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SBI Life Insurance Company Ltd.

BSE: 540719 Sector: Financials
NSE: SBILIFE ISIN Code: INE123W01016
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OPEN 1149.85
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VOLUME 31841
52-Week high 1273.40
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P/E 94.31
Mkt Cap.(Rs cr) 116,505
Buy Price 1164.75
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Sell Price 1165.55
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OPEN 1149.85
CLOSE 1160.90
VOLUME 31841
52-Week high 1273.40
52-Week low 825.00
P/E 94.31
Mkt Cap.(Rs cr) 116,505
Buy Price 1164.75
Buy Qty 1.00
Sell Price 1165.55
Sell Qty 1.00

SBI Life Insurance Company Ltd. (SBILIFE) - Auditors Report

Company auditors report

To the Members of

SBI Life Insurance Company Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

OPINION

We have audited the accompanying Standalone Financial statements of SBILife Insurance Company Limited (“the Company”) which comprise the BalanceSheet as at March 31 2020 the related Revenue Account (also called the“Policyholders' Account” or the “Technical Account”) the Profitand Loss Account (also called the “Shareholders' Account” or“Non-Technical Account”) and the Receipts and Payments Account for the yearended on that date and a summary of the significant accounting policies and otherexplanatory information (hereinafter referred to as “the standalone financialstatements”).

Inouropinionandtothebestofourinformationandaccording to theexplanations given to us the aforesaid standalone financial statements give theinformation required in accordance with The Insurance Act 1938 (the “InsuranceAct”) the Insurance Regulatory and Development Authority Act 1999 (the “IRDAAct”) the Insurance Regulatory and Development Authority (Preparation of FinancialStatements and Auditor's Report of Insurance Companies) Regulations 2002 (the“IRDA Financial Statements Regulations”) and the Companies Act 2013 (“theAct”) to the extent applicable in the manner so required and give a true and fairview in conformity with accounting principles generally accepted in India as applicableto Insurance companies: a) in the case of the Balance Sheet of the state of affairs ofthe Company as at March 31 2020; b) in the case of the Revenue Account of the netsurplus for the year ended on that date; c) in the case of the Profit and Loss Account ofthe profit for the year ended on that date; and d) in the case of the Receipts andPayments Account of the Receipts and Payments for the year ended on that date.

BASIS FOR OPINION

We conducted our audit of the Standalone Financial Statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in theAuditor's Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules made thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

EMPHASIS OF MATTER

We invite attention to Note No 38 regarding the uncertainties arisingout of the outbreak of COVID-19 pandemic and the assessment made by the management on itsbusiness and financials including valuation of assets policy liabilities and solvencyfor the year ended March 31 2020 this assessment and the outcome of the pandemic is asmade by the management and is highly dependent on the circumstances as they evolve in thesubsequent periods. Our Opinion is not modified on the above matter.

KEY AUDIT MATTERS

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.

a) Valuation of Investments(AUM March 31 2020: 1603634820 March 312019: 1410243236) (INR in Thousands) (Refer Significant Accounting Policies in noteno.16 B (k) (Investments) and Schedule 8 8A and 8B note no. 16 C (20 & 21)(Impairment of investment assets) to the standalone financial statements)

The Company's investment portfolio consists of Policyholders'investments (traditional and unit linked policy holders) and Shareholders investments.Total investment portfolio of the Company (i.e. Assets under Management (AUM)) represents98.7 per cent of the Company's total assets.

Investments are made and valued in accordance with the Insurance Act1938 IRDAI (Investment) Regulations 2016 (“Investment Regulations”) IRDAI(Preparation of Financial Statement Regulations) 2002 (“Financial StatementRegulations”) Investment Policy of the Company and relevant Indian GAAPs.

These valuation methods use multiple observable market inputsincluding observable interest rates index levels credit spreads equity pricescounterparty credit quality and corresponding market volatility levels etc.

The portfolio of quoted investments is 26.1 per cent of theCompany's AUM and the portfolio of investments that are valued primarily usingobservable inputs is 71.9 per cent of the Company's AUM. We do not consider theseinvestments to be at a high risk of significant misstatement or to be subject to asignificant level of judgement because they comprise liquid quoted investments. Howeverdue to their materiality in the context of the standalone financial statements as a wholethey are considered to be one of the areas which had the significant impact on our overallaudit strategy.

