Birla Sun Life Insurance sets new benchmarks in transparency

9 March 2005

In a pioneering effort Birla Sun Life Insurance (BSLI), the leading private life insurer, in association with CRISIL today announced the launch of new benchmark services to provide investors a yardstick to measure performance of funds.

In the new liberalized era when life insurance companies are offering products that link investment and risk cover; the fund performance is of key significance to policyholders. Birla Sun Life Insurance (BSLI) had initiated the project by expressing its desire to adopt industry best practices for performance benchmarking. BSLI requested CRISIL as a neutral third party to conceptualise and construct such benchmarks that would be relevant and transparent to this emerging industry and aid their investors to measure the performance of these various Unit-Linked Insurance Plan (ULIP) schemes.

Speaking on the occasion of the introduction of the new indices Mr. Nani Javeri, CEO, Birla Sun Life Insurance said, "We have always believed in offering best value to our customers. The new benchmark indices will help customers evaluate the performance of our funds vis a vis the markets in an unbiased and informed manner ".

Mr. D. Ravishankar, e;xecutive Director & CFO, CRISIL Limited, says, "Birla Sun life Insurance has initiated a step towards setting up best practice of performance benchmarking and this would enable a transparent communication to the investors. Going forward, such benchmarks can help initiate healthy competition in the insurance industry by adopting uniform valuation and benchmarking standards. This would help in the ultimate objective of creating better value for investor money."

Mr. Anil. J. Jhala Chief Financial Officer, says, "We needed to bring greater investor awareness and better transparency into the system of performance and in CRISIL we found a right blend of neutrality and analytical skills to launch such performance barometers. In the interest of investors we would disseminate our performance against CRISIL indices in our monthly fact sheets"

This is the first time that such benchmark indices have been c;reated in the life insurance industry. The product offered by life insurance companies is of a very long term nature and has specific objectives associated with it. There are no readymade benchmarks available in the market, which capture the typicality of life insurance investments.

Hence it was important that a scientific benchmark that represents the investment philosophy and objectives of life insurance companies was c;reated. The creation of such a benchmark will help policyholders understand the performance of their specific funds vis-à-vis the performance of the market and associated risks.

The benchmark indices were developed by CRISIL based on the profile of the funds and the investment objectives as committed to policyholders.

In constructing these indices CRISIL has considered the following parameters for index portfolio construction:

• The investment philosophies and objectives of the different schemes
• The asset composition across asset categories and a relevant benchmark for equity investments
• The average duration of the scheme portfolio
• The interest rate risk management policy defined by the investment committee

CRISIL undertook a study of the 13 ULIP schemes launched by BSLI, where it studied the investment philosophies of the schemes, and based on their investment objectives, the industry structure and regulatory framework for insurance players, evolved indices (seven in number), that would be ideal for benchmarking these schemes.

About the Aditya Birla Group:

The Aditya Birla Group has a turnover exceeding Rs. 28,000 crores (as on 31 March 2004) and is one of the largest business houses in India. It enjoys a leadership position in all the sectors in which it operates. With over 75 business units, spanning the South East Asian belt, Africa, Canada and the UK, among others, it is reckoned as India's first multinational corporation. The group is anchored by 72,000 employees and has seven lakh shareholders, with an asset base of over Rs.23,000 crores.

Additional information is available at www.adityabirla.com

About Sun Life Financial Inc.:

Sun Life Financial Inc. is a leading international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers. Tracing its roots back to 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31 March 2004, the Sun Life Financial group of companies had total assets under management of USD 282 billion.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol "SLF".

Additional information can be found at: www.sunlife.com
For further information kindly contact:
Ms. Anjana Grewal,
Vice President - Marketing & Communication,
Birla Sun Life Insurance Company Limited,
Tel: 91-22-5678 3333.
E-mail: anjana@birlasunlife.com