In its 3 August 2009 edition, Businessworld magazine in India carried an article titled "Banking on Assurance" on SBI Life, arguably India's leading bancassurance led life insurer. Worth noting are a few stats.
- Bancassurance bought in 28% of SBI Life's New Business Premium in FY2008-09 and 39% in FY2007-08.
- Overall channel mix - Bancassurance (28%), Agency (40%), Alternate channel (1.4%) and Group corporate (30%).
- The company started building its agency force in 2005 and has about 70,000 agents on its rolls in addition to 450 offices.
- Having posted a net profit of Rs34 Crores in FY2007-08, the company reported a loss of Rs26 Crores in FY2008-09.
- AUM at the end of FY2008-09 stood at Rs14,964 Crores and currently stands in excess of Rs18,000 Crores
- Advertisement spend in FY2008-09 was Rs15 Crores as against
What is worth noting is that the percentage of new business through the bancassurance channel has been dropping over the last few years. In fact, it generates a little over a quarter of the new business currently. In a way, SBI Life is no more a pure bancassurance player. In percentage terms, players such as MetLife and Aviva generate more business through their bancassurance channel than SBI Life. By some accounts, the promoter Bank of SBI Life, the State Bank of India has just been able to activate less than or about half of its entire bank branch network.
The company which thus far enjoyed lower costs of distribution through higher dependence on the bancaasurance channel is fast set to lose that advantage. In closed room discussions, Insurance Company CEOs admit that agency is a difficult monster to control once it starts growing. No wonder then, the company reported a loss in FY2008-09 having reported profits in the previous three years and having achieved the fastest breakeven amongst the leading private players. With life insurers including SBI Life keen to take the IPO route, it would be interesting to see how analysts and investment bankers reason and account for the above changes.
SBI Life rejigged its senior management positions a few months ago and is set to be led by a new CEO, MN Rao from 1 August 2009. With both the CEO and the Deputy CEO moving, it surely won't be an easy ride for the insurer with the industry still facing some tough times in light of the prevailing business conditions.
- Bancassurance bought in 28% of SBI Life's New Business Premium in FY2008-09 and 39% in FY2007-08.
- Overall channel mix - Bancassurance (28%), Agency (40%), Alternate channel (1.4%) and Group corporate (30%).
- The company started building its agency force in 2005 and has about 70,000 agents on its rolls in addition to 450 offices.
- Having posted a net profit of Rs34 Crores in FY2007-08, the company reported a loss of Rs26 Crores in FY2008-09.
- AUM at the end of FY2008-09 stood at Rs14,964 Crores and currently stands in excess of Rs18,000 Crores
- Advertisement spend in FY2008-09 was Rs15 Crores as against
What is worth noting is that the percentage of new business through the bancassurance channel has been dropping over the last few years. In fact, it generates a little over a quarter of the new business currently. In a way, SBI Life is no more a pure bancassurance player. In percentage terms, players such as MetLife and Aviva generate more business through their bancassurance channel than SBI Life. By some accounts, the promoter Bank of SBI Life, the State Bank of India has just been able to activate less than or about half of its entire bank branch network.
The company which thus far enjoyed lower costs of distribution through higher dependence on the bancaasurance channel is fast set to lose that advantage. In closed room discussions, Insurance Company CEOs admit that agency is a difficult monster to control once it starts growing. No wonder then, the company reported a loss in FY2008-09 having reported profits in the previous three years and having achieved the fastest breakeven amongst the leading private players. With life insurers including SBI Life keen to take the IPO route, it would be interesting to see how analysts and investment bankers reason and account for the above changes.
SBI Life rejigged its senior management positions a few months ago and is set to be led by a new CEO, MN Rao from 1 August 2009. With both the CEO and the Deputy CEO moving, it surely won't be an easy ride for the insurer with the industry still facing some tough times in light of the prevailing business conditions.
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