The portfolio of unquoted investments is 1.2 per cent of theCompany's AUM. The valuation of unquoted investments involves judgement depending onthe observability of the inputs into the valuation and further judgement in determiningthe appropriate valuation methodology where external pricing sources are either notreadily available or are unreliable. The valuation of these investments was considered tobe one of the areas which required significant auditor attention and was one of the matterof most significance in the financial statements due to the materiality of total value ofinvestments to the financial statements.

Auditors' Responses Principal Audit Procedures

We assessed appropriateness of the pricing methodologies with referenceto IRDAI Investment Regulations Financial Statement Regulations Company's internalinvestment and valuation policy; Assessed the process and tested the operatingeffectiveness of the key controls including the Company's review and approval of theestimates and assumptions used for the valuation including key authorisation and datainput controls; Fair value is best evidenced by quoted market prices in an active market.Where quoted market prices are not available the quoted prices of similar products orvaluation models with observable market based inputs are used to estimate fair value. Thecalculation of estimated fair value is based on market conditions at a specific point intime and may not be reflective of future fair values; For quoted investments thevaluation was done in accordance with the independent pricing sources / market prices inan active market; For unquoted investments we critically evaluated the valuationassessment and resulting conclusions in order to determine the appropriateness of thevaluations recorded with reference to the assessment made by the management for suchvaluation.

b) Information technology systems and controls (IT Controls)

All insurance companies are highly dependent on technology due to thesignificant number of transactions that are processed daily. A significant part of theCompany's financial processes is heavily reliant on IT systems with automatedprocesses and controls over the capturing valuing and recording of transactions. Thusthere exists a risk that gaps in the IT control environment could result in the financialaccounting and reporting records being materially misstated.

The Company uses several systems for its overall financial reporting.We have identified ‘IT systems and controls' as key audit matter because ofsignificant use of IT system and the scale and complexity of the IT architecture.

Auditors' Responses Principal Audit Procedures

Sample testing of key control over IT systems having impact onfinancial accounting and reporting; Assessed the IT system processes for effectiveness ofsome of the key controls with respect to financial accounting and reporting records bysample testing; and Our audit approach relies on automated controls and thereforeprocedures are designed to test control over IT systems segregation of duties interfaceand system application controls over key financial accounting and reporting systems.Reviewed the report of independent information system auditors which has further confirmedthe various system control measures adopted by the Company.

sc) Contingent Liabilities and Litigations (Refer SignificantAccounting Policies in note no. 16 B (r) (Provisions and contingent liabilities) and noteno. 16 C (1) to the standalone financial statements)

The Company has pending litigation matters with various appellateauthorities and at different forums. The same involves judgements in accordance withapplicable Accounting Standards to determine the final outcome of such open litigationmatters.

The management with the help of its experts as needed have madejudgments relating to the likelihood of an obligation arising and whether there is a needto recognise a provision or disclose a contingent liability. We therefore focused on thisarea as a result of uncertainty and potential material impact.

Auditors' Responses Principal Audit Procedures

We read the various regulatory correspondences and related documentspertaining to litigation cases and corroborated them with our understanding of legalposition as per various statues; We obtained legal opinion sought by management from theindependent legal counsel including opinionofourownteamtoreviewthesustainability of thedispute. We discussed the status and potential exposures in respect of significantlitigation with the Company's internal legal team and obtaining details regarding theprogress of various litigations including management views on the likely outcome of eachlitigation and the magnitude of potential exposure; The various litigation matters werereviewed in order to assess the facts and circumstances and to identify the potentialexposures and to satisfy ourselves that it is not probable that an outflow of economicbenefits will be required or in certain cases where the amount cannot be estimatedreliably such obligation is disclosed by the Company as a contingent liability.

INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS ANDAUDITOR'S REPORT THEREON

The Company's Board of Directors is responsible for thepreparation of the other information. The other information comprises the informationincluded in the Management Discussion and Analysis Directors' Report includingAnnexures to Directors' Report Corporate Governance and Shareholder'sInformation but does not include the standalone financial statements and ourauditor's report thereon. The other information is expected to be made available tous after the date of this auditor's report. Our opinion on the standalone financialstatements does not cover the other information and we will not express any form ofassurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated. When we read theother information if we conclude that there is a material misstatement therein we arerequired to communicate the matter to those charged with governance.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIALSTATEMENTS

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the Balance Sheet the relatedRevenue Account the Profit and Loss Account and the Receipts and Payments Account of theCompany in accordance with accounting principles generally accepted in India includingthe provisions of The Insurance Act as amended from time to time the IRDA Act the IRDAFinancial Statements Regulations orders/directions/circulars issued by IRDAI in thisregard and the Accounting Standards specified under Section 133 of the Act read with Rule7 of the Companies (Accounts) Rules 2014 further amended by Companies (AccountingStandards) Amendment Rules 2016 to the extent applicable.

