LICAGENTS

Refund of Service tax in Varishtha pension Bima yojana

2015-12-30T17:59:00.006+05:30

"LIC of India has made the provision for ONE TIME Refund of Service Tax under Varishtha Pension Bima Yojana (Plan 828) policies, issued from 14/8/2014 to 31/03/2015"

Varishtha Pension Bima Yojana (Plan 828) was launched by Government of India on 15/08/2014 for person aged more than 60 years to provide a social security through lifetime pension to senior citizens. Varishtha Pension Bima Yojana was sold and administered by Life Insurance Corporation of India. From 15/08/2014 to 31/03/2015 service tax at the rate of 3.5% was collected from the customers on premium, which ranged from Rs. 2333 to Rs. 23333. In the Budget 2015 finance minister provided relaxation of service tax on Varishtha Pension Beema Yojana with effect from 01/04/2015.

Recently government of India issued a notification for the refund of service tax collected on Varishtha Pension Beema Yojana. And following the government’s directive LIC of India has issued the circular regarding the refund of service tax on varishtha pension bima yojana.

How the customer will get the service tax back in Varishtha Pension Bima Yojana

LIC of India has made the provision for ONE TIME Refund of Service Tax under Varishtha Pension Bima Yojana (Plan 828) policies, issued from 14/8/2014 to 31/03/2015 as follows :

IPP Cells of LIC of India: Will refund Service tax for policies surrendered and also policies where annuity is being paid
Branch Offices of LIC of India: will refund Service tax for policies where Death Claim have been paid under Varishtha Pension Bima Yojana Policies, the payment of which will be in favour of Nominee.

Policy holders of varishtha pension bima yojana (Plan 828) will get the intimation related to refund of service tax. Refund will be made through NEFT to the account registered with LIC of India.

LIC enters Diamond Jubilee Year!

2015-09-06T00:28:00.001+05:30

Rs.161.75 Crore profit in one day

2015-09-04T22:39:00.002+05:30

Source: The Financial Express
IOC share jumped 4.36% in volatile trade on Tuesday, reflecting a mark-to-market gain of Rs 161.75 crore on LIC’s investment.

Life Insurance Corporation (LIC) of India acquired a “substantial” quantum of shares in the Indian Oil Corporation (IOC) offering on Monday, valuing the investment in the state-owned refiner at Rs 8,077 crore, showed stock exchange disclosures.

The insurance behemoth purchased 20.87 crore shares, representing an 8.59% stake, in the secondary market offering that saw lukewarm response from foreign institutions and retail investors amid a rout in global equities. LIC’s stake in IOC will now rise to 11.11% from 2.52% earlier.

After the stake sale, the government’s stake sale drops to 58.57%. The government sold 10% of the equity capital of the oil refiner at a floor price of Rs 387 per share, mopping up more than

Rs 11,000 crore, with the issue subscribed 1.18 times. The government’s collections from selling minority stakes in public sector companies now stand at nearly Rs 13,000 crore.

Interestingly, the IOC share jumped 4.36% in volatile trade on Tuesday, reflecting a mark-to-market gain of Rs 161.75 crore on LIC’ investment. On Monday, the IOC scrip declined 4.11%, while stocks of other refiners and energy companies fell even more with some hitting 52-week lows as global financial markets took a beating over concerns of economic growth in China.

In the past, LIC has featured as the single biggest investor in many PSU auctions. In January 2015, LIC acquired 45% in Coal India’s Rs 22,557-crore offering. In December 2014, LIC took up more than 72% of the shares offered in the Steel Authority of India (SAIL) auction. SAIL’s 5.82% stake sale (first tranche) in March 2013 also saw LIC acquire nearly 70.6% of the shares on offer, and more than two-thirds of the shares offered in the second tranche of Hindustan Copper’s disinvestment in July 2013.
After Monday’s stake sale in IOC, the government will look to sell minority stakes in ONGC, NTPC, NMDC, BHEL, Bharat Electronics and Oil India, among others. In addition, the department of disinvestment (DoD) has also proposed to conduct a follow-on offer in CPSE ETFs to meet its record disinvestment target of Rs 69,500 crore. In the previous fiscal, the government had set a target of Rs 63,425 crore, which was revised down to Rs 36,925 crore, but managed to raise only Rs 24,277 crore, DoD data showed.

Profile of LIC - 2015

2015-09-04T22:01:00.003+05:30

LIC Profile 2015

While others were selling, LIC bought and earned Rs.10 K Cr.

2014-11-08T00:03:00.001+05:30

Source: ET

In the game of stock picking, the largest local investor, LIC has been a contrarian. It's a bet that has paid off so far in the current bull run.
LIC's mantra is simple: buy shares of operationally sound companies that are caught in unfavourable business cycle and trading at a lower multiple. Based on the latest stock holdings, the state-owned insurer has gained almost Rs 10,000 crore in the past four quarters on back of its contrarian calls on scrips like BHEL and Axis Bank.

