SBI Life to add 135 branches this year

When others life insurers are talking about cutting headcount, SBI Life is adding branches and agents as well. The insurer added 118 branches in April-June alone.

 “We may add another 20-25 branches during this year,” M N Rao, managing director and chief executive officer at SBI Life that announced total premium collection of Rs 1,707 crores in the first quarter of 2010-11 said. The company will in all add 135 branches this year. “We wanted to added majority of them in the first quarter and then let them stabilise and leverage over the remaining 9 months,” Rao added.

The life insurer’s employee strength has also gone up by 830 and the life insurance agents by 5,000. This is inspite of the fact that its promoter (State Bank of India) runs a bank branch network of 16,000 plus—through which SBI Life products are distributed.

Despite such heavy expenses, the company’s net profit for April-June almost trebled, up 195%, to Rs 114 crore.

Asked whether the costs incurred on adding staff will dent profits, Rao said, “We as a group have always followed a controlled expansion strategy. We expect the profitability to continue.”
“Bancassurance (selling through State Bank of India and other bank branches) is slightly more profitable for us, but the agency channel contributes more to the topline. So, we have to be in every space,” said Rao explaining why inspite of wide bank-branch footprint, it is expanding its own offices.

The retail agency model contributed 33%, while group business is 39%, bancassurance contributed 26%, of the total business on a year-to-date basis.

The company expects to increase its market by 2% from 14.4% now.

The company is yet to re-file products that are expected to be in line with the new guidelines starting September 2010.
“We will file them in the next 7-10 days and we should be ready by Spetember 1, 2010,” Rao said. But the insurer is not planning an initial public offer immediately.