LIC seeks hike in corporate investment limit to 20-25%

2:24 pm equity investments, equity portfolio and investments, equity stake buy limit, Insurance Regulatory and Development Authority, Life Insurance Corporation

Mumbai, Sept. 9: LIC would ideally like to have headroom of 20-25 per cent for investments in some of its investee companies. As of now, it can invest a maximum of 10 per cent in a company, and any exception to this is approved on a case-by-case basis by the Insurance Regulatory and Development Authority (IRDA).

“The matter has been in discussion with the regulator for some time. Let us see how much leeway the regulator wants to give us. My only concern is that this 10 per cent includes historic holdings which we have since 1956. So, for good scrips, I should have some headroom. Otherwise, what will happen is with the amount of equity we sit upon, we will not have good opportunities in the market,” D. K. Mehrotra, Chairman, LIC, told Business Line. Mehrotra also pointed out that he would not like to risk investment in stocks that do not add value for the insurer. This is why LIC has been asking the regulator to give it some headroom, especially where (in companies) LIC has reached the limit of 10 per cent or nearing it, he added.

Asked how much the life insurance behemoth would be comfortable with, he said: “I do not mind 25 per cent. And it is not that if they give 25 per cent I will reach 25. If they give 25 per cent, it will take care of our investment requirements for the next 10 to 15 years.

Lost opportunity

“It is not that any scrip is so attractive that we will jump on it and we also know that the market will be strongly disturbed if we do so. Anything between 20-25 per cent is good enough.”

When it was pointed out that LIC’s request for a stake of over 10 per cent in a company is already being considered on a case-to-case basis, he said by the time a decision was taken, it was an opportunity lost.

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LIC's 11% SBI stake makes RBI see red

2:21 pm LIC, LIFE INSURANCE CORPORATION OF INDIA, RBI, SBI

The banking regulator is unhappy with the Life Insurance Corporation (LIC) of India holding more than 10 per cent stake in State Bank of India, the country’s largest lender. LIC stake in SBI was 11.05 per cent, as on June 30.

The Reserve Bank of India (RBI) has conveyed its discomfort to the bank’s management, according to a top SBI official. “These are two big institutions. RBI is not comfortable with two large institutions having a cosy relationship,” the official said.

A top RBI official also confirmed the development. “Any institution that wants to have more than five per cent stake in a bank needs to have our prior approval, even if the stake is acquired from the secondary market,” the RBI official said. “We don’t want the banking sector to have too much capital from volatile sources,” he added. 

The move comes at a time when LIC has increased stake in public sector banks by purchasing shares both from the secondary market and through direct equity infusion via preferential allotment. The cash-strapped government had asked LIC to infuse equity into public sector banks so that these lenders could have eight per cent tier-I capital. LIC had infused close to Rs 8,000 crore in several public sector banks such as Punjab National Bank, Bank of Baroda, Union Bank of India, Dena Bank, and Central Bank of India, among others, in the last financial year. LIC’s stake in SBI, however, has been acquired from the secondary market.

Interestingly, the insurance regulator is also unhappy with LIC for its more than 10 per cent stake in several public sector banks, as such a move breaches the single company cap norm. Concerned over the concentration risk, the Insurance Regulatory and Development Authority (Irda) has sought details of LIC’s investment in banks. Nearly 26 per cent of LIC’s equity investment is in banks, while nearly 39 per cent of its equity exposure is in stocks of public sector units.

According to the Insurance Act, equity exposure in a single entity is capped at 10 per cent. Thus, LIC can invest up to 10 per cent of the capital employed by the investee company, or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.

As on March 31, 2011, LIC’s investment corpus stood at nearly Rs 11 lakh crore, of which 20 per cent, or Rs 2.2 lakh crore, was equity. Of that, investments in state-run stocks stood at Rs 85,031 crore, while exposure in banks stood at nearly Rs 59,586 crore.

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IRDA slaps Rs 22 lakh fine on Kotak Mahindra Life Insurance

2:17 pm IRDA, Kotak Mahindra Fined

Insurance regulator IRDA today slapped a fine of Rs 22 lakh on Kotak Mahindra Old Mutual Life Insurance for violation of various norms, including payment of death claims.

"I direct the insurer (Kotak Mahindra Life) to remit the penalty of Rs 22 lakh by debiting shareholder's account, within a period of 15 days," Insurance Regulatory and Development Authority (IRDA) Chairman J Hari Narayan said in an order.

Kotak Mahindra, the order said, violated the guidelines on group insurance policies by not paying the small value death claims directly to the beneficiary. The insurance company routed the claims through the NGO, instead of paying it directly to the beneficiaries as required under the law.

The insurance company, IRDA said, has violated the guidelines by not paying the death claims on grounds of non-submission of additional documents.

"... It is held that the claim repudiations on the basis of non-submission of requirements called for is violation (of regulation) ... and a penalty of Rs one lakh is imposed under the Insurance Act," IRDA said.

