SBI Life Insurance today hiked its paid-up capital to Rs 250 crore from Rs 175 crore and foreign equity in the company may go up to 49% if thegovernment hikes the FDI limit in the insurance sector."We have increased the paid-up capital of the company by Rs 75 crore to Rs 250 crore to maintain over 300% growth in business achieved so far," S Muralidharan, chief marketing officer of SBI Life said at the launch of the company's first unit-linked insurance product 'Horizon' today.SBI Life Insurance, a 74:26 joint venture of SBI and Cardiff SA, is looking at an investment of over Rs 500 crore from its promoters to fund business growth and become the second largest life insurer in the country in the next two years.Cardiff SA may increase its stake if the government hikes the FDI limit in the insurance sector from 26% to 49%, as the agreement between the two JV partners allows for equal shareholding, a top company official said."We expect SBI Life to become the second largest player next to LIC in the next two years," Muralidharan said.Currently, SBI group distributes insurance products through 5,000 branches and by march 2006 it expects over 10,000 branches to sell these products.The bank, with a base of over 10 crore customers, would also enter non-life insurance business soon. The fourth largest life insurance company has covered over 20 lakh lives till date. To attain the second slot, this number would have to grow to one crore lives every year.The insurance JV has reported a gross premium income of Rs 362 crore in the nine months ended December 2004 and expects the first premium income for FY-05 to reach over Rs 600 crore. SBI Life's core business segment, group insurance, has contributed nearly 63% to the total premium income by covering 18 lakh lives till December."SBI Life is offering 16 products and may introduce new products next fiscal after analysing the sales and preferences of customers," Muralidharan said.The unique feature of the new unit-linked product 'Horizon' is automatic asset allocation at no extra cost, which means policyholders do not have to actively monitor investments or switch portfolio or time the market.The customer only chooses his plan, regular premium amount, frequency of premium payment and the term.Horizon will invest in equities, bonds and money market and is available in two options, plan A - dynamic plan and plan b - growth plan.Under dynamic plan, a higher proportion of the money will be invested in equities during the initial term of the policy and towards maturity, the equity to debt ratio is automatically changed ensuring safer returns.In growth plan, investments are more balanced as the premiums are put in less risky options and the investment in equity decreases more rapidly as the premiums collected are automatically put into less riskier assets.Under the scheme, premium payments are available in regular modes, monthly, quarterly, half-yearly and yearly. At maturity the policyholder receives the policy investment value (PIV) and on death, the nominee receives the PIV plus the sum assured.
