MUMBAI: SBI Life Insurance — the largest new generation life insurance company — has posted a net profit of Rs 114 crore, an increase of 195% over the corresponding period last year.
The total premium of the company grew 9.5% to Rs 1,707 crore during the period, of which new business premium was Rs 976 crore. Growth in new premium during the first quarter was sluggish because of a 21% decline in group business.
The company’s assets under management grew 65%, over the corresponding period last year to Rs 30,082 crore as on June 30, 2010.
Responding to a query on whether the profits would be sustained in light of regulatory changes that lop off a significant margin from the life insurance business, MD & CEO MN Rao said the objective of the company was to continue business in a manner that is profitable.
Mr Rao pointed out that the company’s expense ratio was already the lowest and would come down further as business grew. “We would not be looking at cost cutting in the absolute sense but would definitely keep a watch on our ratios.”
“The company has not required any capital infusion for the past two years and we do not see any need for addition capital. Our net worth is currently Rs 1,350 crore, which includes our paid-up capital of Rs 1,000 crore and retained profits of Rs 350 crore,” said Mr Rao.
Unlike most other private life insurers who are rationalising their operations, SBI Life plans to increase its network during the year. The company plans to add around 20-25 branches and increase agent headcount from 70,000 to 75,000. The company generates around 45% of its business from individual agents.
Mr Rao said there would be changes in the product line in view of the new regulations. He said the company was discussing internally on change in product profile and new Ulips were still on the drawing board. Ulips constitute 65% of the total premium.
Mr Rao pointed out that the company’s expense ratio was already the lowest and would come down further as business grew. “We would not be looking at cost cutting in the absolute sense but we would definitely keep a watch on our ratios.”
The company continues to have the lowest expense to GWP (Gross Written Premium) ratio of 9.18% in industry. As per the latest Irda report in June, the company has a market share of 14.4% among private life insurers and a total market share of 3.83%. The company generates around 45% of its business from individual agents.
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