In both stocks, LIC raised its stake nearly 4% since December 2013 when several brokerages gave 'sell' call and even three months ago many were bearish about the stocks. "The biggest ability of LIC is to relate the current valuation and current business cycle of the operationally sound companies. When they find valuation of a stock is discounting current business cycle excessively, LIC buys the stock," said G Chokkalingam, Founder, Equinomics Research. "What works in favour of LIC is the duration of holding period for a stock. Being an insurance company, it can hold stock for 8-10 years. However, mutual funds do not have such flexibility as they are under pressure to outperform the benchmark index on a quarterly basis," he said.
The point LIC started buying BHEL, three out of four analysts covering the stock came out with 'sell' reports. Their reasons: a depleted order book and an
operating profit margin that was 50% lower than the historical average; and, thanks to competition, things are unlikely to look up till FY16.
Similarly, investors dumped bank stocks as a tight money market had increased cost of borrowing.
Axis Bank, with high loan exposure to power and infrastructure companies, was among the stocks to suffer the most. A year ago, the private lender was trading at a discount of 45% to its 5-year average price-to-book multiple.
"The price plays a pivotal role in LIC's investment decision. If a stock looks attractive even after factoring earnings de-growth, it becomes a clear buy for an investor with longer investment horizon.
This is the reason why LIC is able to generate higher returns by picking up operationally sound stocks that are punished by the market badly due to their cyclical nature of business," said Amit Tiwari, portfolio manager at Escorts Securities.
Over the past few quarters, LIC has been consistently paring down its holding in IT stocks. But Infosys is an exception. Till September 2014, the stock had fared badly compared to its peers following adverse analyst reports.
But LIC had been quietly increasing stake in the company - from 3.25% in March 2014 to 4.45% in September 2014. During the same period, it raised its holdings in Bajaj Auto, NTPC and NMDC, which had underperformed in the past few months as most viewed the stocks differently than LIC.

Jeevan Rakshak Crosses 1 Million Mark!

2014-10-23T22:50:00.000+05:30

Cyclone Hudhud: LIC appoints nodal officers to step up services in Odisha, AP

2014-10-20T01:41:00.001+05:30

Courtesy: Firstpost

The country's largest life insurer, Life Insurance Corporation of India, has appointed nodal officers in cyclone-devastated Andhra Pradesh and Odisha for stepping up its services in the region, including expediting settlement claims.

LIC has eased the procedure for settlement of claims on the lives of the victims of cyclone Hudhud in Andhra Pradesh and Odisha, the company said in a statement.

These concessions and relaxations are in the nature of simplified procedure for death and disability claim settlement, loss of policy document and claim settlement on the lives of missing persons, it said.
LIC has appointed Nodal Officers in the affected states for coordinating and expediting settlement claims, it said.

More than 30 people lost their lives while several others were rendered homeless after cyclone Hudhud made landfall last Tuesday. Prime Minister Narendra Modi had announced Rs 1,000 crore towards taking up immediate relief works.

LIC gets Rs. 11,500cr in I-T refunds, policy holders to benefit

2014-10-20T01:30:00.002+05:30

Courtesy : The Hindu

Life Insurance Corporation (LIC) has received more than Rs. 11,500 crore in income tax refunds and a big chunk of the amount would be passed on to policyholders, an official said.

“We received I-T refunds in two tranches aggregating to more than Rs. 11,500 crore, after winning a dispute with the I-T department at the Income Tax Appellate Tribunal (ITAT),” an LIC official, who wished not to be named, told PTI here today, adding that this refund happens to be the largest which the company has received so far.

This could not be ascertained with LIC Chairman S.K. Roy.

A text message sent to him also remained unanswered.

In its order dated April 3, 2013, ITAT Mumbai had delivered a judgment in favour of LIC with respect to assessment years 2007-08, 2008-09 and 2009-10, the official said.

As a result of the above ITAT judgment, the LIC received a refund of Rs. 4,190.19 crore for assessment years (AY) 2007-08 and 2009-10 on December 31, 2013. A refund for AY 2008-09 worth Rs. 7,500 crore has been received by the LIC recently, the official said.

As per Section 26 of the LIC Act of 1956, 95 per cent of the surplus coming from I-T refunds ought to go to its policyholders, while the remaining 5 per cent has to be paid to the government in the form of dividend, after arriving at actuarial valuation at the

close of the current fiscal year, the LIC official said.

LIC has paid advance income tax for the financial year 2013-14 (AY2014-15) to the tune of Rs. 5,118.92 crore, as against Rs. 4,323.99 crore in 2012-13 (AY2013-14). LIC's service tax obligations for FY14 was Rs. 4,022.40 crore (provisional) as against Rs. 3,682.58 crore in FY13, he said.

LIC investment value jumps 45% in 1 year, beats indices

2014-10-20T00:55:00.002+05:30

Courtesy: Financial Express

"Since most of the surplus gets distributed among policyholders,
rise in investment return will benefit policyholders"

LIC policyholders may gear up for higher returns on their investment. The Life Insurance Corporation, the largest domestic institutional investor, has seen its portfolio of stocks outperform the two benchmark indices and even the average return generated by large-cap equity funds over the last one year as its investment value has jumped by 45 per cent.
This is despite the government reportedly pushing the insurer to subscribe to overpriced issues of state-owned entities. The government has also, at times, forced it to sell stakes in companies in order to provide stability to the rupee, when foreign investors were pulling out of the markets, leading to the rupee falling against the dollar.
As per nseinfobase.com, developed and compiled by Prime Database, LIC, as on the quarter ended June 2014, owns over 1 per cent stake in 316 listed entities and the market value of all such
holdings have risen by 35 per cent in calendar 2014 and by over 45 per cent over the last one year.
While the market value of the portfolio of stocks held by LIC stood at Rs 2,84,199 crore at the end of September 2013 and Rs 3,05,558 crore at the end of December 2013, the value of the stocks jumped to Rs 4,12,165 crore as on September 14.
An LIC official told The Indian Express that since most of the surplus gets distributed among policyholders, rise in investment return will increase their returns.
“The surplus is arrived at after taking into account all the liabilities and receivables and that is passed on to the policyholders. LIC invests on behalf of its policyholders and if the investment income goes up it will result into increased returns for the policyholders,” said a senior LIC official.
While LIC and its policyholders will benefit from the upward market trend, it has been seen that while in some companies LIC has increased its holding over the last one year there are others where it has also reduced its holding.
While the Sensex return and average return generated by large-cap funds have grown by 39.6 per cent and 40.1 per cent, respectively, since September 30, 2013, the LIC portfolio has grown by 45.1 per cent, beating the index as well as a large number of mutual funds in terms of performance.
In the calendar 2014 itself the value of LIC’s portfolio has risen by 35 per cent or Rs 1,06,606 crore.
LIC's holding across the 316 companies shows a huge variation. While in a company such as ITC the value of its holding stood at Rs 40,806 crore, there are 52 companies where the value of its holding is less than Rs 10 crore and in almost half of the companies (154 companies) its holding is valued at less than Rs 100 crore. In fact, there are 10 companies where the market value of LIC's holding is Rs 1 crore or less.
The value of LIC's top 25 holdings adds up to Rs 290,380 crore accounting for over 70 per cent of the total investment value of LIC's total investment value. The top five holdings of LIC include — ITC, ONGC, SBI, RIL and L&T.

