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Five LIC Officials In Race For Post Of Chairman

Posted on April 26, 2013 by
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LIC

It’s going to be a five-horse race for the position of the Chairman of the Life Insurance Corporation of India (LIC) which needs to be filled after D K Mehrotra demits office on May 31, 2013.

A special panel set up by the government has interviewed Sushobhan Sarkar (currently Managing Director at LIC), V K Sharma (CEO, LIC Housing Finance), S B Mainak, S K Roy and Usha Sangwan (EDs, at LIC) for the post.

Among the contenders, Sarkar appears to be the most likely candidate to land the job.

Sarkar took over as LIC MD in February 2012. He is an industry veteran having significant experience at the insurance behemoth, having handled its business in various regions, including foreign countries. He also served as the CEO of LIC Mutual Fund.

Mainak ED of LIC’s investments, too, has got ample experience. Besides, he is one of the applicants for the LIC MD’s post which will fall vacant after the retirement of Thomas Mathew later this year.

The selection panel has recommended the five names to the appointments committee of the cabinet.

At this juncture, LIC needs an efficient person to lead the corporation in the current dynamic financial environment.

On a customer base of over 20 million, LIC had a 61.4% share of policy premium during April 2012-February 2013, driven mainly by sales of traditional insurance plans.

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LIC Books Record Profit Of Rs 20,000 Crores In FY’13

Posted on April 23, 2013 by
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LIC

The last financial year was among the best for Life Insurance Corporation of India (LIC) that booked a profit of Rs 20,000 crores highest in around 7-8 years.

Country’s largest institutional investor, LIC is planning to invest Rs 2.15 lakh crores in current financial year out of which 10% or Rs 21,500 crores will be in equities. However, if something better comes, say, an Initial Public Offering (IPO) comes; it can raise it a bit to around Rs 25,000-30,000 crores.

LIC has a thumb rule of putting 10-15% in equity and rest in other instruments.

According to LIC Chairman D K Mehrotra, the insurer major got a lot of opportunities to book profits in FY’13, which also saw the government-entity investing Rs 23,000 crores inequity.

It is widely believed LIC would be in focus once the divestment issues start hitting the market in the coming months.

The government has set a target of Rs 40,000 crores by selling partial stake in listed PSUs.

In FY’13, LIC participated in seven divestment offerings –Hindustan Copper, NMDC, Oil India, NTPC, Rashtriya Chemicals and Fertilizers (RCF), Nalco and Sail.

Mehrotra, however, had denied being labeled the government’s ‘bailout agency’. He said that all of LIC’s investment decisions were based on its own assessment of market conditions and the fundamentals of the company.

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LIC Reduces Stake in Infosys by 1.28%

Posted on April 12, 2013 by
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LIC

State-run, Life Insurance Corporation of India (LIC) has pared its stake in Infosys to 5.96%, reducing its holding in the IT major in the last quarter with an estimate sale of shares worth over Rs 2,000 crores.

LIC held 7.24% stake in Infosys during the October-December quarter, which has fallen to 5.96% as of 31 March 2013.

LIC’s holding in Infosys had gone up during the preceding three quarters. It held 4.92% stake in the company at the beginning of the last fiscal – first April 2012.

Taking into account the average market value of Infosys shares, the 1.28% decline in LIC’s holding in the company would be worth about Rs 2,000 crores.

During January-March 2012, LIC had pared its holding in the company marginally from – 5.17% to 4.92%. However, it rose to 6.28% in the April-June 2012 quarter, and 6.60% in the July-September 2012 quarter, before rising to 7.24% as on 31 December 2012.

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LIC to End FY’13 with Record Profits From Share Sale

Posted on March 21, 2013 by
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LIC

Country’s largest insurer, the Life Insurance Corporation of India (LIC) is set to end the current financial year with record profits from sale of equities, amounting to about Rs 24,000 crores, its highest ever.

LIC’s record surplus is fuelled by booking profits in investments, even as its new business premium growth is showing a marginal fall.

LIC is expecting to end the current financial year with Rs 5,000 crores more surplus than the previous record of Rs 19,000 crores recorded in the pre-crisis years.

The bulk of the profits were booked in the third quarter, when the sensex was touching 20,000. During the quarter, LIC sold stakes in a number of large companies, as it booked profits.

