SBI Life Insurance aims to raise up to Rs 8,400 crore via initial public offer: 10 things to know about the IPO

SBI Life Insurance's much talked about initial public offer (IPO) to raise up to Rs 8,400 crore will commence today.

The IPO of the leading private sector insurer has been in news due to its tremendous popularity (country's largest lender SBI being the parent firm) and the market leadership position it enjoys in the private sector.

We look at key facts related to SBI Life Insurance and its initial public offer.

• The initial share sale offer will open on September 20 and close on September 22. This would be the second listing of a life insurer after ICICI Prudential Life Insurance, which went public last year.
• SBI and BNP Paribas Cardif (BNPPC) - the insurance holding company of France hold 70.10 per cent  and 26 percent stake in SBI Life, respectively. During the initial public offer, State Bank of India (SBI) will sell up to 8 crore shares while BNP Paribas Cardif SA will offload up to 4 crore shares.
• The firm's revenues rose at compounded annual growth rate (CAGR) of 19 per cent during the last five years. The initial public offer's price band will be Rs 685-700 per equity share with a discount to eligible employees of Rs 68 per share on the offer price.
• SBI Life's claims ratio stood at 93.39 percent in terms of number of policies and 83.05 percent in terms of benefit amount for 2015-16. The claims ratio is claims payable as a percentage of premium income. Market leader LIC had claims ratio of 98.33 percent in terms of number of policies and 95.59 percent in case of benefit amount.
• SBI Life is country's largest private life insurer, in terms of new business premium generated in each fiscal year, since fiscal 2010. It increased market share of new business premium generated among private life insurers in India, from 15.87% in fiscal 2015 to 20.04% in fiscal 2017, and market share of new business premium in the entire life insurance industry, from 4.89% in fiscal 2015 to 5.80% in fiscal 2017.
• The total sum assured under the individual life insurance business was Rs 96 trillion as of fiscal 2017. The sum assured for the individual insurance is estimated to have increased at a CAGR of 16% from fiscals 2011 to 2017.
• SBI Life earned Rs 313.48 crore in net profit for the quarter ended June 30, 2017. For the year ended March 31, 2017, the private sector insurer earned Rs 954.6 crore in net profit against Rs 844.1 crore net profit for the year ended March 31, 2016.
• SBI Life's solvency ratio is higher compared to the Insurance Regulatory and Development Authority of India (IRDAI) mandated requirement of 1.5. As of March 31, 2015, 2016 and 2017, the insurer's solvency ratio was 2.17, 2.12, 2.04 respectively.  For three months ended June 30, 2017, the solvency ratio stood at 2.11. The solvency ratio indicates whether a firm's cash flow is sufficient to meet its short-term and long-term liabilities.
• Income from investments rose 178.22% from Rs 33,409.14 million in fiscal 2016 to Rs 92,949.84 million in fiscal 2017. This increase was primarily due to an increase in investment income of our unit-linked portfolio from a gain of Rs 3383,013.45 million in fiscal 2016 to a gain of Rs 55,266.70 million in fiscal 2017.
• As of June 2017, the insurer had assets under management (AUMs) worth Rs 1,012,260.34 million and equities, government securities and corporate bonds represented 23.02 percent, 46.44 percent, and 21.92 percent, respectively of the AUM on such date.