on 01 April 2017. BNPPC, an insurance subsidiary of BNP Paribas, with operations across 36 jurisdictions internationally, is among the leading credit life insurance businesses globally. BNP Paribas was a top 10 global financial institution in terms of revenues in 2016.

The company has been top NBP generator for last eight straight years since FY2010. The company has increased its market share of NBP generated among private life insurers in India, from 15.87% in FY2015 to 20.04% in FY2017. NBP of the company has increased at a CAGR of 35% between FY2015 and FY2017, which is the highest growth among the top five private life insurers in India. The company has also issued the highest number of individual life policies annually among the top five private life insurers in India since FY2014.

Arijit Basu is deputed by State Bank of India and was appointed as MD&CEO of the company from 1 August 2014 and was re-appointed as MD&CEO twice with effect from 1 August 2016 and subsequently with effect from 9 July 2017. Julien Hautiere Rey is the Deputy CEO and has been deputed by BNPPC, who is responsible for planning and budgetary, learning and development, channel administration and strategic marketing functions. Sanjeev Pujari is President - Actuarial and Risk Management and Chief Risk Officer, who is responsible for risk and product management functions and overseas functioning of the actuarial department. Abhijit Gulanikar is the President-Business Strategy, Sangramjit Sarangi is the Chief Financial Officer and Gopikrishna Shenoy is the Chief Investment Officer of the company.

As of July 2017, the company had a comprehensive product portfolio of 29 individual and eight group products, including a range of protection and savings products to address the insurance needs of diverse customer segments. Individual products include participating products, non-participating protection products, other non-participating products and unit-linked products, which contributed 10.77%, 0.95%, 1.69% and 50.36%, respectively, of NBP in FY2017. Group products include credit life group protection products, other group protection products, group fund management products and other group products, which contributed 2.72%, 1.14%, 31.73% and 0.65%, respectively, of NBP in FY2017.

The company has developed a multi-channel distribution network comprising an expansive bancassurance channel, including State Bank of India, the largest bancassurance partner in India, a large and productive individual agent network comprising 95,177 agents as of 31 July 2017, as well as other distribution channels including direct sales and sales through corporate agents, brokers, insurance marketing firms and other intermediaries. As of July 2017, the company had 803 offices, located across 29 States and seven Union Territories, and 12,647 employees.

In FY2017, the company has 13th month and 61st month persistency ratios of 81.07% and 67.18%, respectively, with 61st month persistency ratio being the highest among the top five private life insurers in India. In FY2017, the mis-selling ratio of the company stood at 0.20%, which was the lowest among the top five private life insurers. Grievance disposal rate was 99.96% in FY2017 and 95.10% in Q1 of FY2018. Death claims settlement ratio improved from 92.33% in FY2015 to 97.98% in FY2017, and was 89.61% in Q1 of FY2018.

The embedded value was Rs 16538 crore as of March 2017. Value of new business was Rs 1037 crore in FY2017 while value of new business margin was 15.4% and present value of NBP margin was 3.8% for FY2017.

Indian Life Insurance Industry and growth potential

The size of the Indian life insurance industry is Rs 4.2 trillion on a total-premium basis as of FY2017, which is the 10th largest market in the world and the fifth largest in Asia. New premium constituted 42% of the total premium as of FY2017. The industrys assets under management (AUM) grew at a compound annual rate (CAGR) of 19% during FY2001 to FY2017 to Rs 30 trillion. Total premium has grown at a stupendous 17% CAGR during FY2001 to FY2017, after the allowing entry of private players in 2000. New business premium grew at 9% CAGR during FY2007 to FY2017 to Rs 1.8 trillion.

CRISIL Research forecasts new business premium for life insurers to grow at higher pace of 11-13% CAGR from FY2017 to FY2022. The total premium is expected to grow at 13-15% CAGR over the next five years, from Rs 4.18 trillion in FY2017 to Rs 7.90 - Rs 8.10 trillion by FY2022. Improving economic growth, low inflation, and increase in financial savings, along with rising awareness of insurance, would be the key catalysts.

Competitive Strengths of the company

Largest private life insurer with a consistent track record of rapid growth: The company is Indias largest private life insurer, in terms of NBP for last eight years, while it has increased market share of NBP generated from 15.87% in FY2015 to 20.04% in FY2017. The company has also issued the highest number of individual life policies annually among private life insurers in India since FY2014.