This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. The Board of Directors are alsoresponsible for overseeing the Company's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONEFINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also: Identify andassess the risks of material misstatement of the standalone financial statements whetherdue to fraud or error design and perform audit procedures responsive to those risks andobtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higherthan for one resulting from error as fraud may involve collusion forgery intentionalomissions misrepresentations or the override of internal control.

Obtain an understanding of internal financial controls relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern. Evaluate the overallpresentation structure and content of the standalone financial statements including thedisclosures and whether the standalone financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal control that we identify during our audit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

OTHER MATTER a) The actuarial valuation of liabilities for lifepolicies in force is the responsibility of the Company's Appointed Actuary (the“Appointed Actuary”) whose services are as extended and approved by IRDAI. Theactuarial valuation of these liabilities for life policies in force and for policies inrespect of which premium has been discontinued but liability exists as at March 31 2020has been duly certified by the Appointed Actuary and in his opinion the assumptions forsuch valuation are in accordance with the guidelines and norms issued by IRDAI and theInstitute of Actuaries of India in concurrence with the Authority. We have relied upon theAppointed Actuary's certificate in this regard for forming our opinion on thevaluation of liabilities for life policies in force and for policies in respect of whichpremium has been discontinued but liability exists as contained in the standalonefinancial statements of the Company. (Refer note no. 5 Schedule 16(C)). b) Due to theCOVID-19 pandemic and the lockdown and other restrictions imposed by the Government andlocal administration the audit processes were carried out based on the remote access tothe extent available/feasible and necessary records made available by the managementthrough digital medium. c) The standalone financial statements of the Company for the yearended March 31 2019 were jointly audited by another Auditors who expressed an unmodifiedopinion dated April 25 2019 on such financial statements.

Our opinion is not modified in respect of these matters.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the IRDA Financial Statements Regulations we haveissued a separate certificate dated May 05 2020 certifying the matters specified inparagraphs 3 and 4 of Schedule C to the IRDA Financial Statements Regulations.

2. As required under section 143(5) of the Act based on our audit asaforesaid we enclose herewith as per Annexure I a report on the directions includingadditional directions issued by the Comptroller and Auditor-General of India (‘C& AG') action taken thereon and its impact on the accounts and financialstatement of the Company.

3. As required under the IRDA Financial Statements Regulations readwith section 143(3) of the Act we report that: (a) We have sought and obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purpose of our audit; (b) In our opinion and to the best of our information andaccording to the explanations given to us proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books; (c) Asthe Company's financial accounting system is centralised at Head Office no returnsare prepared at the branches and other offices of the Company; (d) The Balance Sheet theRevenue Account the Profit and Loss Account and the Receipts and Payments Account dealtwith by this Report are in agreement with the books of account;

(e) The actuarial valuation of liabilities for life policies in forceand for policies in respect of which premium has been discontinued but liability exists asat March 31 2020 has been duly certified by the Appointed Actuary. The Appointed Actuaryhas also certified that in his opinion the assumptions for such valuation are inaccordance with the guidelines and norms issued by IRDAI and the Institute of Actuaries ofIndia in concurrence with the Authority; (f) In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid standalonefinancial statements comply with the Accounting Standards specified under section 133 ofthe Act read with Rule 7 of the Companies (Accounts) Rules 2014 further amended byCompanies (Accounting Standards) Amendment Rules 2016 to the extent not inconsistentwith the accounting principles prescribed in the IRDA Financial Statements Regulations andorders/ directions/circulars issued by IRDAI in this behalf; (g) In our opinion and to thebest of our information and according to the explanations given to us investments havebeen valued in accordance with the provisions of the Insurance Act the Regulations andorders/directions issued by IRDAI in this behalf; (h) In our opinion and to the best ofour information and according to the explanations given to us the accounting policiesselected by the Company are appropriate and are in compliance with the AccountingStandards specified under Section 133 of the Act to the extent not inconsistent with theaccounting principles prescribed in the IRDA Financial Statements Regulations and orders/directions/circulars issued by IRDAI in this behalf; (i) On the basis of writtenrepresentations received from the directors and taken on record by the Board of Directorsnone of the Directors are disqualified as on March 31 2020 from being appointed as adirector in terms of section 164 (2) of the Act.