LIC’s equity operations typically involve buying large chunks in blue chips whenever the sensex crashes after a big event. It also consistently books profits whenever there is a bull run fuelled by Foreign Institutional Investors (FIIs).

LIC is in a position to take this contrarian approach because most of its funds come from renewal premium, interest and dividend income and from new business. Mutual funds cannot afford to take this approach because they usually see bulk withdrawals when markets fall, forcing them to sell stocks. At the same time, they are forced to buy during Bull Run because it is during such times that they get the highest inflows.

Part of the profit booking was also because LIC was selling equities held under its traditional portfolio to create headroom to buy public sector undertaking (PSU) shares that were put on the block.

LIC typically buys PSU shares under its traditional portfolio as these investments do not have to be marked-to-market (revealed at market prices), unlike Unit-Linked Insurance Plan funds.

The higher profits, which come from sale of investments under the life fund, will enable LIC to record a higher valuation surplus. The surplus is the excess available for distribution after providing for present and future liabilities which include maturity and death claims. It is distributed largely to policyholders in the form of bonus and a small part to the government in the form of dividend.

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LIC Sees Sharper Growth Decline In New Business Premium Than Industry

Posted on March 20, 2013 by
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LIC

Life Insurance Corporation of India (LIC) showed a sharper decline in growth in new business premium than the life insurance industry during the April-to-February  period this financial year, compared with the last financial year.

While LIC saw a dip of 6.3%, the life insurance industry as a whole saw a 6.1% fall in this period compared to same period last financial year.

LIC’s new business premium collection during April-January period of this financial year stood at Rs 60,705.46 crores compared to Rs 64,820.48 crores in corresponding period last year.

The sharpest fall was seen for LIC in non-group single premium segment, where total new premium collection dropped to Rs 1,635.63 crores, against Rs 10,340.56 crores in the previous year.

On the other hand, private life insurers collected Rs 23,796.29 crores, a dip of 5.5%, compared to the last year.

During April 2012-January 2013, life insurance industry’s total new business premium collection stood at Rs 84,501.74 crores as against Rs 90,015.83 crores in corresponding period previous year.

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LIC Open To Buying Over 15% Stake with Govt. Nod

Posted on March 13, 2013 by
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LIC

Life Insurance Corporation of India (LIC)  has said that it will stay within the 15% limit laid down by the Insurance Regulatory and Development Authority (IRDA) for equity investments in companies but might buy a higher stake if it was to spot a good opportunity.

LIC said that it always go to government and put before them its requirements. They have been good enough to give it clearance when it was required. And in future if it needs to cross 15% and if it approaches the government then it is confident that it will get the clearance.

LIC also denied being labeled the government’s bailout agency. It said that all of LIC’s investment decisions are based on its own assessment of market condition and the fundamental of the company. It also said that it is not in the business of bailing out. It take a very reasoned decision before entering the market and wherever it get a good opportunity, it participate.

LIC will set aside Rs 30,000 crores for equity investments in the next financial year. Equity investments typically constitute roughly 10% of the investment corpus of LIC.

LIC is expecting to invest around Rs 2.25-2.3 lakh crores in financial year 2013-14.

In FY’12, LIC had made total investments to the tune of Rs 1.95 lakh crores and in current financial year it will cross Rs 2 lakh crores.

In recent times, LIC has bought big chunks of shares in stake sales of government-owned companies, at times when other investors have not found the issue attractively priced or fundamentals strong enough. For instance, it bought into Hindustan Copper and NMDC this year, which fetched the government Rs 6,700 crores. Last fiscal, it picked up a large chunk of ONGC, buying nearly all the Rs 12,000-crores worth of shares on sale.

As per the latest guidelines laid down by the IRDA in February 2013, an insurance company with a controlled fund above Rs 2,50,000 crores will be allowed to take up to 15% equity stake in any single company.

The controlled fund is the total corpus of traditional policies and policyholder funds held by an insurer.

LIC’s controlled fund stood at around Rs 13 lakh crores as of 31 January.

Last year, finance ministry has pointed that as per LIC act 1959, the LIC is permitted to increase shareholding in a single company to 30%. However, the ministry is yet to come out with a proper regulation or guideline in this matter.

