M SaraswathyMoneycontrol
State Bank of India (SBI) will begin the process of listing its insurance arm SBI Life in 2017-18. SBI Life was valued at Rs 46,000 crore during a recent stake sale in December when the State Bank of India (SBI) announced it would divest 3.9 percent stake in its insurance arm for Rs 1794 crore. This made the insurer the highest valued life insurer.In an interview with Moneycontrol Arijit Basu, MD and CEO, SBI Life said that now that they have a benchmark, this will be actively considered in the next fiscal year.Sources said that the process could be completed in 18 months.SBI Life is a joint venture between State Bank of India (SBI) and BNP Cardif with the latter holding 26 percent stake. The foreign partner BNP Cardif will take a final decision to hike their stake by the end of the financial year. The new insurance laws allow foreign partners to hold up to 49 percent in an Indian insurance company.
Basu said that the valuation came because of the strength that the investors saw in the company, not just in the new business, but also in the quality of business. “Our responsibility now is to see that this is maintained and this will happen if we grow at a reasonable pace in the months and years to come and also maintain the qualitative metrics,” he said.
With respect to the listing, Basu, however, said that no final decision has been taken and that it will depend on market conditions and the timing. Currently, only one insurer ICICI Prudential Life Insurance was listed on the stock exchanges.
Apart from this, the insurer is also working on becoming the largest insurance company in terms of valuation. Basu said that their growth rates have been much higher than their competitors.
The combined valuation of HDFC Life-Max Life once they are merged could be higher than SBI Life. Basu said that they aspire to be bigger than them. Max Life has announced a merger with HDFC Life which is under consideration at the insurance regulator’s office. Basu added that if they continued to keep growing, their growth rates would be significantly higher than our competitors. Even last year, he said that they grew at 38 percent while their competitors lagged at 10-11 percent. In an earlier deal, while ICICI PruLife was valued at Rs 32,500 crore, during the initial public offering (IPO), it was valued at almost Rs 43,000 crore. HDFC Life-Max Life combined could be valued at Rs 65,000 crore, according to industry analysts.
“Till November, growth has been significant. If you add up the numbers, we can aspire to be bigger than them [HDFC Life-Max Life]. We have presented the same to our board as well and hope to achieve it,” he said.
The insurance industry is also bracing for changes, not just from the upcoming Budget but also the Goods and Services Tax (GST) that is expected to be implemented from the next financial year. Basu said that they have sought tax sops for the life insurance industry. He added that since the need for life insurance is not very well understood, some incentives should be given to life insurance policies.
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