(j) With respect to the adequacy of the internal financial controlswith reference to standalone financial statements of the Company and the operatingeffectiveness of such controls refer to Annexure ‘II' to this report.

(k) With respect to the other matter to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended: In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the Company to its directors during theyear is in accordance with the provisions of section 197 of the Act.

(l) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us: i) The Company has disclosed the impact of pending litigationson its financial position in its standalone financial statements - Refer Note 1 of Part Cof Schedule16. ii) The Company has made provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long term contracts ifany including derivative contracts. - Refer Note 33 of Part C of Schedule 16. iii) Thereare no amounts which are required to be transferred to the Investor Education andProtection Fund by the Company during the year ended March 31 2020.

For R. Devendra Kumar & Associates For S.C. Bapna & Associates
Chartered Accountants Chartered Accountants
Firm Regn. No.114207W Firm Regn. No.115649W
D. K Gupta S.C. Bapna
Partner Partner
Membership No. 009032 Membership No. 071765
UDIN: 20009032AAAABL1187 UDIN: 20071765AAAAAB1490
Place: Mumbai
Date: May 05 2020

(Referred to in paragraph 1 under ‘Report on Other Legal andRegulatory Requirements' section of our Independent Auditors' report of evendate to the Members of SBI Life Insurance Company Limited)

To the Members of

SBI Life Insurance Company Limited

This certificate is issued to comply with the provisions of paragraphs3 and 4 of Schedule C read with Regulation 3 of Insurance Regulatory and DevelopmentAuthority (Preparation of Financial Statements and Auditor's Report of InsuranceCompanies) Regulations 2002 (the “IRDA Financial Statements Regulations”).

MANAGEMENT'S RESPONSIBILITY:

The Company's Board of Directors is responsible for complying withthe provisions of The Insurance Act 1938 as amended from time to time including amendmentbrought by Insurance Laws (Amendment) Act 2015 (the “Insurance Act”) theInsurance Regulatory and Development Authority Act 1999 (the “IRDA Act”) IRDAFinancial Statements Regulations orders/directions/circulars issued by the InsuranceRegulatory and Development Authority of India (the “IRDAI”/Authority) whichincludes the preparation and maintenance of books of accounts and the Management Report.This includes collecting collating and validating data and designing implementing andmonitoring of internal controls suitable for ensuring compliance as aforesaid.

AUDITOR'S RESPONSIBILITY:

Pursuant to the requirements of IRDA Financial Statements Regulationsit is our responsibility to obtain reasonable assurance and form an opinion based on ouraudit and examination of books and records as to whether the Company has complied with thematters contained in paragraphs 3 and 4 of Schedule C read with regulation 3 of the IRDAFinancial Statements Regulations.

We conducted our examination in accordance with the Guidance Note onAudit Reports and Certificates for Special Purposes issued by the Institute of CharteredAccountants of India (the ‘ICAI'). The Guidance Note requires that we complywith the independence and other ethical requirements of the Code of Ethics issued by ICAI.

We have complied with the relevant applicable requirements of theStandard on Quality Control (‘SQC') 1 Quality Control for Firms that PerformAudits and Reviews of Historical Financial Information and Other Assurance and RelatedServices engagements.

OPINION:

In accordance with the information and explanations given to us and tothe best of our knowledge and belief and based on our examination of the books of accountand other records maintained by SBI Life Insurance Company Limited (‘theCompany') for the year ended March 31 2020 we report that:

1. We have reviewed the Management Report attached to the standalonefinancial statements for the year ended March 31 2020 and on the basis of our reviewthere is no apparent mistake or material inconsistencies with the standalone financialstatements;

2. Based on management representations by the officer of the Companycharged with compliance nothing has come to our attention that causes us to believe thatthe Company has not complied with the terms and conditions of registration stipulated byIRDAI; We have verified the cash balances and securities relating to the Company'sloans and investments as at March 31 2020 to the extent considered necessary based onmanagement certificates Custodian certificates / Confirmations (RBI CCIL SHCIL HDFCBank Ltd. various other banks/mutual funds etc.) documents of charge creation as thecase may be. As at March 31 2020 the Company does not have reversions and lifeinterests;

3. The Company is not the trustee of any trust; and

4. No part of the assets of the policyholders' funds has beendirectly or indirectly applied in contravention to the provisions of the Insurance Actrelating to the application and investments of the Policyholders' funds.