IRDA also advised Kotak Mahindra Life to revise its claim manual procedures in line with the regulations.

The insurance regulator has also hauled up Kotak Mahindra Life for inserting a clause to deny death claims within 3 months from the date of policy in its group insurance schemes.

"The insurer is directed to reopen all such claims which are repudiated because of inclusion of this lien clause and examine and decide on the same. The action taken be confirmed to the IRDA," the order said.

IRDA also found Kotak Mahindra violating the rules with regard to reimbursement of administrative expenses to master policyholders many of whom were acting as its corporate agents.

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Jeevan Ankur a gift for you child in World Literacy Day

2:10 pm Jeevan Ankur, World Literacy Day

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Insurance week celebrated in Madurai

9:37 pm Insurance week, LIC, LIFE INSURANCE CORPORATION OF INDIA

The Life Insurance Corporation of India (LIC), which turned 56 years on September 1, 2012, is celebrating the first week of September as ‘Insurance Week.’ Addressing a press conference here on Thursday, M. Govindaraju, Senior Divisional Manager, Madurai Division, said that the Insurance Week celebrations were being conducted in a grand manner.Various activities such as medical camps and competitions for school children have been conducted throughout the Division during the first week.The Madurai Division, which covers six southern districts, has generated new businesses to the tune of 1.04 lakh policies in the first five months of this fiscal.In last financial year, LIC Madurai Division settled 1.47 lakh policies maturity claims amounting to Rs. 429.15 crore and in Death Claim, it settled 8,563 polices to the tune of Rs. 57.67 crore. 

 As directed by the Central Government, he said that the Division was promoting the use NEFT mandate to all policy holders, which would enable LIC to expeditiously settle all policy-related payments through electronic transfer. Of the Madurai Division’s 30 lakh policy holders, so far 1 lakh NEFT mandates have been collected from our customers.“We request all the policyholders of LIC to provide their bank details for speeding up the payments to them whenever it falls due.”Giving a national picture of the LIC’s performance, he said that during 2011-12, 357 lakh policies were sold enabling it to command 80.9 per cent of the market share in new policies issued and its total first year premium income was pegged at more than Rs. 81,514.49 crore.Also as part of the celebrations, Mr. Govindaraju said that a new micro insurance product ‘Jeevan Deep’ was launched on 1st September. This is an endowment assurance with an added feature of guaranteed additions along with provision of loyalty addition. An immediate annuity product is available for ‘online buy.’

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Better deal sought for women LIC agents

9:35 pm welfare schemes for LIC women agents, Women LIC agents

The first State-level meet of Life Insurance Corporation Agents’ Organisation of India (LICAOI) held in Mangalore on Monday highlighted the demands of benefits for women LIC agents.It includes providing a Provident Fund, pensions, health schemes, pensions and welfare schemes for women LIC agents.Of the 1 lakh LIC agents in the State, 40,000 are women. 

“We have never heard of people saying they lost money they spent on LIC,” said S.K.Geetha, State leader, All India Insurance Employees Association (AIIEA).The Life Insurance Corporation of India (LIC) is standing strong today 12 years after the Indian economy’s privatisation began she said. Much of the credit for the steadfastness of the organisation depended on the agents, including women agents, she said.She said the insurance bills that are being tabled in Parliament were significant for the sector as they would allow higher foreign direct investment.‘Address the issues’ Ms. Geetha said that the issues facing women LIC agents should be addressed as they were working in addition to their work at home, which is not seen as economic activity as it earns no money.If they get their spouse's support, they consider themselves lucky. 

However, no man is considered 'lucky' because his spouse works, she said. B. Madhav, Secretary, district unit of CPI(M), said that the conference of women LIC agents to highlight their problems was welcome and that the organisation must be strengthened.The discussions at the meeting must be followed up with concrete resolutions.Gurudutt, Secretary, Udupi Sub division, AIIEA, said the strength of the LIC agents was growing stronger with the support of other workers unions.

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LIC embarks on ambitious plan to cover all Indians

9:32 pm LIC for all, LIFE INSURANCE CORPORATION OF INDIA

State-owned Life Insurance Corporation of India (LIC) wants every Indian to have life cover by 2020. The country’s largest insurer has formed a team that’s working on the ambitious expansion strategy, which could cost as much as Rs.2 trillion to execute, two top LIC officials said.

“We will stretch ourselves to any extent to meet the target,” said one of the two officials. “There will be new recruitments, the sales force will be expanded, and more branches and satellite offices will be added. There will also be new tie-ups with banks, post offices and others.”

The group working on the plan is expected to finalize the blueprint in the next two months for submission to the LIC board. “Fifty members of the strategy implementation group are working on it with seven sub-groups. Many executive directors are part of the group,” the second person said.Both officials did not want to be named because the plan is yet to be formally announced.India has 24 life insurers with combined assets of at least Rs.16.18 trillion. LIC is the largest, with at least Rs.13 trillion in assets.With at least 300 million policies in force, about 250 million people are covered by LIC in a nation of some 1.2 billion people.
According to a report by global consulting firm McKinsey and Co., life insurance premiums as a percentage of gross domestic product in India is about 4%, much lower than developed market levels of 6-9%. “In several segments of the population, penetration is lower than potential.