LIC eases claims settlement rules for Jammu and Kashmir flood victims

2014-09-15T22:14:00.000+05:30

Source: ET

State-run insurer LIC has relaxed claim settlement procedure for those affected in floods in Jammu and Kashmir and a special help desk has been set up for expeditious claim processing.

LIC has extended concessions and relaxations to claimants with respect to settlement of death and disability benefit claims, the largest insurance company said in a statement.

"These concessions are in the nature of simplified death claim settlement, proof of death or missing, loss of policy document etc, similar to concessions and relaxations extended to the victims of floods and landslides in Uttarakhand in June 2013," it said.

In addition, for policyholders residing in the flood affected areas, LIC has extended waiver of interest on the overdue premium, it said.

LIC has set up special help desk at Srinagar divisional office and Northern zonal office at New Delhi to facilitate expeditious settlement of claims.

LIC investment to cross Rs 2.5 lakh crore in FY'15

2014-09-15T07:38:00.000+05:30

Source: ET

Country's largest insurer LIC has lined up over Rs 55,000 crore for investment in the equity market in the current fiscal, a part of which will be used for picking up stakes in PSUs during the disinvestment process.

"We will invest a total of Rs 55,000 crore or even more in the equity market in the current fiscal," LIC Chairman SK Roy told PTI.

Asked how much LIC has been earmarked for the upcoming disinvestment, Roy said that Rs 55,000 crore "covers all" type of investments.

LIC had picked up stocks worth Rs 51,000 crore last fiscal and investments were made across sectors.

The public sector insurer has been a key investor in the disinvestment programme of the government.

The government recently gave go ahead to disinvestment of its part stakes in ONGC, CIL and NHPC, which together may earn Rs 43,000 crore to the exchequer. It is also planning to sell 5 per cent stake in SAIL and 10 per cent each in RINL and HAL in the current fiscal.

Roy also informed LIC investment in the bond market may touch Rs 2.5 lakh crore in the fiscal ending March 2015.

In the current fiscal, the life insurer has

raised its stakes in many public sector banks including United Bank of India, Central Bank of India and Bank of Maharashtra by picking up preferential shares.

Some more banks would make preferential allotment to LIC during course of the year.

During the first quarter ended June, 2014-15 fiscal, LIC earned a total premium of Rs 14,016 crore, lower than Rs 14,295 crore in the year-ago period.

LIC with 75 per cent market share collected Rs 41,441 crore from individual premiums and Rs 48,682 crore in group premiums, aggregating to a total of Rs 90,124 crore.

LIC tops list of Million Dollar Round Table in 2014

2014-09-05T23:53:00.002+05:30

Source : BusinessStandard

Life Insurance Corporation of India (LIC) has topped the company ranking list of the Million Dollar Round Table (MDRT) in 2014. LIC leads the company ranking list with 6730 MDRT members.

Founded in 1927, the Million Dollar Round Table (MDRT), The Premier Association of Financial Professionals, is an international, independent association of more than 42,000 of the world's leading life insurance and financial services professionals from more than 470 companies in 71 countries.

Apart from the basic membership, MDRT has two levels-- Court of Table (COT) and Top of Table (TOT). MDRT's Top of the Table is an exclusive forum for the world's most successful life insurance and financial services professionals.

It has now been decided by LIC to encourage more agents to join this esteemed group and aim to achieve 13000 members in this calendar year.

To become a member of MDRT in 2014, an agent is

required to do annually. Agents are required to have a minimum commission of Rs 8.36 lakh annually in 2013 and Rs 25.08 lakh for COT. Court of the Table members must earn three times the MDRT base production requirement and are eligible to attend a special session at the MDRT annual meeting to celebrate and network. Top of the Table, MDRT's highest level of membership, comprises those members who submit six times the MDRT production requirement.

MDRT members get access to meetings, networking opportunities and international training and development. Through its many professional development programs, services and products, MDRT provides opportunities for members to gain insights into all aspects of expanding their business, leading to even greater success. Its membership is regarded as the standard of excellence in the insurance and financial services industry.

Marketing, not FDI limit, important: Irda chairman

2014-09-04T01:19:00.001+05:30

Source: BusinessStandard

Insurance Regulatory and Development Authority (Irda) chairman TS Vijayan on Wednesday said the percentage of foreign direct investment (FDI) in the insurance sector was not as much relevant in the Indian context as the marketing of the products and the need for professionals who could drive the industry on a higher growth trajectory.

“FDI in insurance is being debated much more prominently than the similar proposals in strategic sectors like defence as if bringing capital is going to solve all the problems faced by the industry,” Vijayan said at the convocation ceremony of the Institute of Insurance and Risk Management (IIRM) here.

