LIC to get bankers on board for managing lending operations

Insurance behemoth LIC will soon obtain services of retired bankers to strengthen its lending operations and ensure that non-performing assets (NPAs) are kept at the minimum. LIC has set up a cell for its lending, NPA resolution and one time settlement (OTS), people familiar with the matter said, adding that the company will soon get experts, particularly bankers, to this portfolio.


LIC has been into the business of insurance but they don’t have expertise on loan risk assessment and resolution, the people said. A standard operating procedure has also been worked out for repayment through OTS scheme, they added. At the end of March 2016, LIC had a debt portfolio of Rs3.79 trillion, bigger than the loan portfolio of most banks. Its gross non performing assets stood at 3.76% at the end of March 2016, up from 3.30% in the previous year.

ALSO READ: PIL filed against government, LIC for holding stake in ITC

Driven by a sudden surge in single premium policy sales and falling interest rates, the total new business premium of LIC rose 25.8% to Rs1.22 trillion in FY 2016-17 from around Rs97,000 crore in the previous year. However, the state-owned insurer witnessed degrowth in terms of policies during the year under review.

Total new business premium, including pension and group business, rose to Rs1.22 trillion in 2016-17 from around Rs97,000 crore a year ago, a senior LIC official with knowledge of the matter said. New business on the individual basis zoomed 47% to Rs37,800 crore from Rs25,700 crore a year ago. New business on the individual basis jumped 122% from the projected target of Rs31,000 crore in 2016-17. Interestingly, the target was the same for the previous fiscal too. New business on the individual basis at LIC grew by 47% to Rs37,800 crore for 2016-17 from Rs25,700 crore in the previous fiscal.(News Courtesy :livemint)

LIC doubles profit from sale of stocks in 2016-17

State-run Life Insurance Corp. of India or LIC, the country’s largest institutional investor, nearly doubled its profit from sale of equity investments in 2016-17 on the back of rising stock markets. According to two people familiar with LIC’s investment strategies, the life insurer booked profits to the tune of Rs21,000 crore in fiscal 2017 compared to around Rs11,000 crore the previous year.


In 2016-17, India’s equity benchmark, the Sensex, gained 16.9%. In the March quarter, the gauge rose 11.24%.

One of the two people said on condition of anonymity that since the stock market was gaining in most trading sessions during 2016-17, LIC got more opportunities to book profits rather than taking fresh positions in listed companies, which in turn led to higher profit booking.

“LIC is a contrarian investor,” said Santosh Singh, head of research at Haitong Securities. “It follows a counter-cyclical strategy. When the market is expensive, LIC books profits in equities. Following this strategy LIC may be able to generate some alpha over markets and outperform in the long run.”

In 2016-17, Indian equities logged more daily gains than losses. The Sensex gained in 132 trading sessions and was down in 115 sessions.

That LIC has sold a lot is supported by the fact that all domestic institutional investors together bought only a net Rs27,900 crore of equities in fiscal 2016-17.(News Courtesy :livemint)

LIC’s new premia growth jumps 26% to Rs 1.2 trillion in FY17

Driven by sudden surge in single premium policy sales and falling interest rates, total new business premium of LIC rose 25.8 per cent to Rs 1.22 trillion in FY17 from around Rs 97,000 crore in the previous year. However, the state-run insurance behemoth witnessed degrowth in terms of policies during the year under review.


Total new business premium, including pension and group business, rose to Rs 1.22 trillion in FY17, a growth of 25.8 per cent from around Rs 97,000 crore a year ago, a senior LIC official told PTI here. New business on the individual basis zoomed 47 per cent to Rs 37,800 crore from Rs 25,700 crore a year ago. New business on the individual basis jumped 122 per cent from the projected target of Rs 31,000 crore in FY17. Interestingly, target was the same for the previous fiscal too.

New business on the individual basis at LIC grew by 47 per cent to Rs 37,800 crore for the fiscal year 2016-17 from Rs 25,700 crore in the previous fiscal. LIC had internally set a target of Rs 31,000 crore under the segment for the entire fiscal and thus the company’s growth in this segment was up by 122 per cent for the fiscal year just gone by, the official said.

The company’s single-premium policy under pension segment Jeevan Akshay comprises around 60 per cent of its total premium income which provides assured annual annuity in the range of 7.1 and 7.2 per cent.

“We did very well in the pension segment and falling interest rates also helped us achieve the growth,” he said.

However, the company registered degrowth in terms of policies in the year under observation. LIC sold 2.01 crore policies during the fiscal 2017 from 2.05 crore during the previous financial year.