For example, in urban areas, penetration of life insurance in the mass market is about 65%, and it is considerably less in the low-income unbanked segment. In rural areas, life insurance penetration in the banked segment is estimated to be about 40%, while it is marginal at best in the unbanked segment,” said the report titled India Life Insurance 2012 by McKinsey.

In the June quarter, LIC collected Rs.14,451 crore in new business premiums. The industry’s new business premium income has been declining over the past three years in the backdrop of stricter regulations and weak market sentiment. In fiscal 2012, LIC’s first-year premium collection fell to Rs.81,514.49 crore from about Rs.86,444.72 crore in fiscal 2011.LIC is targeting a total new business premium collection of around Rs.1 trillion in the current fiscal, said the first person cited above.“Keeping all other parameters constant and excluding capital infusion, it may take at least Rs.2 trillion to grow LIC’s business in line with its target,” said the second official.Ashvin Parekh, a partner and national leader (financial services) at audit and consulting firm Ernst and Young India (E&Y), said LIC can achieve the target, but it has to work on product design.“LIC has to spend time on products. Merely launching one product after another may not help. There has to be a larger underlining concept behind every product,” Parekh said.The insurance regulator is working on new guidelines for insurance products, which are likely to be announced in the next few weeks. According to Parekh, the new norms may facilitate greater insurance penetration and help LIC, too.“LIC will also have to stop its overdependence on agency channel and work on multi-channel plans. A complete overhauling is required. LIC must come out of its comfort zone and work on segment-wise products and services,” said Parekh.

The state-run insurance company has been on overdrive over the past three years. In 2010, it appointed consulting firm Accenture Plc to suggest ways for speeding up growth. Accenture’s recommendations—on distribution and branding—are being implemented in a phased manner.The plan to ensure all Indians have insurance coverage is not part of Accenture’s recommendations.Currently, LIC has around 3,200 branches, including satellite offices. It has 1.28 million agents, and distribution tie-ups with at least six banks.Between December 2011 and June 2012, the insurer raised its equity stake in 11 state-owned banks, at the behest of the government, to reinforce their capital base.


The branch networks of these banks will come in handy in selling insurance. LIC bought a large equity stake in Corporation Bank in 2002. At that time, the objective was to use the bank’s branch network to distribute its policies. It holds a 25.49% stake in the bank.One of the LIC officials cited above said it may use the branch network of cooperative banks as well for the distribution of policies.Indian banks have at least 93,000 branches and 101,000 ATMs.“We sold at least 32 million policies last year. We should now be able to sell 80-100 million policies a year,” said the first person.With 300 million policies, LIC has what’s possibly the largest customer base for an insurer in the world, said a top official at ICICI Prudential Life Insurance Co. Ltd.“The unique identification number and the permanent account number are changing the ecosystem, and this will enable LIC to reach its target,” said the official on condition of anonymity. “It will have to expand its distribution network and that will benefit the private sector as well.”


Over the past few years, regulatory changes have slowed the growth of the life insurance industry. The industry’s new business premium income declined to Rs.1.14 trillion in 2012 from Rs.1.25 trillion in 2011. Experts say the industry is poised for consolidation.If LIC succeeds in achieving even close to what it is targeting, the private sector will react by consolidating businesses to compete, said Parekh of E&Y.In line with its plan, on 1 September, LIC announced the launch of a micro-insurance policy meant for the financially weaker sections. It plans to sell insurance cover to people below the poverty line under social security group schemes such as JanaShree Bima Yojana and Aam Admi Bima Yojana. It will offer free add-on scholarship benefit plans for the children of those covered under such schemes.

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LIC targeting Rs 50,000 cr investment in equities

9:27 pm equities, LIC, sharemarket

Life Insurance of India (LIC) is planning to scale up its investment in public sector units (PSUs) as government has instructed it to prepare for divestments. LIC has earmarked Rs 20,000 crore for upcoming PSU share sale, reports CNBC-TV18.

LIC, meanwhile, is targeting to invest Rs 50,000 crore in equities in FY13.

According to the Insurance Act, equity exposure in a single entity is capped at 10%. LIC can invest up to 10% of the capital employed by the investee company, or 10% of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.

As on March 31, 2011, LIC’s investment corpus stood at nearly Rs 11 lakh crore, of which 20% (Rs 2.2 lakh crore) was equity. Of that, investments in state-run stocks stood at Rs 85,031 crore, while exposure in banks stood at nearly Rs 59,586 crore.

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Insurance norms may be tweaked for infrastructure push

9:45 pm CHIDAMBARAM, INSURERS, IRDA, NORMS

NEW DELHI: Finance minister P Chidambaram met insurers on Tuesday to discuss steps to channelise their long-term savings into infrastructure sector and other issues relating to the sector.