The Irda chief’s comments come a day ahead of the meeting of select committee of Parliament on the Insurance Laws (Amendments) Bill, 2008, which seeks to raise the FDI limit in the sector to 49 per cent from the present 26 per cent.

On August 14, the Rajya Sabha adopted a resolution to send the Bill to the select committee after the Congress-led Opposition demanded for the same.

“It is the purpose of capital that is important and not the capital itself. Some even hold the view that we don’t need capital at all. For instance, the Government of India gave Rs 5 crore capital to the Life Insurance Corporation for the purpose of collecting dividend,” he remarked.

However, he said the Indian insurance sector was

attracting lots of investors, which was good for the trained people to seek a career in the sector.

Vijayan said there were some good initiatives such as sale of insurance products on the Common Service Centre (CSC) platform but the numbers were not forthcoming, implying the necessity of a marketing drive, rather than the money, to make it successful.

He also suggested that the industry needed to focus on devising customised products for people whose income levels are higher while keeping generic products for the entry-level customers. Bringing down health costs to make health insurance affordable, focus on disaster management, climate change and the agriculture sector are some of the new focus areas of the regulator, according to him.

National Stock Exchange (NSE) managing director and CEO Chitra Ramakrishna, who was chief guest at the function, said heightened risk in businesses in the past five years was in fact an opportunity for the insurance sector.

Best Indian Brands 2014: 'LIC has been a financial guardian angel'

2014-08-06T05:52:00.001+05:30

Source: ET

Ajay Singh says,

"The reason to get life insurance is to have someone take care of financial needs of your family if something goes wrong. Nobody does it better than LIC"

I didn't even consider any private insurance brands ...it had to be only Life Insurance Corporation. It's like fill it, shut it and forget it. When you are investing in life, you would look for a life partner rather than somebody you are flirting with. It's always long term and that's why LIC.

I bought my first policy when I was 26, just four years into my first job. It's not that there were no options but it was an easy choice to make. The biggest reason to get life insurance is to have someone take care of the financial needs of your family if something goes wrong. And I don't think anybody does it better than LIC. I've also bought policies for my wife and 10 year-old daughter.

This year, I am planning to have a policy for my son who will soon turn two. What works best for LIC is the trust that the brand enjoys. It may be not be aggressive in terms of communications or may not have the best of customer service or maybe viewed by the new generation as a 'desi' brand, but that doesn't matter.

It's not a T20 but a Test match. The very thought that your money is safe with LIC is so comforting that any deficiency in service can be ignored. And what's wrong with being desi?

(The writer Ajay Singh works in an HR firm.)

"LIC" - the largest profit earner among financial institutions and banks in India

2014-08-02T11:30:00.001+05:30

LIC does not have a concept of profit in its business and its profits are known as Surplus Fund Transfer which is distributed among unit holders (95 per cent) and the government (5 per cent)

Source: Indian Express

LIC has managed to post

a profit of Rs 26,384 crore!

Life Insurance Corporation, India’s largest financial institution, has increased its presence in the equity market with a 60 per cent rise in its investments in equities in FY14.

The corporation bought stocks worth Rs 53,373 crore during 2013-14 as against Rs 33,205 crore in fiscal 2012-13, making it the largest domestic investor in Indian markets, said an official. It has booked a profit Rs 21,257 crore from the capital market in the year ended March 2014 in spite of a challenging environment.

This is the second year in succession that LIC made bumper profits from the market as the corporation had realised a profit of Rs 21,000 crore in the previous fiscal.

However, LIC was unable to take on the combined might of foreign institutional investors in terms of inflows. During FY14, FIIs pumped in a net amount of

Rs 79,709 crore in the equity market, according to data available with Securities and Exchange Board of India. Further, anticipating a slew of reforms, FIIs have made net investments of Rs 1,53,000 crore in calendar 2014. Out of total investment by LIC, Rs 2,24,967.02 crore was invested in Central/ state government securities, bonds and debentures and other investments, said an official. The corporation’s total investment (including govt securities and equity) increased by 41 per cent to Rs 2,78,340 crore (provisional) as against Rs 1,96,828.35 crore in FY13.

“The corporation has realised a profit of Rs 21,257.10 crore (provisional) by sale of equities and Rs 364.75 crore by sale of securities (including G-secs and bonds). It has earned a yield of 9.42 per cent (provisional) during FY14 on the total investments,’’ said an official.

The Sensex had showed only a 1,000 point rise from April 2013 till January 2014 with the market gathering momentum from March 2014 onwards. The Sensex has jumped nearly 6,000 points since February this year, betting on the reforms agenda of the ruling NDA government.

Despite outflows and redemption from its ULIP (unit linked products ), the corporation has managed to post a surplus fund transfer of Rs 26,384 crore for FY14 from life and ULIP business as against Rs 22,539.99 crore in the previous year, showing a 17.05 per cent increase.

LIC does not have a concept of profit in its business and its profits are known as Surplus Fund Transfer which is distributed among unit holders (95 per cent) and the government (5 per cent). The surplus fund transfer of Rs 26,384 crore makes LIC the largest profit earner among financial institutions and banks in India. Among all companies and entities in the country, it comes close to ONGC which reported a profit of Rs 26,507 crore in FY14. There was a drop of Rs 13,663 crore from ULIP funds to Rs 11,7878.07 crore although ULIP faced a net redemption of Rs 33,000 crore during the reporting financial year.

Know Your LIC...! (Profile 2014)

2014-07-30T12:45:00.000+05:30

LIC Profile 2014

LIC to invest Rs2.25 trillion in markets this fiscal

2014-07-18T22:40:00.001+05:30

Full Article: livemint

State-owned Life Insurance Corp. of India (LIC), the country’s biggest insurer, expects to invest at least `2.25 trillion in the financial markets in the year to next March, seeking to tap a potential upturn in the economy after the presentation of the national budget on 10 July.

