Page 24 - Life Insurance Today OCTOBER 2017

Raising the

bar

T he decision by the Life website as a part of the quarterly LIC's related party deals with its owner

Insurance Corporation of India
public disclosures mandated for all life
- the Government - are essential to
to release its quarterly insurers. While these are designed to reassure investors that its heavy
financials in a press conference for the help policyholders assess the health of participation in the capital-raising
first time in six decades is a welcome an insurer, LIC needs to set a far plans of PSUs, public sector banks and
development. As India's leading life higher bar on its disclosures by virtue the railways, are prudent and on an
insurer and its biggest custodian of of its systemic importance to the arm's-length basis. Three, LIC's voting
household savings, the results of LIC's capital markets. LIC's investment policy on corporate actions can help
operations are certainly of great portfolio of Rs. 22 lakh crore assess its corporate governance role.
interest to the investing public. (policyholders' funds) is bigger than In fact, such voting policy disclosures
Greater transparency is also desirable that of the entire mutual fund (now mandatory for mutual funds)
at a time when the Government has industry, with 40-odd fund houses. should apply not just to LIC but also to
hinted at plans to list this insurance private sector insurers.
behemoth on the bourses sometime Therefore, any misjudgments by LIC
in the future. on its investments or risk controls can Even as it has managed to successfully
have market-wide implications. Its fend off private sector competition
With a 12.4 per cent growth in its equity portfolio of over Rs. 4.2 lakh and retain over 75 per cent share of
premium income to Rs. 1.45 lakh crore also makes LIC the largest the market, the one parameter on
crore in the first nine months of FY17, domestic equity investor, giving it which LIC's financials stand on a weak
LIC claims to have already met its considerable clout over both market footing is its solvency margin.
business targets for the year. It is movements and corporate actions.
heartening to note that the Investors at large and policymakers In end-December 2016, LIC's solvency
corporation turned cautious in a rising would, therefore, benefit from more margin at 151 per cent barely met the
market by sharply pruning its equity granular details of LIC's market statutory requirement of 150 per
purchases to Rs. 39,705 crore (Rs. operations. cent, and lagged the 200 to 300 per
64,000 crore last year), even while cent margins of leading private
booking more profits from its existing For starters, disclosures of the mark- insurers. Thus, it is also critical for the
investments. But then, details such as to-market value of LIC's equity Centre to disclose its own roadmap for
LIC's premium income, expenses, portfolio and its exposure to sectors shoring up the capital base of this
investment transactions and much and corporate groups can help gauge insurance giant. (Source : Business
more are already available on its concentration risks. Further, details of Line)

"Even if we lose the wealth of thousands, and our life is sacrificed, we...should keep smiling and be cheerful keeping our faith in God
and Truth."

24 October 2017 Life Insurance Today

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