The company appointed 1.75 lakh new agents during the year (until February) and net addition stood at over 50,000. At present, the company has around 11.2 lakh agents.

The company lost around 30,000 agents in the previous fiscal.(News Courtesy :moneycontrol)

LIC taken to court for funding cigarette firm

The Bombay High Court has allowed a public interest litigation (PIL) filed by doctors from Tata Memorial Hospital against the government and state-run insurers, including Life Insurance Corporation of India (LIC), for holding shares in cigarette makers, including ITC Ltd.


The petition, which will come up for hearing on Thursday, has made the Insurance Regulatory and Development Authority of India and five state-run life insurance companies as party in the petition for investing in tobacco companies.

On Monday, the advocate on behalf of the petitioners drew the attention of the division bench, Chief Justice Dr. Manjula Chellur and Justice G.S. Kulkarni, to the fact that the LIC, which offered insurance policies to the masses, was using the sum collected from insurers to fund cigarette manufacturing companies. This is against the World Health Organisation (WHO) convention on tobacco control.

The petition further said while the government is committed to tackling the problem of tobacco and its ill, the insurance companies, in complete disregard to government policy, continue to invest in ITC.

The petitioners’ advocate also stressed on the fact that one of the insurance companies had a 83 per cent stake in a tobacco company, which was unacceptable.

The main petitioners are Dr. Pankaj Chaturvedi, surgeon, Tata Memorial Hospital; Ashish Deshmukh, member of the Maharashtra Legislative Assembly; Sumitra Pednekar, widow of former Maharashtra minister Satish Pednekar; Abhay Bang, director of Education, Action and Research in Community Health; and P.C. Gupta, director of the Healis-Sekhsaria Institute of Public Health.(News Courtesy :asianage)

Bank of India to raise Rs 204 cr by issuing shares to LIC

The shareholders at the extra ordinary general meeting held today approved to allotment of 1.75 crore shares on preference basis to LIC at Rs 116.81 per share, the bank said in an exchange filing.


State owned Bank of India will raise Rs 204.42 crore by issuing shares to LIC on preferential basis.

The shareholders at the extra ordinary general meeting held today approved to allotment of 1.75 crore shares on preference basis to LIC at Rs 116.81 per share, the bank said in an exchange filing.(News Courtesy :moneycontrol)

NCDRC asks LIC to pay Rs 7 lakh to woman who lost ailing son

The apex consumer commission has asked the Life Insurance Corporation (LIC) of India to pay Rs 7 lakh to the kin of a youth whose medical claim was rejected on the ground of non-disclosure of material facts.


The National Consumer Disputes Redressal Commission (NCDRC) upheld the district forum’s order directing the LIC to pay Rs 7 lakh under the policy, Rs 2,000 towards deficiency in service and Rs 1,500 as litigation cost to Gujarat-resident Jamnaben Shambhubhai Mange, who lost her ailing son.

“The allegation of suppression of material information against the insured is not established. It is also stated that the insured was subjected to examination by the panel of doctor of insurance company and nothing adverse was noticed against him,” the NCDRC bench headed by presiding member B C Gupta said.

According to the complaint filed by Mange, her son Hitesh, who had an insurance cover of Rs 7 lakh, was admitted with fever to a private hospital on August 29, 2006.

He was diagonised with kidney-related ailments and was subjected to dialysis and also given vaccine for jaundice, it said, adding that he died on October 8, 2006.

The LIC claimed that Hitesh had earlier undergone treatment for pain in abdomen and renal disease, but those facts were not disclosed at the time of availing the insurance cover.

The NCDRC, however, observed that even if Hitesh was suffering from stomach pain or headache, there was no need or occasion to mention the same in the proposal form, unless some specific disease is indicated and treatment for it was taken.

“At the time of filling up the proposal form in March 2006, the youth was not suffering from the disease of chronic renal failure (CRF) and hence, he cannot be charged with the allegation of non-disclosure of material information,” it said.

The NCDRC was hearing Mange’s appeal against the state commission’s order which had denied the relief to her, saying true facts about the health condition of the youth were not stated in the proposal form.(News Courtesy :dnaindia)

LIC claims dues from Essar before giving NOC to Rosneft-Essar deal

LIC, India’s top financial institution, before it gives the green signal to the $13 billion Essar-Rosneft deal wants its fair share. The Essar-Rosneft deal would be the largest inflow of foreign direct investment into the country.