The expected investment by LIC marks an increase of `15,000 crore, or 6.6%, in the money the insurer spent buying securities in the last fiscal year. The figure may be revised higher, said two senior officials at LIC, the single largest investor in India’s financial markets.

Most of the `2.25 trillion of estimated investment by LIC could be allocated to government securities because equity markets have been trading high for several months and the insurer typically is used to selling shares on market highs and buying stocks on lows.

In fiscal 2014, LIC earned `90,123.76 crore in first-year premiums. That makes up three-quarters of the total first-year premium collected by the life insurance industry, in which LIC competes against 23 private-sector firms.

Of about 6,000 listed firms, LIC held stakes in at least 361 at the end of March. Only 957 firms have disclosed their June-end shareholding pattern so far; LIC has a holding in 125 of them.
To read Full Article: livemint

LIC's Rs 1,280 crore rescue act for 3 banks

2014-07-18T22:04:00.000+05:30

Source: DNA

A clutch of public sector banks are knocking at the doors of state-owned insurance giant Life Insurance Corporation (LIC) to raise funds.

At least three banks -- Central Bank of India, United Bank of India and Bank of Maharashtra -- will make a preferential allotment to LIC to raise funds urgently needed for expansion. Banks need more money to fund their growth and meet regulatory requirements.

Under preferential allotment, shares are allotted to a preferred institution without going to the open market.

Finance minister Arun Jaitley had said during

budget presentation that banks need to go to the equity market to raise money.

LIC's infusion of money into the three banks will mean that the government will continue to indirectly hold a major shareholding.

Some other banks, in which LIC has already hit its regulatory limit of 15%, are planning to raise money through the Qualified Institutional Placement (QIP) route. Under this arrangement, shares of a company are allotted to select institutional investors.

Three of those banks are Union Bank of India, Canara Bank and Corporation Bank. LIC has the highest stake in Corporation Bank, where it holds 22%. Though it is above the upper limit, it's considered a strategic investment.

Central Bank of India is holding an extraordinary general meeting on Tuesday (today) to get shareholder approval to raise Rs 580 crore. United Bank of India is expected to raise Rs 300 crore and Bank of Maharashtra Rs 400 crore. All this will be done through a preferential allotment to LIC.

So, wherever banks have regulatory headroom, they are following preferential allotment. If they are nearing limits, they prefer QIP.

Wherever LIC has not reached the 15% limit, banks prefer to utilise the limit first before exercising another option.

The government holding in these banks are much higher. It holds 88.63% in Central Bank of India, 85.21% in Bank of Maharashtra and 82.23% in United Bank of India. In most other banks, the government holds between 58% and 64%.

Deepak Narang, executive director, United Bank of India, told dna, "We will be shortly undertaking a preferential allotment of Rs 300 crore to LIC. The government holding will come down and LIC holding may be a little under 10%." LIC holds 4.6% and the government holds 82.23% in the bank.

Bank of Maharashtra, in which the government holds 85.21% and LIC holds 5.3%, will raise about Rs 400 crore. It will take the LIC stake in the bank to 10%. The bank is also converting about Rs 588 crore worth of perpetual bonds (long-term debt) held by the government into equity for their capital requirements.

"Going to LIC is the fastest and the most cost-effective method of raising funds," said a senior official.

A Central Bank of India official told dna, "We have got government approval for preferential allotment. On July 15, we will take shareholders' approval for preferential allotment."

LIC has already breached regulatory limits in State Bank of India (SBI), after subscribing to one-fourth of the bank's QIP.

In Bank of Baroda, it holds 10.48% and 12.79% in Punjab National Bank. Even these big banks may take the preferential allotment route as a speedier option to raise funds, said another official.

When SBI raised Rs 8,032 crore though a QIP in January 2014, LIC had stepped in and bought around 40% of the offering, and raised its stake to 14.99% from the earlier 12.15% it held in the state-run lender.

Who wants to privatise LIC?

2014-06-21T07:42:00.002+05:30

Finance Minister sought opinions from several sectors. While asking about Banks, Vice Chairman of Kotak Mahindra Bank adviced Government to sell LIC into shares to mobilise funds.
How will a man react, if he is sane and capable of thinking logically?
"I asked about banks, not about insurance industry or Government's needs of funds" might be the right answer.
"You take care of your institution - Kotak Mahindra Bank, we can very well take care of the Government" would have been the reply, if the FM had some self respect.
"First you administer properly your insurance arm - Kotak Mahindra Old Mutual Life Insurance Co. When you become better than LIC, come and advice us", would have been the apt reply, if he had some conscious.
But, he had sought opinion from LIC whether it can be listed.
What does it mean?
Allahabad High Court ordered IRDA to scrutinise all policies of SBI Life and if required wind up the company.
If LIC chairman or somebody else asks the Government to wind up SBI Life, will the Government write to SBI Life?
But, the Government is seriously seeking opinion from LIC, whether it can be listed.
That means...
It is the intention of the Government to privatise LIC. They knew how will LICians react. So, they are creating an illusion, as if, somebody is suggesting something and they are considering.
LIC Chairman aptly replied.
We also need to reply in the form of movements involving general public, against the Government, when it tries to proceed.
Be prepared...

= = = = = = = = = = = = = = = = = = = = = = = = = = = = =
LIC Chairman replies to Finance Minister
Source: Indian Express
State-run Life Insurance Corporation (LIC) is against diluting its present character and listing the entity on the stock exchanges and has
conveyed it to finance minister Arun Jaitley.

