SBI Life targets the No. 2 slot

SBI Life Insurance Company aims to be the second life insurance player after Life Insurance Corporation of India (LIC) in the next two years.

SBI Life has estimated a minimum additional capital requirement of Rs 500 crore to meet this target.

"With State Bank of India's 14,000 branches, we need to aim at a slot next to LIC. By March 2006, more than 10,000 of our branches will sell SBI Life products, thereby after LIC, ours will be the largest distribution network," said A K Purwar, chairman SBI.

SBI Life is at present selling its products through 5,000 branches of the SBI group.

S Krishnamurthy, managing director, said the company has plans to grow at a faster pace and the additional capital requirement could be anything above Rs 500 crore.

The capital requirements of SBI Life will be comparatively lower as its bancassurance model eliminates heavy investments in distribution infrastructure, he added.

The two promoters "" SBI and Cardif SA of France "" will shortly infuse Rs 75 crore, which will take the total paid-up capital of SBI Life to Rs 250 crore. "The promoters will inject another Rs 100 crore before the end of March 2005," he said.

SBI Life has mopped up a premium income of Rs 360 crore for the nine months ending December 2004. This is as against Rs 235 crore it realised in the entire fiscal 2004.

Purwar and Krishnamurthy were speaking on the sidelines of the launch of SBI Life's first unit-linked insurance product branded "Horizon".

The unique feature of the product is that after the policyholder chooses one of the three plans from among equity, bond and money market funds, SBI Life will determine the allocation of customer premium into the different funds automatically over the term of product.

The idea being to reduce the level of risk a policyholder takes as his policy nears maturity.

At present, SBI Life, with a market share of 11 per cent, is positioned fourth among private life insurance players. This is up from eight per cent in March 2004.

Private sector players, which currently hold over a 20 per cent market share, have witnessed a 153 per cent growth in terms of premium income, and an 121 per cent rise in terms of number of policies sold.