"For that what changes are to be made in the regulations by the government of India or by Income-Tax department...everything has been looked at," Financial Services secretary DK Mittal said after the meeting, adding that no decision was taken and another meeting would be held shortly.

India needs about a trillion-dollar investment in the infrastructure sector during the 12th Five-Year Plan (2012-17).

"It was basically to understand, as a part of a series of meetings that the finance minister is holding," said Mittal.

IRDA's chairman J Hari Narayan said that the regulator is already working towards easing the norms of investment for insurance firms.

"There is a need to revisit investment norms for insurance companies. We will look at revising investment regulations over the next month," he said.

Finance ministry is also examining the option of letting life insurance companies invest up to 50% of their debts investments in AA-rated paper.

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Eastern zone tops LIC's most expensive policy sale list

4:09 pm Kolkata, lic eastern sector, policy sale

KOLKATA: Economically backward eastern zone springs a surprise for the country's largest insurer Life Insurance Corporation (LIC) of India. The region where per capita income is much lower than the national average has contributed onefourth of the sales of LIC's most expensive insurance policy currently in the market for middle income group with an entry level premium of Rs 1 lakh.

The policy in question is Jeevan Vaibhav, which was launched in May for a limited period. "We had great doubts about the prospect of this policy in the eastern zone when it was launched," said SK Roy, LIC's zonal manager for east. "To our wonder, this zone stood first both in terms of number of policies sold and premium income collected, ahead of the western zone," he said.

The company's eastern zone covers West Bengal, Sikkim, the difficult parts of the seven North East states and the far-flung Andaman & Nicobar Islands. These states, with low industrial activity, generate much lower income than the country's developed states like Gujarat or Tamil Nadu. Central Statistical Office estimated that India's per capita income rose to Rs 53,331 in 2010-11 at current prices, 15.6% more than previous year's Rs 46,117.

West Bengal, the largest state in the East, had recorded a per capita income of Rs 41469 last year and its contribution to the national GDP has dipped to 6.5% in 2009-10 from 7.8% in 1980-81. Roy said the eastern zone sold 10,000 Jeevan Vaibhav policies with an average ticket size of Rs 1.40 lakh.

LIC sold a total of 40,000 policies across the country. "The policy seems to have attracted the lower middle income group more," said US Roy, former managing director of SBI Life Insurance.

"Going by demographic distribution of surplus income, eastern region has more number of lower middle income group than any other part of the country." LIC's Jeevan Vaibhav is a close-ended single premium endowment assurance policy with guaranteed benefits on death and maturity. The insurer will close the 10-year policy on September 17.

Holders of this policy who paid Rs 1 lakh premium, including service tax, will get a life cover of Rs 2 lakh. When analysed over a 10-year period, the returns generated by the scheme during the entire term works out to 7.7-8.0% per annum. The company employs 13 lakh agents while bancassurance partners contribute to less than 5% of the sales. West Bengal alone contributes over 50% of total sales in the eastern zone.

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Health insurance, pension policies see a sharp dip

1:05 am Health Insurance, Pension Policy

Sales of health and pension policies of life insurance companies have taken a beating in June, according to the latest data released by the Insurance Regulatory and Development Authority (IRDA).

The regulator releases figures of monthly business of both life and non-life insurers, segment wise.
  
The insurance regulator has segregated the figures for the life insurance players into four categories — individual single premium, individual non-single premium, group single premium and group new business-non-single premium. According to the data, there have been only 13 non-linked health policies in individual single premium in June 2012, compared with 60 policies in the same period last year. Linked health policies for the same period dropped to 14 in June 2012, compared with 105 in June 2011. Both the above figures are for without-profit sub-category. The with-profit category figures stood at zero.

Even in the individual non-single premium category, there was a 53 per cent drop in health insurance premium (without profit) for March 2012, compared with the figures a year ago in the non-linked category. In the linked category, the same fell by 36.8 per cent to 8,705 policies in March 2012, compared with 13,780 policies in March 2011.

Industry players said the change in portfolio strategy with less focus on health has been one of the reason why the health insurance policies have come down. “Over the years, life insurance players are making an attempt to significantly reduce their health portfolio, due to the complexities of health insurance as a whole. This explains the drop in premium numbers on a year-on-year basis,” said a senior executive of a private life insurer.

Pension has been another category, which has seen an almost zero rise and even a negative growth in policies. In the group single premium category, there was only one non-linked pension scheme in March 2012, against 199 schemes (without profit) in March 2011.

Only the group new business-non single premium showed an upward trend, where non-linked pension schemes (without profit) stood at 19 in June 2012 , compared with six schemes in June 2011. In the same period, linked pension schemes (without profit) in the same category rose to 15 in June 2012, against two a year ago.