For R. Devendra Kumar & Associates For S.C. Bapna & Associates
Chartered Accountants Chartered Accountants
Firm Regn. No.114207W Firm Regn. No.115649W
D. K Gupta S.C. Bapna
Partner Partner
Membership No. 009032 Membership No. 071765
UDIN: 20009032AAAABL1187 UDIN: 20071765AAAAAB1490
Place: Mumbai
Date: May 05 2020

ANNEXURE ‘I' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal andRegulatory Requirements' section of our Independent Auditors' report of evendate to the Members of SBI Life Insurance Company Limited)

Based on the verification of records of the Company and based oninformation and explanations given to us we give below a report on thedirections/additional directions issued by the Comptroller and Auditor General of India interms of the section 143(5) of the Act.

Sr.
Directions under section 143(5) of the Act Auditors' Comments
1. Whether the Company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. As per the information and explanations furnished to us The Company's financial processes are heavily reliant on IT systems with automated processes and controls over the capturing valuing and recording of transactions. The Company has different IT systems in place for processing the accounting transactions such as premium commission claims investments etc. All the transactions from these IT systems flows into the accounting system which is used for preparation of standalone financial statements and other reporting purposes.
As a part of our general review of IT controls we have carried out the review of major controls in existence in the applications with regard to integrity of data flowing to accounting system. Basis our sample verification nothing significant has come to our attention that causes us to believe that there are material gaps pertaining to IT controls. The claim submission process in the Company is predominantly manual and data input into the IT systems of the Company in respect of claims is also a manual process. The controls over capturing of dates of claim intimation into the systems needs to be further improved. Further management has conducted the system audit with the help of the consultants which has not reported any significant gaps.
2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/loans/interest etc. made by a lender to the Company due to the Company's inability to repay the loan? If yes the financial impact may be stated. The Company has not taken any loans thus restructuring of an existing loan or cases of waiver/write off of debts /loans/interest etc. made by a lender to the Company due to the Company's inability to repay the loan is not applicable.
3. Whether funds received/receivable for specific schemes from Central/State agencies were properly accounted for/utilised as per its term and conditions? List the cases of deviation The Company has not received any funds for specific schemes from central / state agencies thus proper accounting and utilisation of fund as per terms and conditions of the scheme is not applicable.

Additional directions issued by C&AG as applicable to SBI LifeInsurance Company Limited for the year 2019-20

Sr.
Additional Directions under section 143(5) of the Act Auditors' Comments
1. Number of titles of ownership in respect of CGS/SGS/Bonds/Debentures etc. available in physical/demat form and out of these number of cases which are not in agreement with the respective amounts shown in the Company's books of accounts may be verified and discrepancy found may be suitably reported. The Company holds investments both in physical and dematerialised form with clear title of ownership. The holdings are in agreement with the respective amounts shown in the books of accounts of the Company as on 31.03.2020.
2. Whether stop loss limits have been prescribed in respect of investments. If yes whether or not the limit was adhered to. If not the details may be given. The Company's cut loss policy for equity investments in Linked and Non-linked portfolios have been prescribed in the Investment Policy as approved by the Board.
As per the cut loss policy of the Company Investment compliance team monitors market price of all equity securities falling below 30% of the ‘Average Purchase Price'. The decision on to hold partially sell or completely sell of cut loss securities is recorded and reported to investment Sub- Committee and Board Investment Committee periodically. During the year the Company has adhered to the cut loss policy.
3. Whether the Company has complied with IRDAI circular (No. IRDA/F&A/CIR/MISC/052/03/2018 dated March 27 2018) regarding exemption of reinsurance schemes in respect of specified insurance schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana (PMMJJBY) from the purview of GST and passed on to the insured/Government the benefit of reduction in premium? As per the IRDA Circular dated 27.03.2018 “the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been approved by the GST Council in its 25th meeting held on 18.01.2018 on the condition that the benefit of reduction in the premium on such Insurance schemes must be passed on to the beneficiaries and the State and Central Exchequers. Insurers shall avoid any undue enrichment on this account.”
A copy of the DO. No. 354/12/2018-TRU dated 24th January 2018 issued by the Hon'ble Finance secretary Government of India (enclosed with IRDAI Circular) states as under:
“Considering the fact that no GST is payable on insurance premium of such schemes and the GST paid on the re-insurance is included in the cost of insurance premium charged by the Insurance companies from the beneficiaries and also shared between the Centre and State Governments the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been approved by the GST council in its 25th meeting held at New Delhi on 18.01.2018.”
No reduction of premium has been passed on to the insured/Government on account of the exemption of the reinsurance scheme as envisaged in the directions.
As per the management of the Company the pricing under the PMJJBY scheme is arrived at as per advice of the ‘Department of Financial Services of Ministry of Finance' and no benefit is available to the Company due to the said exemption.

