Page 11 - Insurance Times March 2022

to shareholders' fund at amortised cost, Unclaimed amounts include settled public offering of LIC with market regu-
the loss that would have accrued in the claims which haven't been paid out, lator Sebi by this week, Department of
profit and loss account (shareholders sums which become due when policies Investment and Public Asset Manage-
account) would have been Rs 5,365.83 mature as well as excess amounts paid ment (DIPAM) Secretary Tuhin Kanta
crore as of September 2021, LIC said in which are to be refunded. The largest Pandey had said.
its draft red herring prospectus (DRHP). amount due is because of policies ma- The embedded value of LIC has been
LIC is mandated to transfer those in- tured but where the money hasn't arrived at and it is over Rs 5 lakh crore.
vestments to shareholders' fund at reached the investor. They account for The size of the issue would be men-
amortised cost, 90 days after such in- Rs 19,285.6 crore or nearly 90 per cent tioned in the DRHP. The issue, after
vestments are reclassified as "other in- of the total amount. approval of Sebi, is likely to hit the mar-
vestments", which it is yet to be under- The scale of the outstanding amount is ket in March, Pandey said. Up to 10 per
taken. higher than the budgets of many cen- cent of the LIC IPO issue size would be
Irdai has allowed LIC to hold those in- tral government ministries. It is larger reserved for policyholders.
vestments under "other investment" than the budget for the ministry of civil
aviation (Rs 10,667 crore), ministry of
category till January 2023, subject to LIC didn't pay dividend to
electronics and information technology
the latter complying with the govt in FY21: Union Minis-
regulator's investment regulations by (Rs 14,300 crore), the ministry of ex-
the same date as there will be no fur- ternal affairs (Rs 17,250 crore) and the ter Karad
ther extension. Further, LIC has to com- ministry of environment, forests and Life Insurance Corporation (LIC) did not
ply with the extant regulations with climate change (Rs 3,030 crore). The pay any dividend to the government in
regard to all its new investments in pen- total unclaimed amount rose 16.5 per the last financial year and used the free
sion, group, and annuity funds. cent in the six months since March 2021. reserves to increase its paid-up capital,
In the DRHP, LIC has said that as of Sep- which has now risen to Rs 6,325 crore,
tember 2021, it had "other invest- IPO-bound LIC ropes in 6 the government told Rajya Sabha.
ments" of Rs 11,289.36 crore (of which ind directors In 2019-20 fiscal, the insurance behe-
Rs 24.74 crore was in equity and Rs Ahead of initial public offering (IPO), Life moth, which is set for an Initial Public
11,264.62 crore in debt instruments) in Insurance Corporation (LIC) has ap- Offer (IPO), paid Rs 2,610.75 crore as
the pension, group, and life annuity pointed six independent directors on its dividend to the government from prof-
funds that have not been transferred board to meet regulatory norms of cor- its pertaining to FY 2018-19.
even after 90 days of them becoming porate governance. LIC appointed Citing data received from LIC, Minister
part of "other investments". former financial services secretary of State for Finance Bhagwat Karad said
Anjuly Chib Duggal, ex-Sebi member G no dividend was paid in FY 2020-21 as
LIC's unclaimed money Mahalingam, former SBI Life manag- the Insurance Regulatory and Develop-
tops many ministries' bud- ing director Sanjeev Nautiyal, sources ment Authority of India (Irdai) had in-
said. structed insurers to refrain from dividend
gets payouts from profits pertaining to the
Besides, chartered accountant MP
The amount of money lying unclaimed Vijay Kumar, Raj Kamal, and V S financial year ending March 31, 2020.
with the Life Insurance Corporation of Parthasarathy are roped in as indepen-
India dwarfs the budgets of many min- dent directors on LIC's board. With the LIC chief bats for deploying
istries. appointment, the total number of in- bionic agents
There was Rs 21,539.5 crore which lay dependent directors goes up to 9 and
unclaimed with India's largest insurance all vacancies are filled. The chairman of IPO-bound LIC, M R
Kumar, has said that digital platforms
company, according to details in the Fulfilling corporate governance norms
initial public offer (IPO) document it filed is an important element for filing Draft embedding insurance in a bid to
monetise their user base poses a chal-
over the weekend. The regulatory docu- Red Herring Prospectus (DRHP) with
mentation is ahead of LIC selling shares the Securities Exchange Board of India lenge for insurers. Kumar has proposed
to the public through the stock ex- (Sebi). a strategy of deploying 'bionic' agents
change for the first time this financial by extending tech support in the form
year. This will be India's largest ever The central government is expected to of digital tools and analytics to the
public listing. file draft papers for the mega initial agency force.

The Insurance Times, March 2022 11