Significant brand equity and pre-eminent Promoters: The company is recognized as among the Most Trusted Brands by The Economic Times Brand Equity - Nielsen survey in FY2017 for the sixth consecutive year. According to the Kantar - IMRB survey 2017, the company was jointly top-ranked for customer loyalty in the life insurance category across more than 15 cities in India. As life insurance products are typically long term in nature, the customers are able to better identify with long and stable operating history, financial strength and high financial credit ratings, established business reputation and market leadership position of the company.

Expansive multi-channel distribution with pan-India bancassurance channel and high agent productivity: The company has over the years developed one of the largest multi-channel distribution networks among private life insurers in India, with the largest bancassurance channel, including with State Bank of India, the largest bancassurance partner in India. The company also has a large and productive individual agent network comprising 95,177 agents as of July 2017. Other distribution channels include direct sales and sales through corporate agents, brokers, insurance marketing firms and other intermediaries. Bancassurance contributed 53.03% of total NBP in FY2017, which has benefits from cost efficiencies. NBP generated through State Bank represented 41.48% of NBP in FY2017, which may further increase in the future as the company strategically expands its bancassurance business through additional branches of State Bank. As of 31 July 2017, the company has bancassurance partnerships with 17 Regional Rural Banks, and with the Punjab and Sind Bank and South Indian Bank.

Robust financial position supported by high operating efficiencies: The company has developed a strong capital base, and is adequately capitalized. The company has turned profitable within the first five years of operations, have demonstrated consistent profitability since FY2010 and have declared dividends every year since FY2012. The company has maintained Solvency Ratio at over 2.00x during the last five financial years with Solvency Ratio at 2.11x end June 2017, compared to the IRDAI mandated solvency ratio of 1.50x.

Cost leadership with improving operating performance: The company has undertaken significant investments to support its growth, while ensuring high levels of operating efficiencies reflected in low operating expense ratios. The operating expense ratio of the company was the lowest among top five private life insurers at 7.83% in FY2017. The relatively low operating expense ratio reflects the effective utilization of distribution channels, increased focus on bancassurance, improved productivity of individual agent network supported by effective sales and training and leveraging integrated IT infrastructure.

Superior investment performance: The company manages the second largest AUM among private life insurers with AUM at Rs 101226.03 crore end June 2017. Most of unit-linked funds that are benchmarked to independent indices have out-performed the benchmark over the last 5 year, 3 year and 1 year horizons. The average realized returns for traditional portfolio in FY2017 was 9.00%.

Diversified product portfolio: The diversified product portfolio of the company is an important contributing factor to the growth of business. In FY2017, participating products, non-participating protection products, other non-participating products and unit-linked products contributed 16.9%, 1.5%, 2.7% and 79% of Individual NBP. The focus on maintaining a diversified product mix has resulted in value of new business margin of 15.4% in FY2017.

The Offer and the Objects

The company is coming out with the biggest Initial Public Offering (IPO) in seven years and would be the second life insurer in India to list on exchanges. The offer comprises sale up to 12,00,00,000 equity shares of the company, representing about 12% of its equity share capital for cash, through an offer for sale by State Bank of India and BNP Paribas Cardiff S.A.

The Offer for Sale (OFS) is of up to up to 8,00,00,000 equity shares by State Bank of India and up to 4,00,00,000 equity shares by BNP Paribas Cardif S.A. The entire proceeds from the OFS will be paid to the selling shareholders. The OFS would mop up proceeds of Rs 8220 crore at the lower price band of Rs 685 per share (face value Rs 10 per share) and Rs 8400 crore at the upper band of Rs 700 per share.

The issue is to be made through a book building process and will open on 20 September 2017 and will close on 22 September 2017.

The objects of the offer are to achieve the benefits of listing the equity shares of the company on the Stock Exchanges. The listing of the equity shares will enhance the SBI Life brand name and provide liquidity to the existing shareholders. The listing will also provide a public market for the equity shares in India. The company will not receive any proceeds from the offer.

To reward the banks existing share holders, the management has set a preference up to 10% of SBI Lifes shares for shareholders of State Bank of India.

Risk Factors

The Indian life insurance sector is highly competitive, and the company will have to maintain its market position and sustain growth amidst intense competitive pressures and consolidation among competitors,

Any termination of, or adverse change in, bancassurance arrangements, and in particular bancassurance agreement with the State Bank, or a decline in performance standards of bancassurance partners, may have a material adverse effect on business of the company. NBP generated through State Bank represented 41.48% and overall bancassurance channel represented 53.03% of NBP in FY2017.