A senior official, who is on the board of LIC said, “I don’t see any reason for listing of its shares. Why should LIC be listed? It makes sense for the government to retain its current character.”

The issue of listing of LIC had come up during a meeting of financial sector chiefs with Jaitley last week. Kotak Mahindra group chief Uday Kotak had suggested that the government should look at listing LIC as it can generate a lot of revenue. Kotak had argued that the kind of money the government can raise by listing LIC is significant and it can fund needs of public sector banks as well as fiscal deficit.

Jaitley then sought LIC chairman SK Roy’s opinion on the issue. “While Kotak has many reasons for listing LIC, I don’t have any reason to list the corporation,” Roy reportedly told the finance minister.
Kotak persisted with the listing issue and said the Centre can really reap a huge windfall by listing the corporation which is valued more than Rs 10 lakh crore. However, Roy said LIC’s asset size exceeds Rs 18 lakh crore. “If government wants to make Rs 18 lakh crore into a Rs 10 lakh crore organisation, it can do that,” Roy said.

IRDA proposes ban on surrender recycling

2014-06-20T10:03:00.000+05:30

Sources:
Business Standard

Times of India

IRDA Draft Circular

Replacement of a life insurance policy means an intermediary, agent or an insurer selling a new policy within six months of surrender of the earlier policy, entailing modification in the terms resulting in reduction of the benefit amount of the existing policy.

Irda asked insurers not to withhold any part of the surrender value payable to the policyholder towards the cost of a new policy.

In cases where it is unavoidable, the regulator has asked the insurer to document the entire process and submit to the policyholder a document highlighting the loss he will suffer and the reason for recommending the new policy.

A policyholder who is not properly guided by the existing life insurance company has the right to exercise the restoration of the existing policy within seven days from the receipt of the new one.

The policy that was replaced and restituted is entitled to all such benefits that is otherwise eligible had the policy been not replaced for taking a new policy. A policyholder who has exercised the restitution of the replaced policy is entitled to total refund of premiums, without any recoveries, on returning the new policy at his option.

How to shrink Rs50,000 to Rs248 - Learn from SBI Life!

2014-06-18T09:21:00.001+05:30

Source: liveMint

Allahabad High Court asked Irda to scrutinise SBI Life’s policies, and if found guilty of a breach, to wind up its business.

It also held Irda remiss in its duties of upholding consumer interest. “Irda completely failed in exercise of its statutory duty in allowing the unilateral amendments in the policy on a mere advice of a switch over option to all the policy holders. …an advice of Irda could not be the basis of change in the policy, which is a contract unless written consent of policyholder was obtained. Irda failed to carry out its statutory duties in allowing such unilateral change by mere information without insisting upon written consent of the policy holder,” the judgement noted (edited excerpt).

As a scientist at the National Botanical Research Institute in Lucknow, Virendra Pal Kapoor, now 72, spent years developing eco-friendly, toxin-free, herbal products. Ironically, as an investor, he contaminated his own portfolio by making the cardinal mistake of buying insurance when not needed. To be fair to the scientist, he was taken in by the advice given by his life insurance agent, whom he met in the premises of his bank.

Kapoor, now retired, is a happy customer of State Bank of India and has built a relationship of trust over decades with the bank. “I met this agent at my bank, and since SBI is government owned, I thought that the companies that he represented (SBI Mutual Fund and SBI Life Insurance Co. Ltd) would also be backed by the government,”said Kapoor.

In 2007, at the age of 64-plus, Kapoor bought a unit-linked insurance plan (Ulip) on the advice of his agent. According to Kapoor, his agent, Vinod Kumar Harjai, who is an independent financial adviser (IFA), suggested that he buy SBI Life Unit Plus-II single-premium Ulip for a term of five years. The rationale offered was that the Ulip would not only help Kapoor invest in equities just like mutual funds, but also provide insurance cover at a nominal cost, almost free. So, Kapoor, who didn’t need insurance at all, bought the Ulip and opted for the growth fund with an equity exposure of 40-100%, instead of a mutual fund since the Ulip came with free insurance. “I invest to save on taxes. Before I bought the Ulip, I used to invest in mutual funds, which were also recommended by the same agent. But when he told me about this Ulip that would also give me insurance for free, I was interested. I didn’t need insurance, but since it was free I didn’t see any harm in taking it,” said Kapoor.

Harjai said he did not give such advice: “I told him he didn’t need insurance, but he wanted this plan. I only sell term plans but since he had made up his mind, I told him to buy it from me only”

Cost of insurance

Insurance for a senior citizen is very expensive, but in Kapoor’s case, what added to the burden was that he inadvertently opted for a higher sum assured. “I didn’t know I could choose the sum assured. I was told that this was the standard sum assured that comes with the policy,” said Kapoor. So, instead of going for the minimum sum assured of 125% of the premium, Kapoor opted for a sum assured of 625%, or around `3.13 lakh. The result: in five years, his investment of `50,000 was reduced to `248.

Ulips typically come with four cost heads. The first is a premium allocation charge, which is deducted straight from the premium. The other three costs—policy administration charge, fund management charge and mortality charge or insurance charge—get deducted from the invested fund. Mortality charge varies across individuals depending upon age and amount of insurance taken. The older the person, the riskier she becomes and so insurance becomes more expensive. These costs bite more in case of a single-premium plan because no fresh investments are made to offset the burden of costs.

What’s more, since the rules at the time Kapoor bought the policy didn’t mandate a customized benefit illustration to show how the charges would eat into the fund value, he was not made aware of them. So, when he got just `248 in his account, he was shocked.