A negative growth was seen on the pension policy front in the individual category. In individual non-single premium, the number of policies went into negative, both in the linked and non-linked category. This, according to life insurers, is due to the adjustments made by insurance players made in terms of pension policies. “The pension product market is on a decline for some time now. Adding to this, there have been some adjustments made by insurance players, due to which the figures which were anyway on a decline, have fallen further into negative,” said an official from a life insurance company.

In terms of the non-life insurers segment wise information, motor accounted for the highest share in the gross premium underwritten by non-life insurers (both public and private insurers) within India.The motor segment registered a 21.6 per cent growth in premiums year-on-year in June 2012, including public and private insurers.

The fire segment reported the highest rise in premiums among all categories, registering a 22.2 per cent rise in premiums on a year-on-year basis in June 2012.

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Manufacturing growth eases to nine-month low in August

7:36 pm india, manufacturing growth

Growth in India's manufacturing sector eased to a nine-month low in August as export orders fell for a second month, underscoring the risks to the wider economy from Europe's debt crisis, a business survey showed on Monday.

The HSBC manufacturing Purchasing Managers' Index (PMI) eased for the second month to 52.8 in August, its lowest level since November, from 52.9 in July. However, it has kept above the 50 mark that divides growth and contraction for more than three years.

"The momentum in the manufacturing sector eased further on the back of weak external demand and output disruptions caused by the major power failures in early August," said Leif Eskesen, economist at HSBC.

Sixteen states in northern India, home to almost half of the country's 1.2 billion people, fell into darkness last month as power grids collapsed, disrupting businesses and economic activity.

Any slowing in the manufacturing sector, which accounts for a little over 15% of India's gross domestic product, does not bode well for the overall economy, especially as this sector has been the biggest drag on growth.

The Indian economy grew 5.5% in the quarter to June, languishing near its slowest pace of growth in almost three years, data showed on Friday.

With no concrete signs of a resolution to Europe's debt crisis, the new export orders sub-index - an indicator of prospective overseas business - fell for the second month in a row to 49.2, its deepest contraction since October.

The euro zone, India's largest trade partner, has been ravaged by a debt crisis that began in Greece and appears to be hurting growth in heavyweight economies like France and Germany, posing further risks to the Indian economy.

While domestic orders helped increase output in August, the pace of expansion was the slowest since November.

The lone bright spot among the survey's otherwise gloomy data was that new jobs were created at the fastest pace since the series began more than seven years ago.

The survey also showed output prices, or what consumers pay for products, jumped in August and may push India's headline inflation rate up from July's 6.9%.

At the same time, input price pressures remained elevated, giving little room for the Reserve Bank of India to act on increasing calls for it to cut interest rates and support growth.

"While input price rose at a slightly slower pace, output price inflation picked up due to higher import costs and taxes. With the slowdown partly supply driven and inflation risks still lingering, these numbers underscore that the room for policy rate cuts is very limited at the moment," Eskesen added.

The RBI next meets on Sept 17 and with inflation refusing to ease substantially the chances of a rate cut appear slim, even with growth slipping, after the central bank placed the onus of reviving the economy on the government.

Pending government reforms include allowing foreign direct investment in the retail and airline sectors coupled with pension and insurance reforms.

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Sensex closes 45 points down, Nifty at 5,253

7:28 pm gaar, nifty, Sensex

Belying hopes of improved sentiment after GAAR panel report, the Sensex today surrendered early gains and ended 45 points lower on selling in oil&gas, banks and metal shares amid reports that India's  manufacturing sector in August reported the weakest growth rate in 9 months.

Traders said the market sentiment was also hit as the government-BJP stand-off over CAG report on coal block allocation continued even today, signalling the possibility of a washout of the remaining four days in the Monsoon session.

The BSE benchmark index, which jumped to a high of 17,509.99 on an expert committee on General Anti Avoidance Rules (GAAR) recommending the postponement of the tax rule by three years, fell back sharply to end with a loss of 45.16 points at 17,384.40 -- its second straight session of losses. "Market corrected even today though the announcement of GAAR deferment is very positive," said Kishor P Ostwal, CMD, CNI Research.

RIL, ICICI Bank and Tata Motors pulled the 30-share index down. Jindal Steel, which lost 2.23 per cent, led 17 Sensex losers, followed by Tata Power and ONGC. ITC was unchanged. Among 12 winners, Bajaj Auto rose 3.04 per cent while CIL, Cipla, Bhel gained between 1-2 per cent.

"The Parliament remained disrupted for ninth consecutive day, along with weaker manufacturing data released which shows the numbers at nine-month low levels underpinned the bearish sentiment," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.

Brokers said reports that HSBC India Manufacturing Purchasing Managers' Index  a measure of factory production easing to 52.8 in August, from 52.9 in July, caused selling. The market received another jolt as reports said Morgan Stanley lowered India's growth forecast to 5.1 per cent for the current fiscal from 5.8 per cent, citing high fiscal deficit and renewed weakness in external demand.

The 50-share National Stock Exchange index Nifty ended down by by 4.75 points, or 0.09 per cent at 5,253.75.