LIC’s loan outstanding to Essar Oil is $125 million while its exposure to Essar Power is around Rs 1,500 crore. As per the company, it had received a proposal from group companies for flexible restructuring and it was decided before considering the proposal and the company have to clear all the dues.

The deal was announced last October when Prime Minister Narendra Modi met President Vladimir Putin during a meeting of BRICS leaders in Goa.

Replying to a leading new house, LIC has said that it will issue a ‘no-objection certificate’ (NOC) only after Essar clears all dues.

The stand taken by LIC has put a question mark on whether the all-cash transaction will receive all the necessary approvals before March 31.(News Courtesy :indiainfoline)

LIC to step up income from non-single premium in FY18

Life Insurance Corporation of India (LIC), the country’s largest life insurer, will step up sale of non-single premium policies to about 25 per cent in 2017-18 to bring balance in its business growth profile. LIC Chairman V K Sharma said the state-owned insurer has already met its FY17 target for new business premiums and was concentrating on efforts to grow income from non-single premiums for this financial year.


The thrust would be maintained in 2017-18 and he expects growth for the non-single premiums stream (individual as well as the group segments) of over 25 per cent, Sharma said on the sidelines of an insurance summit organised by the Federation of Indian Chambers of Commerce and Industry (Ficci).

Income from the non-single premium segment saw 8.16 per cent growth at Rs 13,646 crore in April-December 2016, against Rs 12,617 crore in April-December 2015. The pace of expansion in group non-single premiums was better at 53.34 per cent in April-December 2016. It garnered premium of Rs 3,220 crore in nine months of FY17, from Rs 2,100 crore in April-December 2015, according to Life Insurance Council data.

LIC to step up income from non-single premium in FY18
Backed by robust growth in the single premium segment, LIC posted a 12.43 per cent growth in total premium income at Rs 1.45 lakh crore in the nine months ended December 2016 from Rs 1.29 lakh crore in the same period last year.

Individual single premium income grew 176.38 per cent to Rs 18,500 crore in April-December 2016 from Rs 6,693 crore a year ago. The group single premium segment saw a 26.05 per cent growth at Rs 48,156 crore as against Rs 38,203 crore over the same period.

LIC’s gross total income grew 15.76 per cent to Rs 3.37 lakh crore against Rs 2.92 lakh crore a year ago.(News Courtesy :business-standard)

UCO Bank requests LIC again to invest Rs 1K cr in tier-2 bonds, but insurer seen unwilling

State-run UCO Bank has knocked on the doors of LIC for the second time in as many months requesting the latter to invest Rs 1,000 crore in tier-2 bonds of the bank. Moneycontrol has a copy of the letter written by UCO Bank to LIC. The insurer, however, may not be keen to comply as it feels size of the investment is too huge. It has reservations about the paper’s rating, too.


A source said that the insurer would be looking to invest in better-rated papers. However, they have not yet rejected the offer outright and may reconsider it if a better proposal comes along. An official mail sent to LIC remained unanswered. IRDAI has permitted insurers to invest in instruments including tier II bonds, but has cautioned that they should not invest in lower-rated papers.

Kolkata-based UCO Bank is raising capital to meet Basel III norms on capital. Banks are required to maintain a capital adequacy ratio of 10.25 percent at the end of March 31, 2017 as against 9.62 percent required on March 31, 2016.

Indian banks are expected to fully comply with Basel III standards by March 2019 to improve and strengthen their capital planning processes. The norms are being implemented to allay concerns on potential stresses in asset quality and their impact on profitability.

UCO Bank’s letter to LIC, submitted to the insurer on March 15, says: “In accordance with Basel III guidelines, our (UCO Bank’s) existing tier-2 bonds which are not Basel III compliant are being discounted at 10 percent every year. Further, some of these bonds are also redeemed on maturity. In view of the same we propose to raise tier-2 bonds of Rs 1,000 crore. We request you to kindly consider for infusing tier-2 capital in the form of debt capital to the tune of Rs 1000 crore.”

Currently, the bank’s rating for Basel III tier-2 instrument is AA- with stable outlook from India Rating and AA- from Brickwork rating agency.

In January, too, UCO Bank had written LIC seeking investments in tier-2 bonds of the bank. However, LIC did not respond to it.

UCO Bank has been taking several measures to meet the increased capital requirement. The bank has been requesting the government to infuse more capital over and above government’s infusion of Rs 750 crore in the month of September 2016.

Additionally, the bank had raised tier-1 capital from the market raising Rs 750 crore in November, 2016.

In November, 2016, LIC had also infused equity capital of Rs 270 crore in the bank.(News Courtesy :moneycontrol)