“With mutual funds, I used to get regular statements. But after I bought this policy, I didn’t get any statement. I had absolutely no idea how my money was doing,” said Kapoor. Even communications with the agent didn’t help. “I would ask the agent and every time he would tell me the NAV. But I had no clue about my money,” said Kapoor. Net asset value (NAV) can be misleading as it reflects the net value of the underlying asset, while the actual fund value would depend also on the units held by the investor. For instance, if the NAV of a fund is, say, `10 per unit and the investor has 10 units, the fund value will be `100. In an insurance policy, the insurer deducts charges by cancelling the units. So, while the NAV may go up, the fund value may actually come down due to units being used to pay for the charges. In Kapoor’s case, the particular fund’s NAV rose from `17.15 to `19.24 in five years giving an annual return of 2%. For Kapoor, the insurance cost was big—but it didn’t reflect in the NAV, and he didn’t receive any fund value statement either.

In fact, even close to the policy’s maturity, Kapoor didn’t receive any communication from the insurer. So, he approached SBI Life at its Gomti Nagar branch of Lucknow. “I went to their office to remind them that my policy was due to mature. They didn’t tell me my fund value even then. In fact, they kept saying the system had some problem and that they would not be able to tell me the fund value,” said Kapoor. “Instead, I was asked to fill up a maturity claim form, and they specifically asked me to keep the amount column blank. After about a week, `248 was credited to my bank account,” he added.

From there on it was a battle with the insurer as Kapoor decided to seek an explanation for how his money was reduced to ashes. The insurer wasn’t very forthcoming. “Every time I went there, I was told that the authority concerned was busy,” he said. After several harassed visits, Kapoor approached Dhruv Kumar, an advocate and an insurance activist.

Kumar worked as a branch manager with United India Insurance Co. Ltd and also got a degree in law. He took voluntary retirement to practice law in 2005. “The biggest challenge for any insurer is to pay the claim. Having being in the business, I saw first-hand how policyholders got harassed with half-baked information. So, I decided to start my own practice as a lawyer,” said Kumar. As a first step with Kapoor, he lodged a complaint with insurance watchdog, Insurance Regulatory and Development Authority (Irda).

“Irda gave a routine reply that the complaint had been forwarded to SBI Life and that the company would get back to us,” said Kapoor. The insurer did get back to them with an explanation. Sadly, it was even more cryptic than the policy.

“We had asked them in simple words to explain the charges and how `50,000 became `248. They sent us a letter that was very difficult to understand,” said Kumar. Unable to make any headway, Kumar took the matter to court; on behalf of Kapoor, he filed a writ petition in Allahabad High Court in September 2013.

The problem was not limited to wrong advice; Kumar found loopholes in the policy itself, which violated regulatory guidelines. For instance, the policy offered two minimum sum assured: 125% and 625% of the premium. Kapoor had no clue about the choice, and the agent opted for the higher sum assured on his behalf.

The second clause in the policy document referred to a safety net. The original policy stated that if anytime during the term of the policy the fund value fell below `10,000, the policy would get terminated and the money would be returned to the policyholder at no extra cost. However, the insurer later amended the clause to just offer a switch to another fund. Irda, which allowed the amendment, asked the insurer to inform policyholders. Kapoor said he didn’t receive the communication, but the insurer stated in the judgement that the information was sent.

The verdict

Given the manner in which the policy was sold and subsequently serviced, the Allahabad High Court found SBI Life guilty of wrongdoing. In its judgement dated 29 May, the court observed that the insurer could not satisfactorily reply as to whether the terms and conditions of the policy were properly explained by the insurance agent. “In case the calculations were explained, he would certainly not have opted for a policy which would ultimately lead to completely wiped (sic) out his investment. No prudent person, if he was explained the consequence of deduction of mortality charges at 625% risk, would have subscribed to the policy, which in any case, even if the NAV had risen, would not give any return at all,” the judgement noted.

The court further ruled that the insurer couldn’t unilaterally make amendments to the policy since it was a contract between the policyholder and the insurer. “Clause provided for termination of the policy, if the investment fell below `10,000. It could not have been changed unilaterally even on the advice of Irda. The written consent of the policyholder was required for deletion of the clause,” said the judgement.

Kumar added: “SBI Life, being a commercial organization, will aim at profits. But Irda, being a statutory authority, is duty bound to look after the customers and to ensure that they aren’t cheated. However, the regulator supported SBI Life before the high court, despite knowing that it had violated its guidelines. Therefore, the regulator is a bigger culprit.”

Calling the policy “unconscionable”, the high court has declared the contract illegal and void and has asked the insurer to return `50,000 to Kapoor along with `10,000 towards expenses in filing the writ petition. It has also asked Irda to scrutinise SBI Life’s policies, and if found guilty of a breach, to wind up its business. The court has asked Irda to examine the policies for any hidden terms and charges with an objective to deceive the policyholder, and if found guilty, to direct SBI Life to discontinue such policies and return the entire amount invested to the investors. “In such case, it will be open to the central government to initiate prosecution against the management of SBI Life in accordance with the law,” the judgement noted.

Mint Money take

This is a landmark judgement in the interest of policyholders which hasn’t been shy of even pulling up the insurance regulator for being remiss in its duties. “Strict action should be taken by Irda against the intermediary in case of mis-selling or where the policy is sold without considering the risk profile of the policyholder. Also, it’s important that products are simple to understand by a common person,” said Pankaj Mathpal, managing director, Optima Money Managers Pvt. Ltd, a financial planning firm. It’s important that complex products such as insurance be sold not only under watertight regulations but also through responsible sellers. Accountability is important so that such products don’t turn toxic by going into the wrong hands.

We contacted both Irda and SBI Life for the story. While Irda didn’t respond, SBI Life officials said they were not in a position to comment as the company has filed a Special Leave Petition in the Supreme Court and the matter is now subjudice.

