CRISIL''s first life insurance company rating gets SBI Life highest financial strength rating

17 September 2007

CRISIL has assigned a ''financial strength rating'' of ''AAA / Stable'' to SBI Life Insurance Company Ltd (SBI Life), reflecting the highest degree of financial strength to meet policyholder obligations.

The rating is centrally based on the strong support that SBI Life derives from its parent, State Bank of India, which has a CRISIL rating of ''AAA/Stable/P1+''. It also factors in the distribution advantages and distinctive product strategy of SBI Life, and the flexibility available for further capital infusion into the company. These rating strengths are, however, partially offset by SBI Life''s weak earnings profile and limited track record.

This is CRISIL''s first rating of a life insurance company. In developed markets, a majority of life insurers are rated.

"We see this rating as the first indication of what is clearly a positive trend," said S Venkataraman, director, CRISIL Ratings. "Life insurance is a critical element of life planning for an increasing number of people in India. As more life insurers come forward to get themselves rated, the public will be better informed in taking these vital long-term decisions."

SBI holds a 74-per cent stake in SBI Life and extends strong financial support to SBI Life through regular capital infusion; CRISIL''s rating factors in SBI Life''s flexibility to raise capital from its promoters, SBI and Cardif S A (Cardif). Cardif is the life insurance company of BNP Paribas, a European leader in banking and financial services.

SBI also extends operational support by allowing SBI Life to sell products through the SBI group''s vast network of more than 14,500 branches. This ''bancassurance'' channel, which accounts for about 40 per cent of SBI Life''s premium receipts, places the company in the unique position of being able to tap the vast potential of the Indian life insurance market by selling directly to SBI''s large customer and employee base.