ANNEXURE ‘II' TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 3(j) under ‘ Report on Other Legal andRegulatory Requirements' section of our Independent Auditors'report of even dateto the Members of SBI Life Insurance Company Limited)

Report on the Internal Financial Controls with reference to standaloneFinancial Statements under Clause (i) of sub-section 3 of Section 143 of the CompaniesAct 2013 (“the Act”).

We have audited the internal financial controls with reference tostandalone financial statements of SBI Life Insurance Company Limited (“theCompany”) as of March 31 2020 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal financial control withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls over Financial Reporting issued by the Institute ofChartered Accountants of India. These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to standalone financial statements based on ouraudit. We conducted our audit in accordance with the Guidance Note and the Standards onAuditing issued by ICAI and as prescribed under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether adequate internal financialcontrols with reference to standalone financial statements was established and maintainedand if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to standalonefinancial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to standalone financial statements included obtaining anunderstanding of internal financial controls with reference to standalone financialstatements assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to standalone financial statements.

Meaning of internal financial controls with reference to standalonefinancial statements

A company's internal financial control with reference tostandalone financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of standalonefinancial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control with reference tostandalone financial statements includes those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of internal financial controls with reference tostandalone financial statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system with reference to standalone financial statements andsuch internal financial controls with reference to standalone financial statements wereoperating effectively as at March 31 2020 based on the internal financial control withreference to standalone financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note.

Other Matter

The actuarial valuation of liabilities for life policies in force andpolicies in respect of which premium has been discontinued but liability exists as atMarch 31 2020 has been certified by the Appointed Actuary as per the IRDA FinancialStatements Regulations and has been relied upon by us as mentioned in “OtherMatter” of our audit report on the standalone financial statements for the year endedMarch 31 2020. Accordingly our opinion on the internal financial controls with referenceto the standalone financial statements does not include reporting on the operatingeffectiveness of the management's internal controls over the valuation and accuracyof the aforesaid actuarial valuation. Our opinion is not modified in respect of the abovematter.

For R. Devendra Kumar & Associates For S.C. Bapna & Associates
Chartered Accountants Chartered Accountants
Firm Regn. No.114207W Firm Regn. No.115649W
D.K. Gupta S.C. Bapna
Partner Partner
Membership No. 009032 Membership No. 071765
UDIN: 20009032AAAABL1187 UDIN: 20071765AAAAAB1490
Place: Mumbai
Date: May 05 2020

[Ref: Independent Auditor's Certificate in accordance with theSchedule I (B) (11)(d) of Insurance Regulatory and Development Authority of India(Investment) Regulations 2016 dated August 1 2016 ]

To

The Board of Directors

SBI Life Insurance Company Limited

1. This certificate is issued in accordance with terms of ourengagement letter with SBI Life Insurance Company Limited (the “Company”).Insurance Regulatory and Development Authority of India (Investment) Regulations 2016dated August 1 2016 (the “Regulations”) require the auditors to issuecertificate regarding applicable Net Asset Value (“NAV”) for applicationsreceived as at March 31 2020 in terms of Schedule I (B) (11)(d) of the Regulations.

MANAGEMENT'S RESPONSIBILITY:

2. The preparation and maintenance of all accounting and other relevantsupporting records and documents is the responsibility of the management of the Company.This responsibility includes the design implementation and maintenance of internalcontrols relevant to the applicability of NAV for applications received as at March 312020.

