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SBI Life Insurance gets top rating

SBI Life Insurance gets top rating
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First Published: Mon, Oct 01 2007. 12 08 AM IST
Updated: Mon, Oct 01 2007. 12 08 AM IST
If you are among those who strictly follow ratings to choose an initial public offering (IPO), or a stockbroker, or a mutual fund, then you now can choose your life insurance policy on the basis of ratings provided by credit rating agencies.
Crisil Ltd, a subsidiary of global rating agency Standard and Poor’s, has given a AAA/Stable/P1+ rating to SBI Life Insurance Company Ltd. The rating indicates the highest degree of financial strength to meet policyholder obligations. The rating has taken into account the life insurer’s pedigree, its distribution network, profitability and earnings strength. Being promoted by the largest public sector bank, SBI, and Cardif SA, the life insurance arm of BNP Paribas, SBI Life Insurance has the advantage of using the huge distribution network of SBI, says the Crisil report. The report further states that SBI Life Insurance has a healthy product mix. But the company’s earning profile is relatively weak, a situation which the rating agency attributes to the new entrants in the life insurance sector. Crisil may also downgrade the company if it loses its strategic significance from one of its promoters, SBI.
However, a top rating for a life insurance company may not necessarily give an indication of the quality of its services. Therefore ratings shouldn’t be the sole reason—just the starting point to make a decision.
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First Published: Mon, Oct 01 2007. 12 08 AM IST