A 78.97% of NBPs are generated by unit-linked policies. Any regulatory changes or market development that adversely affects the sale of such products could have a material adverse effect on business, financial condition and results of operations. Moreover unit-linked products are sensitive to equity market conditions and they lose attractiveness when market conditions are adverse.

Any catastrophic event, including any major natural disaster, could result in significant claims which could have a material adverse effect on business, prospects, financial condition and results of operations.

Any significant variation from the various assumptions and estimates used in the pricing of, and maintaining reserves for, wide range of products, could have a material adverse effect on business, financial condition and results of operations.

Embedded value included is based on various assumptions and estimates, and may vary if such assumptions or estimates are modified or if actual experience is different from such assumptions and estimates.

The company does not own the SBI trademark or the SBI Life logo, and the termination of the SBI trademark license agreement with State Bank or otherwise inability to use the SBI name or the SBI Life logo may materially and adversely affect business.


SBI Life Insurance Company is the largest private sector life insurance company in terms of NBP income with strong promoters. The company has diversified product portfolio and expansive multi-channel distribution network that helps it company maintain lowest expense ratio in the private life insurance sector. The company has strong track record of profitability with healthy financial position. The company has not required additional capital infusion since 2008, while expects the sufficient capital position for next three years.

The company is the second life insurance company to list on the exchanges, after ICICI Prudential Life Insurance Company listed in September 2016. ICICI Prudential Life Insurance Company was offered at 3.43 times the embedded value, as the company was valued at Rs 47939 crore and its embedded value as on March 2016 stood at Rs 13940 crore.

State Bank of India in December 2016 sold 1.95% stake in the company to KKR and Temasak Holdings valuing the company at Rs 46000 crore or 3.54 times its embedded value of Rs 12999 crore end March 2016.

The Embedded Value of the SBI Life stands at Rs 16538 crore end March 2017. The company is offered at valuation of Rs 70000 crore or 4.23 times of embedded value at the upper price band of Rs 700 per share. ICICI Prudential Life is currently trading at 3.78 times its March 2017 embedded value.

SBI Life Insurance Company : Issue highlights
Offer for Sale Offer size (in Rs crore)
- On lower price band8220.00
- On upper price band8400.00
Offer size (in no. of shares )12.00 crore
Price band (Rs)685-700
Minimum Bid Lot (in no. of shares )21
Post issue capital (Rs crore)
- On upper price band1000.00
- On lower price band1000.00
Post-issue promoter & Group shareholding (%)84.1
Issue open date20/09/2017
Issue closed date22/09/2017
Rating 50/100


SBI Life Insurance: Policyholders Account
1303 (12)1403 (12)1503 (12)1603 (12)1703 (12)1706 (3)
Premium earned (net)10345.3010701.9412780.0015665.4520852.453762.59
Income from Investments4373.956354.0010242.913340.919294.982606.98
Other income12.0212.4213.8919.7067.3918.81
Contribution from the Shareholders account244.25301.07149.6893.6762.680.00
Total Income14975.5317369.4223186.4919119.7230277.516388.37
Op. expenses related to Insurance business1000.151089.431167.531480.851646.49371.84
Benefits paid (Net)7778.788780.208197.697958.559526.142622.50
Change in valuation of policy liabilities4741.145922.7812284.087986.8617240.962784.79
Provision for taxation59.8588.45109.78151.88179.83121.54
Total Expense14240.7516557.4222483.8118475.1029623.156128.84
Transfer to Shareholders account741.05823.35707.27651.72654.59218.03
Figures in Rs crore
Source: SBI Life IPO prospectus


SBI Life Insurance: Shareholders Account
1303 (12)1403 (12)1503 (12)1603 (12)1703 (12)1706 (3)
Amounts transferred from Policyholders account741.05823.35707.27651.72654.59218.03
Income from investments150.52202.18276.11317.79401.56106.95
Expenses (apart from Insurance)23.764.0611.8428.6727.126.25
Contribution to policyholders account244.25301.07149.6893.6762.680.00
EPS (Rs)*6.307.288.158.449.5512.54
* on current equity of Rs 1000 crore of face value of Rs 10 each
Figures in crore,
Source: SBI Life IPO prospectus


