MUMBAI: SBI Life Insurance - the country’s second-largest private life insurer - has booked a Rs 26-crore accounting loss due to itsmarket 100% of its equity portfolio under traditional business. The life insurer, which recorded Rs 34 crore of net profit in 2007-08, expects to return to profits this year if the stock market does crash significantly from this level.
SBI Life had grown by 12.4% with new business premium of Rs 5,386 crore in 2008-09 — a year which saw the industry shrink 6% in new business premium. “The accounting loss is not on account of new business strain. This year we had to make additional provision on our traditional business portfolio because of the fluctuations in the equity market,” said SBI Life MD US Roy. Last March IRDA has asked insurance companies to mark-to-market their investments in the traditional portfolio. However, Mr Roy said the process of marking-to-market was left to interpretation. In the absence of any prescription, the company has decided to mark-to-market all its equity investments in its traditional portfolio, following the conservative accounting practice adopted by parent SBI. “In banking, there is a method for classifying the portfolio into assets that are held-to-maturity and the assets that are available for sale which is not there in insurance. An IRDA standing committee has referred this matter to the CFOs committee of the life council. The CFO council, has in turn, forwarded their recommendations to the committee of appointed actuaries who have given a report to the regulator. We are now expecting some specific prescription this year,” said Mr Roy. Among new players, SBI Life has been one worst sufferers with premium from traditional policies accounting for 38% of the company’s business. A life insurer is not affected by the high equity investments in its ULIP schemes, since in ULIPs, the loss or gain in the value of equity is entirely on the customers’ account. According to Mr Roy, SBI Life was the most capital-efficient among insurance companies. “We do not need any additional capital. Our solvency ratios are 2.8 times the statutory requirement. In 2008-09, we have not infused even one rupee and we do not have any accumulated losses to fund,” he said. With a paid-up capital of Rs 1,000 crore, it has recorded gross written premium of Rs 7,212 crore in 2008-09, which has helped take its AUM to nearly Rs 15,000 crore. http://economictimes.indiatimes.com/Economy/SBI-Life-books-Rs-26-cr-loss/articleshow/4474055.cms --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