LIC likely to invest Rs 3.5-lakh cr in FY15

2014-06-14T07:19:00.005+05:30

Source: BusinessStandard

Life Insurance Corporation of India is reportedly looking to invest up to Rs 3.5 lakh crore in FY15 in debt and equities. Of this, it is expected that Rs 40,000-50,000 crore will be put into the equities market.
The government-owned giant had booked profits of Rs 21,000 crore in the stock market during 2013-14.

Sources said a plan of investing Rs 3.2-3.5 lakh crore in 2014-15 will be discussed by the board of directors in a few days. In FY14, it had invested Rs 2.25 lakh crore, including about Rs 40,000 crore in the equity market.
Apart from the regular investment

activity, LIC participated in the government divestment of Bharat Heavy Electricals Ltd, the Specified Undertaking of UTI stake sale in Axis Bank and the Central Public Sector Enterprises' exchange-traded fund.

In 2013-14, LIC collected Rs 41,441 crore of individual premiums and Rs 48,682 crore of group premiums, totalling to Rs 90,124 crore.

With the new product guidelines for traditional products taking effect from January, several of LIC's popular products had to be withdrawn, to make way for newer ones. Officials said there a resulting slide in premium collection for January to March, due to less products for customers, down to about 20 at present, from 54 earlier.

LIC sources say there is not enough incentive from the market to launch unit-linked insurance products (Ulips). They might look into doing so if the Sensex hits 28,000.

LIC's total investments touch Rs 14.8-lakh crore

2014-01-09T19:41:00.000+05:30

Source: Business Standard

India's largest insurer to invest Rs 2.25-lakh crore in FY14

The total investments of Life Insurance Corporation of India (LIC) at the end of FY13 stood at Rs 14.86 lakh crore. According to LIC's annual report for 2012-13, the country's largest insurer had Rs 14.84 lakh crore worth of investments in India and Rs 2,408.61 crore worth of investments abroad.

In FY14, LIC plans to invest Rs 2.25 lakh crore in government securities, bonds, infrastructure, debenture and equity, of which 15-20 per cent would be in equity.

The insurer had booked Rs 21,000 crore profit from sale of equities and churning of the portfolio. According to an earlier presentation by LIC to a Parliament standing committee on finance, total investments at the end of March 31, 2012 was Rs 13.49 lakh crore.

Usha Sangwan, managing director of LIC, had recently said the insurer has planned to invest Rs 40,000 crore in equity this financial year. "We have already invested Rs 33,000 crore. We have also booked profits of Rs 14,000 crore, since there has been a continuous churn in the portfolio," she had said.

With respect to the investment in infrastructure and the social sector, LIC invested Rs 10,995.33 crore in power, Rs 4,121.74 crore in housing, Rs 35.72 crore in water supply and sewerage, and Rs 5,012.13 crore in other infrastructure in FY13.

The insurer plans to have 12 per cent growth in new business premium this financial year. LIC Chairman S K Roy had earlier said that although it had budgeted for 12 per cent in first premium growth, the insurer is hopeful of achieving more growth.

LIC most consumer friendly: IRDA

2014-01-09T19:30:00.001+05:30

Source: The Times of India
Life Insurance Corporation of India has outdone its peers in the private sector in most parameters used for measuring consumer friendliness. The corporation had fewer lapses, higher claim settlement and no penalties from the regulator.

The claim settlement ratio of LIC was better than that of private life insurers. Its settlement ratio increased to 97.73% in FY13 from 97.42% in the previous year. And the percentage of rejections was only 1.12% compared to 1.30% earlier.

Private insurers reported a dip in settlement ratio to 88.65% from 89.34% in FY12. "Private insurers had repudiated more number of claims when compared to LIC. The percentage of repudiations (by private insurers) was 7.85%, almost unchanged from pervious years 7.82% in FY12," the Insurance Regulatory and Development Authority said in its annual report for FY13 released on Wednesday.

In terms of persistency of business too, LIC scores better with a lapse ratio of only 5.6% as against private life companies which are all in double digits ranging from 17% to 42%. The only exception is HDFC Life Insurance, which has a lapse ratio of 5.6%. IRDA measures lapse ratio as the number of policies lapsed during the year divided by the average of the policies in force at the beginning and end of the year.

The 13-month persistency (policies which are renewed after a year) is the highest for PNB Metlife at 71.22% on a much smaller business. LIC, Max Life Insurance and IDBI Federal Life Insurance have a 13-month persistency of 70%. For other private companies, the ratio ranges from a low of 36% to 69%.

Private insurers scored slightly better was in terms of commission ratio. Private insurers paid out 5.7% of total premium as commission compared to 7.08% for LIC. However, LIC reach was much bigger and it sold more policies to the lower middle class with an average premium per policy of Rs 11,143. Compared to this, the private life insurers generated an average premium of Rs 24,457 per policy - more than double that of LIC.

While agents of private companies managed to sell only an average of three policies in FY13, the average agent of LIC sold 29 policies. In FY13, the insurance regulatory authority imposed penalties on 12 companies, including two public sector non-life insurers, for various reasons. The penalties ranged from Rs 5 lakh to Rs 1.4 crore. However, LIC did not face any penal action.

In the first quarter of FY14 life, insurers have written business of Rs 19,216 crore as against Rs 19,451 crore, recording a 1.2% shrinkage in business. While private insurers registered a 6.87% decline, the state-owned life insurer recorded a growth of 2.92%. LIC, with Rs 14,295 crore of premium from new policies, saw its new business market share rise from 74.29% to 74.39%.

Private insurance companies deny...

2014-01-09T19:19:00.001+05:30