SBI Life Insurence on Friday clarified that IRDAI’s order to transfer Sahara Life Insurance’s policy liabilities is not a merger between the two companies but only a transfer of assets and liabilities. IRDAI has directed SBI Life, a subsidiary of SBI, to take over the policy liabilities of approximately two lakh policies and the assets of Sahara India Life Insurance Co. Ltd (SILIC) with immediate effect. The decision was taken at the meeting of the Insurance Regulatory and Development Authority of India (Irdai) in view of deteriorating financial health of the SILIC.
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“The Company would like to inform that this is not a merger between the two companies and is only transfer of the policyholder related assets and liabilities. The policyholder-related assets and liabilities being transferred is less than 0.5 per cent of the balance sheet of the company,” SBI Life said in an exchange filing.
SBI Life will shortly reach out to these policyholders and intimate them about various touch points and manners of servicing for a smooth transition, it added. SBI Life assured two lakh policyholders of high levels of service and commitment as is accorded to our customers.
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“Despite being provided ample opportunities and sufficient time to ensure compliances, SILIC has failed to comply with directions of the authority and take any affirmative steps to protect the interests of its policyholders,” the regulator had said.
Further, the policy data of SILIC revealed that the company’s portfolio is showing a run-off trend. The financial position has been deteriorating with rising losses and a higher percentage of claims to the total premium.
“If the trend is allowed to continue, the situation will worsen and lead to erosion of capital and SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders,” IRDAI said.
In order to ensure a seamless transition for all policyholders of SILIC, IRDAI has taken necessary measures, the order said.
IRDAI added that the authority in its meeting held on Friday “decided that action is warranted to protect the interest of the policyholders of SILIC. Accordingly, the Authority decided to transfer the life insurance business of SILIC to another suitable life insurer with immediate effect.”