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LIC to invest about Rs. 45,000 cr in market this year says chairman

2:14 pm 45000crore, D.K. Mehrotra, Investment, LIC

D.K. Mehrotra, chairman,
 Life Insurance Corporation of India (LIC)

In an  interview to NDTV Profit’s Vijay Iyer, D.K. Mehrotra, chairman, Life Insurance Corporation of India (LIC) talks about LIC's targets for investments in the equity market this coming year and what sectors are looking attractive to the insurance giant.


The company is doing better this year compared to last year, and is likely to perform even better in the following fiscal. The slowdown in the last fiscal was witnessed only in the new business segment. We will invest close to Rs. 45,000 crore in markets this year.


Below is the transcript.

Q: We have completed the first quarter of FY13. Has this been one of the toughest years even for an established player like LIC?

    A: If we compare our this year's performance with the last year, I think we are doing better. Last year, the entire industry witnessed a slowdown for various reasons. I would not like to go in the detail but we did witness a slowdown. LIC was not an exception. But we have used that as a learning point for us. Since the first quarter this year, we have been moving ahead. We are doing very well.


Q: Last year the target set to cross was Rs. 2,00,000 crore premium mark. What was the final figure and how do you look at this fiscal now?
    A: We only had a slowdown in the new business. Various constraints like market behaviour or lack of product affected our new business performance. So, we have got two products cleared by the Insurance Regulatory Authority of India (IRDA). One was Jeevan Vidhi, which gave us support this year. Another product, which we are still running, is Jeevan Vaibhav. So, we are doing better than the last year.


Q: Any internal targets that you have set up?
    A: Yes, this year we are going to do Rs. 45,000 crore as the first premium income and over Rs. 4 crore through new policies. So, we are every hopeful that we will be able to do that.


Q: So, the growth will be in double digits?
    A: Definitely. Last year, the performance was not good. We are trying to evaluate ourselves in the year prior to the last year in which we did much better.

    We did not have many ULIP products. Secondly, the market was very choppy and volatile last year. Even today, the market is very rangebound. We don't see any upside in the market in the short term. So, on a very conservative basis, we believe that we will get enough opportunity to pump in same amount of money as we did in the last year.


Q: It is the premium collection which decides how much you are planning to investment options like debt, equity, etc. Last year, you pumped around Rs. 45,000 crore in the equity. How are you looking at your investments this year?
    A: Actually, we don't go by the numbers. We go by a simple thumb rule out of that the total investible fund for the year; about 10-15 per cent goes into the equity market. Leaving that aside, whatever we get through the Unit-linked insurance plan (ULIP), in which case, the customer gives the mandate. We are planning to invest more than Rs. 2, 00,000 crore in the market. So I think we will be very close to the figure we have reached last year.


Q: So, the equity market investment will remain in that Rs. 45,000 crore range?
    A: Absolutely.


Q: Since the investment has come down in the last couple of years from Rs. 60,000 crore to Rs. 45,000 crore, is this because of the investment cap you have got as per the IRDA guidelines? Is that a hindrance?
    A: See, that may be one of the reasons but not the main reason. The main reason is that last year, we did not have many ULIP products. Secondly, the market was very choppy and volatile last year. Even today, the market is very rangebound. We don't see any upside in the market in the short term. So, on a very conservative basis, we believe that we will get enough opportunity to pump in same amount of money as we did in the last year. We are planning to come up with some ULIP products in the market as well. We are working on that. Once it gets cleared by the IRDA, we will launch it.

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1:44 pm address, Contact, jeevan thara, office number

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LIC offering 1% higher returns for online purchase

9:39 pm higher returns, LIC, Online payment

MUMBAI: Life Insurance Corporation of India (LIC) has made available online its immediate annuity plan offering a 1% higher return for online purchases. An immediate annuity plans is one where the investor pays a lump sum upfront and receives a stream of regular income from the next month itself. 

The product that LIC is offering online is Jeevan Akshay VI, which has seven annuity options to choose from. The options range from one where the buyer has a choice to receive annuity at a uniform rate for life, a limited period annuity, and annuity for life with return of purchase price on the death of the investor or annuity for life which will continue to the spouse after the death of the annuitant. The minimum investment for an online purchase is Rs 1,50,000. 

Historically annuities have not been popular because returns have been lower than on long-term fixed deposits. For instance, although there have been 10% FD schemes, whole-life annuity rates have been lower at slightly above 9% for retirees. However, with people having experienced low-interest rate cycles where FD rates have fallen to 7-8%, increasing credit risk among bond issuers and rising life expectancy, insurers expect that annuities will gain in popularity. 

Buy policy online : http://bit.ly/QSoTuO

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LIC Housing Finance plans to hike loan disbursements to developers

7:31 pm developer loans, individual loans, LIC Housing Finance, LIC Housing Finance total loan portfolio, loan disbursements to developers

LIC Housing Finance, a subsidiary of Life Insurance Corporation of India, plans to disburse around 8-10 per cent of its total loan portfolio to developers by the end of this fiscal.

