Page 10 - Insurance Times December 2019

LIC invests Rs 1000 cr in LIC plans to close many products from November 30

Tata Capital Housing Fin LIC is planning to withdraw more than two dozen individual insurance prod-
ucts, eight group insurance plans and
seven-eight riders on November 30. LIC’s
some of retail products such as Jeevan
Anand, Jeevan Umang, Jeevan Lakshya
and Jeevan Labh.

In line with the IRDAI’s customer-centric
product guidelines, these plans will be
revised and relaunched in the course of
LIC invested Rs 1000 crore in Tata the next few months. However, the newer products would have lower bonus
Capital Housing Finance (TCHF), ac- rates and higher premium rates.
cording to the sources. More than According to the experts, around 75-80 life insurance products of the entire
a year ago, infrastructure conglom- industry would go off the shelf after November 30 as they remain non-com-
erate IL&FS triggered a crisis of pliant to the new non-linked and linked insurance product regulations issued
capital that kept the largest domes- on July 8 2019.
tic institutional investor away from
taking usual bets on privately held A senior official from IRDAI, “We don’t see any disruption in the market. The
insurers are on the job. Around 75-80 products may have been withdrawn by
companies.
November 30 as they are not compliant. However, a significantly large num-
“The issuer wanted to increase up ber of products are compliant and would continue to be sold from December
to Rs 1500 crore, but it closed sub- 1 with a tweak in pricing. Insurers will have to reprice the products within the
scriptions with the single large in- bandwidth to manage their risk. In certain cases the premium rates can fall also.
vestor,” said the source.
“However please note that a ‘product withdrawn’ only means that it may not
The company directly placed those
be ready to go to the market immediately but insurers can work on improving
bonds with LIC. Those bonds of- the withdrawn product in line with the (regulatory guidelines) and launch them
fered 8.35% with staggered matu- back again. Also we have allowed companies to offer products under the “Use
rities up to 10 years. The rate is 183 and File” category where they can sell the products to customers and later file
basis points higher than the bench- it with us for verification and approval.”
mark yield. A basis point is 0.01
percentage point. M. R. Kumar, Chairman, LIC, said, “We will be closing some products, modify-
ing them as per the new norms and then relaunching them in the coming
“TCHFL raises funds from time to
months.”
time for its business operations. As
part of this fund raising, it received Mukesh Kumar Gupta, Raj Kumar appointed as MDs in
a bid of Rs 1000 crore for a 10 year
non-convertible debentures (NCD) LIC of India
issuance,” said Rajiv Sabharwal, LIC had recently said that Mukesh Kumar Gupta and Raj Kumar have taken
CEO, Tata Capital, in an email. charge as managing directors of the com-
One-fourths of the sum will be re- pany. Through a government order the two
paid in November, 2026. The rest were promoted.
will follow in next three consecutive According to an official statement, Gupta
years. In the aftermath of the NBFC was earlier executive director, personnel,
crisis, large institutional investors for the life insurance behemoth and had
have preferred bonds sold by gov- also served as zonal manager in charge of the central zone. Kumar was execu-
ernment-owned companies includ- tive director for international operations and had also served as the chief ex-
ing Power Finance Corporation, ecutive of the insurer's asset management arm.
Rural Electrification Corporation According to the statement, with their elevation, the number of managing di-
and the National Highways Author-
rectors at the company goes up to four. T C Susheel Kumar and Vipin Anand
ity of India.
are the other two MDs.
10 The Insurance Times, December 2019