Comparison of Top-Five Private Players
UnitSBI LifeHDFC Standard LifeICICI Prudential LifeMax LifeBajaj Allianz
Premium (FY2017)
New business premium Rs Crore101468696786336773290
Total premium Rs Crore210151945522354107806180
Individual Rated Premium Rs Crore59383636640826391010
Market share (within private players)(FY2017)
New Business Premium % 20.0417.1815.537.246.5
New Business Premium (Individual business)% 20.1613.0921.7510.313.32
New Business Premium (Group business)% 19.8324.254.771.9312
Total premium % 17.8216.4918.969.145.24
Individual Rated Premium % 20.6912.6722.339.23.52
Product Mix –New Business Premium (FY2017)
Linked % 50.535.2479.1324.4241.72
Non-linked - Participating % 10.7714.347.8758.147.52
Non-linked - Non-Participating% 38.7350.421317.4450.76
By customer segment –New Business Premium (FY2017)
Individual % 63.7748.3188.7490.2332.39
Group % 36.2351.6911.269.7767.61
Average Premium (FY2017)
Individual single premium Rs225,29026,095195,83010,310,562227,527
Individual regular premium Rs47,10842,45794,75951,05637,062
Individual new-business premiumRs50,77838,81799,41865,78138,954
Individual New Business Policies
2016-17 growth % 0.1-5.921.09.34.9
3-year CAGR % 7.07.0-3.4-1.5-15.6
5-year CAGR % 7.75.8-7.4-2.5-23.6
10-year CAGR % 8.57.5-9.8-0.9-18.4
Premium Growth -New business premium
2016-17 growth % 42.7634.0416.2227.2514.06
3-year CAGR % 26.0429.1527.8717.498.27
5-year CAGR % 9.2217.819.1413.963.93
10-year CAGR % 14.7418.274.1114.83-2.57
Renewal premium
2016-17 growth % 24.699.416.8712.31-3.99
3-year CAGR % 24.2110.2418.6812.35-3.84
5-year CAGR % 10.4911.048.639.65-9.54
10-year CAGR % 40.4224.4418.0828.3110.73
Individual Rated Premium
2016-17 growth % 38.879.0828.9925.4940.8
3-year CAGR % 28.3115.2725.3614.270.27
5-year CAGR % 23.016.0217.8611.88-5.06
10-year CAGR % 16.8111.414.913.12-10.74
Channel Premium –Individual New Business Premium (FY2017)
Individual agents Rs Crore22046511634826903
Corporate agents -BanksRs Crore418525663982204441
Others Rs Crore789841357438122
Channel mix growth –Individual New Business Premium Growth (FY2014 –FY2017)
Individual agents % 11.2415.9915.258.37-3.02
Corporate agents -Banks% 40.0415.4729.8324.7-23.34
Others % -5.0127.9335.76.667.57
Channel mix –Individual New Business Premium (FY2017)
Individual agents % 34.0815.4923.524.9784.71
Corporate agents -Banks% 64.7161.0957.0661.793.85
Others % 1.2123.4219.4413.2411.44
Persistency ratio (FY2017) -By premium
13% 81.0780.8885.780.468.2
25% 73.8673.3473.970.451.1
37% 67.3663.966.859.743.9
49% 62.4658.3159.354.938.2
61% 67.1856.7956.25331.6
Net cash added (FY2017) Rs Crore11326943371916903-48
AUM (March 2017) Rs Crore97740917371229194437049270
Surrender ratio-linked products (Surrender/ average AUM for FY2017)% 8.8111.3914.212.6814.12
Surrender ratio (FY2017) (Surrender/Total premium)% 22.7931.3352.7620.554.76
Operating performance (FY2017)
Commission ratio % 3.734.13.492.4
NBP commission ratio % 5.097.525.9616.972.42
Operating Expense ratio % 7.8312.2710.5414.7617.1
Operating Expense by Average AUM% 1.852.872.083.952.26
Total cost ratio % 11.5616.3713.9423.7619.5
Agent productivity Rs lakh2.350.951.281.661.08
Number of individual agents (As of March 31, 2017)Nos 95,35554,516136,11454,28377,097
Number of new policies issued Thousands 12761083703503274
Channel mix –New Business Premium (FY2017)
Individual agents % 22.317.4920.8822.5627.54
Corporate agents -Banks% 53.0330.0150.8262.931.31
Others % 24.6662.4928.314.5171.16
RoE [3-year average] (FY2017)% 20.1429.4531.2323.6512.2
ROIC [3-year average] (FY2017)% 87.8638.3934.3425.1571.35
Solvency ratio (March 2017) Times 2.041.922.813.095.8
Death Claim Settlement ratio (FY2017)% 97.9899.1697.298.2799.16
Death Claim repudiation ratio (FY2017)% 1.59%0.70%2.37%1.52%0.81%
Grievances (FY2017)
Total received Number 7,8068,7946,6648,7924,127
Grievance ratio % 0.610.810.951.751.5
Grievance -unfair trade practices –mis-selling ratio%
Geographic distribution -Individual (Based on New Business Premium of (FY2017)
Top three states % 24.6744.7141.933.6236.21
Top five states % 38.3458.5355.8250.0950.56
Top 10 states % 67.2480.8180.2677.3973.45
Geographic distribution -Group (Based on New Business Premium of (FY2017)
Top three states % 48.0769.8590.1994.1361.12
Top five states % 65.3779.1198.0698.8878.92
Top 10 states % 90.6795.7199.9499.4495.01
Source: SBI Life IPO prospectus