“Presently, around six per cent of our total loan portfolio constitutes developer loan. We plan to increase it to 8-10 per cent in the current financial year,” Director and Chief Executive Officer of LIC Housing Finance V.K. Sharma told PTI over the week-end.

He, however, said the housing finance firm would not aggressively push this portfolio in this fiscal though there is an uptick in loan disbursements to developers.

By the end of June quarter, LIC Housing Finance's outstanding loan portfolio was at around Rs 65,650 crore, which was a 24 per cent growth over the same period last year.

While individual loans constituted 94-95 per cent of the portfolio, developer loans comprised 5-6 per cent of the total amount.

Margins under pressure

Earlier, the housing finance company had said that low developer loan portfolio had put the margins under pressure and higher disbursals would increase the margin level.

Sharma also said respite in interest rates is necessary to boost the overall housing finance industry and to reduce the cost of borrowing for the housing finance companies.

Talking about the overall growth projection, he said,” Overall growth in loan portfolio is likely to be around 20 percent in the current financial year,” he said.

Asset quality of NBFCs

He also said there is no concern on the asset quality of NBFCs.

“There is no concern on the asset quality front. We have a total NPA of only around Rs 400 crore,” he said.

Sharma, however, said that the real estate sector was not growing in the country with subdued activity in metro centres like Mumbai, Hyderabad and Bangalore.

“Growth is pretty subdued in the metro centres like Mumbai, Bangalore and Hyderabad. However, there is a demand in tier-II and tier-III cities,” he said.

Q1 performance

LIC Housing Finance posted a 11 per cent drop in its net profit to Rs 228 crore in the first quarter of current financial year on the back of higher interest cost.

During Q1, it sanctioned Rs 4,900 crore loans to individuals, a growth of 33 per cent over the same period last year.

It also sanctioned around Rs 410 crore loans to builders during this period against Rs 5 crore in the corresponding quarter of the previous fiscal.

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LIC launches "Jeevan Deep" T810

2:38 pm 56 years, jeevan deep, LIC, LIFE INSURANCE CORPORATION OF INDIA

JEEVAN DEEP (UIN : 512N270V01)

The Life Insurance Corporation (LIC) of India local division launched a micro insurance policy called ‘Jeevan Deep T-810’ for the benefit of the common man on the occasion of its 56 anniversary on Saturday. The idea is to reach out to the economically weaker sections through the micro-policy. Addressing a press conference on the occasion on the office premises here on Saturday, LIC Senior Divisional Manager D. Tandi said that the insurance product was launched nationwide.

This is an endowment assurance with an added feature of guaranteed additions along with provision of loyalty addition. An immediate annuity product is available for ‘online buy’. Policyholders in the age group of 18 to 60 are eligible for insurance coverage. The policy term is 5 to 15 years. The minimum insurance coverage is Rs.5,000 and the maximum is Rs.30,000. Those who pay the premium amount without fail for two years will have complete insurance cover for the next two years. 

Product Summary:

It is a simple savings related life insurance plan with Guaranteed Additions where you may pay premiums either in lumpsum or regularly at monthly, quarterly, half-yearly or yearly intervals over the term of the policy.

1.      Sample Premium Rates:

Following are some of the sample premium rates per Rs 1000/- Basic Sum Assured:

            Annual Premium ( in Rs.) for Rs 1000/- Basic Sum Assured:

Age (yrs.)	Term of the Policy (years)
	5	10	15
20	210.60	107.30	70.25
30	210.70	107.45	70.55
40	211.3	108.45	71.95
50	213.45	111.75	76.30

Single Premium ( in Rs.)  for Rs 1000/- Sum Assured

Age (yrs.)	Term of the Policy (years)
	5	10	15
20	923.65	789.45	679.85
30	923.70	789.75	680.85
40	924.10	791.80	686.15
50	925.50	798.35	701.50

 2.      Eligibility Conditions and Other Restrictions:

Minimum age at entry                         :  18 years (completed)

Maximum age at entry                        :  60 years (nearest birthday)                             

Maximum Maturity Age                       :  65 years (nearest birthday)

Policy Term                                      :  5 to 15 years

Minimum Sum Assured                        :  Rs. 5000/-

Maximum Sum Assured                       :  Rs. 30000/-

Sum Assured shall be in multiples of Rs. 1,000/-

 3.      Grace Period:  A grace period of two calendar month but not less than 60 days will be allowed for all modes of payments.

4.      Revival:     Under regular premium policies, if premiums are not paid within the grace period the policy will lapse. Subject to production of satisfactory evidence of continued insurability, a lapsed policy can be revived by paying arrears of premium together with interest within a period of five years but before maturity from the due date of first unpaid premium. The rate of interest applicable will be as fixed by the Corporation from time to time.

5.      Nomination: As per Section 39 of Insurance Act, 1938.

6.      Cooling-off period: If you are not satisfied with the Terms and Conditions of the policy you may return the policy to the Corporation within 15 days from the date of receipt of the policy bond stating the reason of objections. On receipt of the same the Corporation shall cancel the policy and return the amount of premium paid after deducting the proportionate risk premium and stamp duty.

