AUTHOR:- Siddhika Mahesh Koli
INTRODUCTION:-
SBI Life Insurance Company Limited is an Indian life insurance company which was started as a joint venture between State Bank of India (SBI) and French financial institution BNP Paribas Cardif.
OBJECTIVE:-
To calculate beta of SBI Life Insurance Company and to see its significance.
LITERATURE REVIEW:-
SBI Life insurance company enter into corporate agency agreement:
SBI Life signs a corporate agency agreement with Repco Home Finance, making insurance more accessible to consumers across India.
Chennai, 24 Chennai, 24 September, 2019 September, 2019 September, 2019: SBI Life Insurance, one of the largest private life insurers in India, has signed a ‘Corporate Agency Agreement’ with Repco Home Finance Ltd (RHFL) to make the company’s wide range of life insurance products accessible to RHFL’s customers across India. The partnership will see over 148 branches and 27 satellite centers of RHFL spread across the country offer SBI Life’s diverse range of life insurance solutions to its customers.
SBI Life has been continuously strengthening its distribution footprint in the country by forging meaningful association with corporate agents, brokers, insurance marketing firms, banks and others. The corporate agency agreement with RHFL are signed by Shri. T. Karunakaran, CFO & Shri K. Prabhu, General Manager, RHFL and Shri. E. Thirumudi Pandian, Regional Director, Chennai, SBI Life in the presence of Shri Yashpal Gupta, MD & CEO, RHFL, Smt. Anita Peshkar, SVP & Chief of Institutional Alliance, SBI Life and other dignitaries.
Commenting on the association, Mr. M Anand, Preside Mr. M Anand, Preside Mr. M Anand, President-Zone 2, SBI Life Insurance Zone 2, SBI Life Insurance Zone 2, SBI Life Insurance said, “The longevity associated with life insurance demands a very high level of consumer trust, which is built with tie ups with highly credible distribution partners. This tie up with Repco Home Finance is step in this direction which will help boost SBI Life’s reach to new customers across geographies and deepen insurance penetration in the country.”
Speaking on the occasion Shri Yashpal Gupta, Shri Yashpal Gupta, Shri Yashpal Gupta, MD & CEO, MD & CEO, MD & CEO, RHFL said “It gives me immense pleasure that this tie up will enable every RHFL customer to meet their diverse insurance needs. Consumers will now have a direct access to SBI Life’s wide range of products in protection, retirement, health, and savings products, providing a holistic financial planning solution thereby empowering the consumer to address their complete financial needs under one roof’.
Short term Picks: SBI Life Insurance Company:
India has highly underpenetrated insurance market compared to the other parts of the world with a life insurance penetration of less than 3%. This presents immense opportunities to expand the life insurance business given the favorable demographics, rising prosperity, growing household income and the increasing awareness of the need for financial protection.
Protection is the most profitable part of business; and this market could double in 5 years as penetration of protection is low at 10% of addressable population. SBI Life is uniquely positioned to tap the vast potential in India’s life insurance sector by harnessing the SBI Group’s large distribution footprint (24,000+ branches). Management stated that relatively newer tie-ups such as Allahabad Bank, Syndicate, Repco, P&S Bank continue to do better than expectations. It expects contribution from these banks to touch 10% in new business sales as early as FY22E.
SBI Life has a natural advantage of being part of a giant ecosystem of SBI that boasts nearly 50 cr clients. This also results in the company having geographically the most diversified business mix amongst its private peers. So far, SBI Life may have tapped only less than 2% of these clients and hence the potential for growth is long. Its products are designed according to SBI’s client base with ULIPs having higher share of debt (~70% in debt – more than several of its peers). It also benefits out of lower cost of acquisition reflecting lower commission structures from SBI.
DATA COLLECTION:-
The data for Nifty and equity company ‘SBI Life Insurance Company Ltd’ has been downloaded from two websites, namely, yahoofinance.com and nseindia.com respectively, from historical data head, for the period, ‘November 1st 2022’ to ‘October 31st 2023’. The data was manipulated for arriving at the Friday closing prices for Nifty and Equity. The returns on Nifty were named as ‘X’ and subsequently, returns of Equity were named as ‘Y’. They both regressed.
DATA ANALYSIS:-
SBI Life Insurance Company Shares 0.0109+0.790NIFTY, n=48, R square=0.152, F=8.442.
The above equation shows the relationship of SBI Life Insurance Company with Nifty.
If Nifty rises by 1 unit, SBI Life Insurance Company will rise 0.790 unit. t-stat for b is 2.905 and the p value is 0.005 which is less than 0.05, meaning Nifty impacts SBI Life Insurance Company shares.
R square is 0.152, meaning 4% of SBI Life Insurance Company share is explained by Nifty, meaning 96% depends upon other things like fundamentals.
F = 8.442, and p value is less than 0.05, so the model is statistically significant at 5% level.
The test hypothesis Is false or should be rejected.
CONCLUSION:- As beta (0.790) is less than 1, so good for long term investment.
REFERENCE:-
https://www.icicidirect.com/mailimages/Momentum_Picks.pdf