3. The Company's management is responsible for complying withconditions stated in the Regulations.

AUDITOR'S RESPONSIBILITY:

4. Pursuant to the requirement of this certificate it is ourresponsibility to provide reasonable assurance as to whether: a) The Company has declaredMarch 31 2020 as a business day for accepting applications; b) The Company has declaredNAV for March 31 2020 on a basis consistent with its accounting policy as disclosed inits financial statements for the year ended March 31 2020; c) The applications receivedon March 31 2020 upto 3.00 p.m. have been stamped and that the NAV of March 31 2020 isapplied for applications received upto 3.00 p.m as per Policy Issuance Procedure; d) Theapplications received on March 31 2020 after 3.00 p.m. have been stamped and that theNAV of next business day of financial year i.e. April 1 2020 is applied for applicationsreceived after 3.00 p.m. as per Policy Issuance Procedure.

5. We audited financial statements of the Company as of and financialyear ended March 31 2020 on which we issued an unmodified audit opinion vide our reportdated May 5 2020. Our audit of these financial statements was conducted in accordancewith the Standards on Auditing specified under Section 143(10) of the Companies Act 2013and other applicable authoritative pronouncements issued by the Institute of CharteredAccountants of India (the “ICAI”). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the standalone financialstatements are free of material misstatement. Our audits were not planned and performed inconnection with any transactions to identify matters that may be of potential interest tothird parties.

6. In this connection we have performed the following procedures: a)Obtained representation from the management that the Company has declared March 31 2020as a business day for accepting application forms and that it has declared NAV for March31 2020; b) Obtained the list of applications for New Business Renewal Premium Top-upSurrender Free - Look Cancellation Fund Switches Withdrawal and Partial Withdrawal inrespect of Unit linked Products on March 31 2020 (together referred to as“Application Forms”) from the Company; c) Selected samples of Application Formsfrom the listing mentioned in paragraph 5(b) above and verified whether: i. Theapplications received on March 31 2020 upto 3.00 p.m. have been appropriately stamped;and the NAV of March 31 2020 is applied for such applications for the selected samples asper Policy Issuance Procedure; and ii. The applications received on March 31 2020 after3.00 p.m. hours have been appropriately stamped; and the NAV of next business day offinancial year i.e. April 1 2020 is applied for such applications for the selectedsamples as per Policy Issuance Procedure. d) We have read the certificate dated April 092020 of the concurrent auditors of the Company M/s. Haribhakti and Co. LLP CharteredAccountants which has been furnished to us certifying compliance with Regulation 5 ofSchedule I (B).

7. We conducted our examination in accordance with the Guidance Note onReports or Certificates for Special Purposes (Revised 2016) issued by the Institute ofChartered Accountants of India. The Guidance Note requires that we comply with the ethicalrequirements of the Code of Ethics issued by the Institute of Chartered Accountants ofIndia.

8. We have complied with the relevant applicablerequirementsoftheStandardonQualityControl(SQC)1

Quality Control for Firms that Perform Audits and Reviews of HistoricalFinancial Information and Other Assurance and Related Services Engagements.

OPINION:

9. Based on the procedures performed by us as mentioned in paragraph 5above and according to the information and explanations and representations provided tous by the Company's management we report that: (a) The Company has declared March31 2020 as a business day for accepting applications; (b) The Company has declared NAVfor March 31 2020 on a basis consistent with its accounting policy as disclosed in itsfinancial statements for the year ended March 31 2020;

(c) The applications received on March 31 2020 upto 3.00 p.m. havebeen stamped and that the NAV of March 31 2020 is applied for applications received upto3.00 p.m. as per Policy Issuance Procedure and (d) The applications received on March 312020 after 3.00 p.m. have been stamped and that the NAV of next business day of financialyear i.e.

April 1 2020 is applied for applications received after 3.00 p.m asper Policy Issuance Procedure.

10. This certificate is addressed to and provided to the Board ofDirectors of the Company solely for inclusion in the annual accounts of the Company asper Schedule I (B) (11)(d) of the Regulations and should not to be used by any otherperson or distributed for any other purpose. We have no responsibility to update thiscertificate for events and circumstances occurring after the date of this certificate.

For R. Devendra Kumar & Associates For S.C. Bapna & Associates
Chartered Accountants Chartered Accountants
Firm Regn. No.114207W Firm Regn. No.115649W
D.K. Gupta S.C. Bapna
Partner Partner
Membership No. 009032 Membership No. 071765
UDIN: 20009032AAAABM8543 UDIN: 20071765AAAAAC6618
Place: Mumbai
Date: May 05 2020

.