7.      Exclusions: This policy shall be void if the Life assured (whether sane or insane at the time) commits suicide at any time within one year from the date of commencement of risk and the Corporation will not entertain any claim under this policy except to the extent of a maximum of (i) 90% of the single premium paid excluding any extra premium paid or (ii) third partys bonafide beneficial interest acquired in the policy for valuable consideration (but limited to the basic sum assured of this policy) of which notice has been given in writing to the branch where the Policy is being presently serviced (where the policy records are kept) at least one calendar month prior to death.

Illustration:

Notes :i)   This illustration is applicable to a non-smoker male/female standard (from medical, life style and occupation point of view) life.ii) The non-guaranteed benefits (1) and (2) in above illustration are calculated so that they are consistent with the Projected Investment Rate of Return assumption of 6% p.a.(Scenario 1) and 10% p.a. (Scenario 2) respectively.  In other words, in preparing this benefit illustration, it is assumed that the Projected Investment Rate of Return that LICI will be able to earn throughout the term of the policy will be 6% p.a. or 10% p.a., as the case may be.  The Projected Investment Rate of Return isnot guaranteed.iii) The main objective of the illustration is that the client is able to appreciate the features of the product and the flow of benefits in different circumstances with some level of quantification. iv) The Maturity Benefit is the amount shown at the end of the policy term

Benefits

1.      Death Benefit:

On death during the policy term excluding last policy year: Basic Sum Assured along with accrued Guaranteed Additions.

On death during last policy year : Basic Sum Assured with accrued Guaranteed Additions along with Loyalty Addition, if any.

Maturity Benefit:

On surviving to the date of maturity, payment of the Basic Sum Assured along with accrued Guaranteed Additions and Loyalty Additions, if any, shall be payable

Guaranteed Addition:

The policy provides for Guaranteed Addition of Rs 20/- per Rs.1000/- Basic Sum Assured per year during the term of the policy.

Loyalty Addition:

Depending upon the Corporations experience,the policy shall be eligible for Loyalty Addition during the last year of the policy at such rate and on such terms as may be declared by the Corporation.

2.            Optional Rider:

  

Accident Benefit Rider : Accident Benefit Rider Option will be available under the plan by the payment of additional premium. This option is available under Regular Premium policies only.

In case of accidental death, the Accident Benefit Sum Assured will be payable as lump sum along with the death benefit under the Basic plan. In case of accidental disability, an amount equal to the Accident Benefit Sum Assured will be paid in monthly instalments spread over 10 years or up to death or maturity, if earlier, and all future premiums under the policy will be waived.

If the policy becomes a claim either by way of death or maturity before the expiry    of the said period of 10 years, the disability benefit instalments which have not fallen due will be paid along with the claim.

3.      Auto-Cover Facility:

If at least two full years premiums have been paid in respect of this policy, any  subsequent premium be not duly paid, full death cover shall continue from the due date of First Unpaid Premium (FUP) for a period of two years or till the end of policy term, whichever is earlier.

During the Auto Cover Period, the Accident Benefits shall not be available.

4.      Paid-up Value:

Under regular premium policies, if after at least two full years premiums have been paid in respect of this policy, any subsequent premium be not duly paid, this policy shall not be wholly void, but shall subsist as a paid up policy. The Basic Sum Assured under the policy shall be reduced to such a sum, called Paid-up Sum Assured, as shall bear the same ratio to the Basic Sum Assured as the number of premiums actually paid bears to the total number of premiums originally stipulated for in the policy.

This paid up sum assured along with accrued Guaranteed Additions shall be payable on the date of maturity or on Life Assureds prior death after the expiry of Auto Cover period.

Accident Benefit Rider will cease to apply if the policy is in lapsed condition.

5.      Surrender Value:

The Guaranteed Surrender Value is as under:

For Regular Premium policies - The Guaranteed surrender value will be available after completion of two policy years and at least two years premiums have been paid and is  equal to 30 % of the premiums paid excluding the premium paid for the first year and all premiums in respect of Accident Benefit rider and extras, if any.

For Single Premium policies- The Guaranteed Surrender Value will be available after completion of at least one policy year and is equal to 90 % of the premium paid excluding extra premium, if any.

The cash value of accrued Guaranteed Additions will also be payable.

Corporation may, however, pay special surrender value as the discounted value of Paid up Sum Assured and accrued Guaranteed Additions provided the same is higher than Guaranteed Surrender Value.

6.      Loan:  No loan facility is available under this plan.

7.      Cooling-off period: If you are not satisfied with the Terms and Conditions of the policy you may return the policy to the Corporation within 15 days from the date of receipt of the policy bond stating the reason of objections. On receipt of the same the Corporation shall cancel the policy and return the amount of premium paid after deducting the proportionate risk premium and stamp duty.

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