Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AAA/Stable’ corporate credit rating on SBI Life Insurance Company Limited (SBI Life).

 

The rating continues to factor in the established market position of the company as one of the top private life insurers (in terms of market share) and benefits derived from the wide and efficient distribution network of State Bank of India (SBI; ‘Crisil AAA/Crisil AA+/Stable/Crisil A1+’) as well as a strong agency network spread across India. The rating also factors in sustenance of healthy operating profitability and adequate capital position. These strengths are partially offset by exposure to challenges in sustaining profitability due to rising competition.

 

The company has strong linkage with SBI driven by the latter’s 55.38% ownership and shared name. SBI’s presence in the life insurance sector is through SBI Life, which is therefore a critical subsidiary of the bank. The two entities have a common board chairperson. Additionally, one member on the board of SBI Life is director on the board of SBI. Also, the Managing Director and chief executive officer (MD & CEO) of SBI Life is deputed from SBI. Hence, SBI should continue to provide necessary support to SBI Life. 

 

SBI Life maintained its leading position among private players, with market share of around 21% in new business premium in fiscal 2025. It also continues to benefit from its strong industry expertise, having been in operations for more than two decades, and has wide presence across all the states and union territories in the country.

 

Gross written premium (net of reinsurance) grew by 4% in fiscal 2025 to Rs 84,985 crore from Rs 81,431 crore in fiscal 2024. Persistency and profitability metrics are healthy with thirteenth month persistency improving to 87.4% in fiscal 2025 from 86.8% in fiscal 2024. The company has maintained thirteenth month persistency over 80% during the last 10 fiscals. Similar improvement was seen in the sixty-first month persistency ratio to 62.7% in fiscal 2025, compared with 57.4% in fiscal 2024. The product mix in new business premium has remained fairly balanced with PAR (participating) products at 2%, non-PAR (non-participating) products at 52% and ULIPs (unit-linked insurance plans) at 46% in fiscal 2025.

 

In terms of earnings profile, in fiscal 2025, the company reported profit of Rs 2,413 crore, as against Rs 1,894 crore in fiscal 2024, translating into a higher return on equity (RoE) of 15.1% in fiscal 2025, compared with 13.6% in fiscal 2024. Additionally, the value of new business stands at Rs 5,954 as against Rs 5,548 crore in fiscal 2024. In fiscal 2025, SBI Life maintained strong solvency at 1.96 times against regulatory requirement of solvency ratio of 1.50 times.

Analytical Approach

For arriving at its rating, Crisil Ratings has considered the standalone financial and business risk profiles of SBI Life. The company's strategic importance to, and expected necessary support from, SBI (holds majority stake) have been factored.

Key Rating Drivers & Detailed Description

Strengths:

Strategic importance to, and expectation of strong support from, SBI

The strong linkage of SBI Life with SBI is indicated by a shared brand name and the majority ownership by SBI. Established brand and market reputation of SBI has enabled the company to build its own brand equity, which assists in selling to customers of all segments. SBI and SBI Life have a common chairperson at the board level. Additionally, one member on the board of SBI Life is a director on the board of SBI. The MD & CEO of SBI Life is deputed from SBI. In addition, SBI acts as a corporate agent for SBI Life, which allows the latter to access the bank’s extensive network of branches and customers. SBI Life, being a listed entity, has the ability to source capital from external investors and has the financial flexibility to raise capital if necessary. As on date, SBI Life doesn’t have any debt obligation on its balance sheet

 

Established market position

The company will likely maintain its market position as a top player in the life insurance industry. It has consistently improved market share in each fiscal. Its market share in terms of Individual rated new business premiums stood at 16.1% as on March 31, 2025 (15.8% as on March 31, 2024). As on March 31, 2025, the company continued its leading position on an individual rated premium basis amongst the private players with healthy market share of 22.8% during fiscal 2025 (23.3% in fiscal 2024). The company has been in operation since 2001 and has presence across all the states. Strong brand, direct access to the large clientele of SBI and having one of the strongest and most productive agency networks provides critical support to business growth. Furthermore, low insurance penetration and other supportive macro factors will likely drive growth.

 

Adequate capital position

The company has maintained an adequate capital position, as reflected in healthy solvency margin of 1.96 times (as on March 31, 2025) against the regulatory requirement of 1.5 times. Absolute networth was Rs 16,793 crore as on March 31, 2025 (Rs 14,591 crore a year earlier). As on March 31, 2025, SBI held 55.38% stake while the remaining was with public shareholders. The solvency margin is healthy despite no capital infusion since fiscal 2008.

 

The embedded value was Rs 70,250 crore as on March 31, 2025, as against Rs 58,259 crore a year earlier, indicating growth of 21%. The ratio of embedded value to networth was close to 4 times as on March 31, 2025, similar to some peers. The embedded value is a representation of the actual capital position as it includes expected profit from the business underwritten till valuation date. The steady increase in internal cash accrual enables the company to maintain the capital position while achieving healthy business growth.