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Public Sector Insurers to Open 1,800 Branches in Next Fiscal

Posted on March 5, 2013 by
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Insurance Distribution

Country’s largest insurer, Life Insurance Corporation of India (LIC) and four public sector general insurers will open around 1,800 branches by the end of next financial year to cover all Indian villages with a population of over 10,000.

Finance minister, P. Chidambaram in his budget speech had said that state-run insurance companies will open a branch each of life and non-life ventures in towns with a population of 10,000 or more. All towns in India with a population of 10,000 or more will have an office of LIC and an office of at least one public sector general insurance company. And he set a deadline of March 2014 to achieve this target.

LIC will open 256 offices to cover all towns with a population of 10,000 or more. These will be one-man offices and will not require much capital.

Currently, LIC has 2,048 branches and around 2,000 satellite offices. In addition it has 20,000 premium paying points where investors can inquire, buy a policy, make payment, pay renewal premium and get loan application forms.

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LIC Exposure Issue is a Matter of Legal Interpretation: IRDA

Posted on February 19, 2013 by
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LIC

Insurance Regulatory and Development Authority (IRDA) had said that the government’s recent move to allow Life Insurance Corporation of India (LIC) to own up to 30% stake in a listed company is a matter of legal interpretation.

IRDA chairman, J. Hari Narayan said that the issue is a matter of legal interpretation. He also said that his view was that LIC should be treated at par with all other private insurers. But the government was of the view that there were certain provisions, only applicable to LIC (as per LIC Act).

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LIC’s Investment Corpus Touched Rs 14.8 Trillion in December

Posted on February 13, 2013 by
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LIC

The total investment corpus of Life Insurance Corporation of India (LIC) has touched Rs 14.8 lakh crores (provisional) as of 31 December 2013 as against Rs 13.49 lakh crores at the end of December 2012, registering a growth of 10% in first nine months of this fiscal.

Investment in government securities accounted for a major chunk in LIC’s investments with investments worth Rs 7.27 lakh crores. Housing and infrastructure investments stood at Rs 1.91 lakh crores. And the rest included investments in the corporate sector and project loans.

Central government securities contributed Rs 4.77 lakh crores, followed by state government and other government guaranteed marketable securities.

Among housing and infrastructure investments, LIC has maximum amount of investments in the power sector, contributing Rs 94,294 crores.

This was followed by housing with Rs 41,900 crores. Other areas in infrastructure included irrigation, road, bridges, port and telecom.

LIC is expecting to invest a total of Rs 2.4 lakh crores in bonds, equities and government securities in the current financial year.

In terms of performance of different distribution channels, out of the first premium income, Rs 1,486 crores came from the chief life insurance advisor. Bancassurance and alternative channels contributed Rs 870.63 crores and direct marketing contributed Rs 218 crores.

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IRDA Maintains Stand on Its LIC’s Equity Exposure Limit

Posted on February 11, 2013 by
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LIC

The tussle between finance ministry and Insurance Regulatory and Development Authority (IRDA) took a new turn, with the regulator capping the equity exposure of all insurance companies, including Life Insurance Corporation of India (LIC) at 15%.

The finance ministry had wanted up to 30% exposure limit for LIC.

IRDA has raised the equity investment cap for insurers from 10% to 12% and 15%, depending on the size of the controlled funds of the insurer. This rule is applicable for all insurers. IRDA said LIC will also be required to adhere to this cap as it is also under its jurisdiction.

The IRDA’s move comes in the backdrop of the finance ministry’s insistence that the exposure limit for LIC be increased to 30%. The move was primarily to aid the divestment process and possible dilution of the Specified Undertaking of UTI (SUUTI).

Government holds significant stakes in companies like Larsen & Toubro, ITC and Axis Bank.

Last November, then financial services secretary, D K Mittal had said that LIC could invest up to 30% in a company.

LIC had also confirmed that the position of LIC, as in the LIC act, 1956, would be maintained. The provision of allowing LIC to invest up to 30% already exists in the LIC Act.

Officials have also said in the recent past that LIC’s exposure limit would be increased soon and they were expecting IRDA to exempt LIC in the final investment regulations.

LIC has been lobbying for this relaxation as it has exhausted the limit for various blue-chip stocks.

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