Market Share of Private Life Insurers on the Basis of New Business Premium
SBI Life 19.95%16.85%17.17%15.87%17.34%20.04%
HDFC Standard Life 11.71%14.42%13.68%15.77%15.83%17.18%
ICICI Prudential Life 15.52%15.63%12.74%15.31%16.51%15.53%
Max Life 5.83%6.17%7.66%7.39%7.03%7.24%
Bajaj Allianz Life 8.29%9.73%8.78%7.76%7.04%6.50%
Kotak Mahindra Old Mutual Life 3.56%3.86%4.31%4.42%5.39%5.63%
Birla Sun Life 5.89%5.97%5.75%5.57%5.42%5.01%
IndiaFirst Life 3.00%4.28%5.70%4.42%3.61%3.30%
PNB Met Life 3.29%2.73%2.28%2.37%2.45%2.27%
Tata AIA Life 2.87%1.82%1.47%0.90%1.81%2.24%
Reliance Nippon Life 5.53%4.47%6.55%5.94%3.80%2.08%
Canara HSBC OBC Life 2.12%1.99%2.05%1.37%2.10%1.94%
DHFL Pramerica Life 0.31%0.45%0.59%1.66%1.77%1.73%
Exide Life0.00%0.00%1.92%1.85%1.54%1.71%
IDBI Federal Life 0.95%1.12%1.07%1.39%1.44%1.57%
Shriram Life 1.21%1.38%1.34%1.47%1.72%1.46%
Star Union Dai-Ichi Life2.95%2.42%1.91%1.81%1.60%1.38%
Bharti Axa Life 0.69%0.81%1.27%1.36%1.32%1.20%
Future Generali Life 1.05%0.79%0.76%0.72%0.62%0.79%
Aviva Life 2.44%2.23%2.01%1.60%0.78%0.48%
Edelweiss Tokio Life 0.03%0.15%0.27%0.35%0.45%0.45%
Aegon Life 0.63%0.44%0.50%0.60%0.33%0.18%
Sahara Life 0.22%0.20%0.22%0.11%0.11%0.09%
ING Vysya 1.95%2.08%0.00%0.00%0.00%0.00%
Source: SBI Life IPO prospectus


Geographic Distribution of Top-Five Players for Individual New Business in FY2017 (Rs crore)
StateSBI LifeHDFC Standard LifeICICI Prudential LifeMax LifeBajaj Allianz
Uttar Pradesh 612230457250131
Maharashtra 52212541641518150
Telangana 4621492743922
Tamil Nadu 45230761221124
Gujarat 43329451428263
Karnataka 39928643117331
Kerala 3941893169157
Andhra Pradesh3926811915514
West Bengal 390206401312105
Rajasthan 2949428510821
Madhya Pradesh 270981449144
Bihar 266481245582
Orissa 258821519371
Punjab 18115318311425
Assam 16538744635
Haryana 15415921227020
Jharkhand 15438814041
Delhi 14231867127539
Uttrakhand 10821504224
Himachal Pradesh 941232129
Jammu and Kashmir3221221214
Goa 322422277
Meghalaya 234541
Chandigarh 185562172
Arunachal Pradesh 150222
Tripura 112945
Manipur 1161061
Nagaland 111480
Puducherry 1041320
Sikkim 85361
Andaman and Nicobar Islands60020
Mizoram 42101
Dadra and Nagrahaveli 10010
Daman and Diu 00010
Lakshadweep 00000
Source: SBI Life IPO prospectus

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