 

Healthy persistency and profitability metrics

The thirteenth month persistency ratio stood at 87.4% in fiscal 2025, as against 86.8% in fiscal 2024. The persistency at sixty-first month improved to 62.7% in fiscal 2025 from 57.4% in the previous fiscal. Improvement in persistency across cohorts was led by focus on better quality of business and leveraging technological capabilities to provide superior customer experience. Healthy persistency reflects the ability to hold on to policyholders for longer tenure. The capital position is supported by healthy cash accrual. The RoE was 13-15% during the last four fiscals (till fiscal 2025). Additionally, the value of new business margin was healthy at 27.8% in fiscal 2025 (28.1% in fiscal 2024). The value of new business stood at Rs 5,950 crore in fiscal 2025, registering on-year growth of 7%.

 

Well-diversified distribution network

The company’s products are distributed through bank branches as the primary distribution channel, leveraging over 27,500+ branches of SBI and its vast distribution reach and large clientele. The bank’s continued focus on cross selling augurs well for SBI Life and will help the latter improve its market share. For fiscal 2025, around 54% of the new business premiums were sourced through the bancassurance channel. Also, the agency channel is the biggest (in terms of new business) in the private sector and comprises a sales force of over 2.40 lakh licensed agents as on March 31, 2025, 10% gross addition over last fiscal. The agency channel contributed 21% of the new business premiums in fiscal 2025. The company is focused on developing other key partnerships and has strong association with some of the key players such as Indian Bank, UCO Bank, South Indian Bank, Punjab & Sind Bank, India Post Payment and Karur Vyas Bank. As on March 31, 2025, SBI Life had its own 1,110 offices across India, which provide support to policyholders and distributors. Furthermore, the distribution model results in the lowest operating expense ratio of 5.3% among private life insurance companies (operating expense ratio is calculated as operating expense as a percentage of gross premiums earned).

 

Weakness:

Exposure to inherent risks in the insurance business

As the life insurance segment in India evolves, the sector has seen frequent regulatory changes such as changes in surrender value of life policies and taxation of policies. While these measures by the regulator are positive from a long-term perspective and will aid in increasing penetration and protecting policyholders, these can result in unforeseen pressure on growth, margins and profitability, and involuntary changes in business models. Despite macroeconomic and regulatory headwinds in recent years, the insurance industry has delivered resilient performance and SBI  Life continues to be the largest player in the industry, showcasing strong performance throughout business cycles.

 

While India has low insurance penetration and ample room for growth, pressure on pricing, profitability and growth due to increased competition from smaller players and new entrants will remain monitorable for established players such as SBI Life.

Liquidity: Superior

Along with adequate reserve against anticipated claims, liquidity is supported by a highly liquid investment portfolio. Cash and bank balance was Rs 1,846.6 crore as on March 31, 2025. The debt investment book (within the traditional segment) had market value of Rs 174,476 crore as on December 31, 2024; of this, 56.2% was in sovereign instruments and 29.8% in other ‘AAA’ rated instruments. As life insurance is a highly granular and stable business, liquidity should remain comfortable.

Outlook: Stable

SBI Life will continue to receive strong support from SBI over the long term and benefit from the latter’s distribution channel.

Rating Sensitivity Factors

Downward factors:

• Downgrade in the rating of SBI
• Reduction in the proportion of shareholding of SBI below 51%
• Decline in the solvency margin to below the minimum set by the Insurance Regulatory and Development Authority (1.5 times)

About the Company

SBI Life was set up as a joint venture of SBI and BNP Paribas Cardif and commenced operations in 2001. The company is uniquely positioned to tap the vast potential of the Indian life insurance sector by harnessing the extensive branch network of the SBI group. Over the years, SBI Life has increased its coverage of branches to around 27,500. As far as shareholding is concerned, SBI continues to hold 55.38% stake in SBI Life.

 

Profit after tax (PAT) was Rs 2,413 crore in fiscal 2025 (Rs 1,894 crore in fiscal 2024). As on March 31, 2025, networth was Rs 16,793 crore, embedded value was Rs 70,250 crore, value of new business was Rs 5,950 crore and solvency margin was 1.96 times.

Key Financial Indicators

As on / for the period ended March 31	Unit	2025	2024	2023	2022
Gross direct premium/gross premium written	Rs crore	84,985	81,431	67,316	58,760
PAT	Rs crore	2,413	1,894	1,721	1,506
Persistency ratio (13th month)	%	87.4	86.8	85.5	85.2
Persistency ratio (61st month)	%	62.7	58.6	55.6	49.5
Solvency margin	Times	1.96	1.96	2.15	2.05

Note:  Persistency – Regular Premium & Limited Premium Paying Term policies of only Individual Segment.