Page 13 - Insurance Times November 2020
P. 13

Act under which the state-run LIC was  IDBI Bank reported quoting govern-  2,44,931.33 crore last year for the
         set up to prepare for the sale.    ment sources.                      same period, implying a growth of 7.7

         A stake sale in LIC is crucial for meet-  However, the report added that the  per cent.
         ing a record Rs 2.1 lakh crore disinvest-  sale structuring is yet to be decided.  "In government securities and equities
         ment target set for the current fiscal  Life Insurance Corporation had a 51 per  we have found good investment oppor-
         ending March 31, 2021.             cent stake in the bank as of Septem-  tunities. In corporate bond investments
         Pandey said only after the four stages  ber 30, while the government had  we are a bit cautious," said MR Kumar,
                                            47.11 per cent.                    Chairman, LIC, is an exclusive interview.
         converge, then a decision would be
                                                                               He added that LIC plans to invest at
         taken on the quantum of government  "LIC has received inter-ministerial feed-
                                                                               least a further Rs. 2 lakh crore, in the
         stake to be diluted in LIC.        back on IDBI Bank stake sale. Ministe-  remaining part of this fiscal.
         "Then the IPO decision would be there,  rial panel is yet to decide on the struc-  On its debt portfolio, LIC is not expect-
                                            turing of IDBI Bank stake sale," the
         what percentage of IPO we will go for-                                ing any major defaults, as it believes
                                            report said.
         ward. Only after these four things con-                               that with the economic activity gain-
         verge... we are trying our best to do  The insurance behemoth will soon seek  ing momentum in the last two months,
         this fiscal. But this IPO is a big issue and  broad in-principle cabinet nod for the  corporate financials should improve
         I think it will take time," Pandey said  stake sale in IDBI Bank.     further.
         when asked if the offering would hap-
                                            Earlier in the day, the share price of  "LIC follows strict due diligences and
         pen this fiscal.                   the lender closed 2.61 per cent down  very few companies have taken mora-
         Pandey said Deloitte and SBI Caps have  at Rs 33.60. On the other hand, the  torium, which is not even 2 per cent
         been appointee pre-IPO advisors who  BSE Sensex slipped 1,066 points, or  of our corporate debt," adds Kumar.
         have been working with LIC to list out  2.61 per cent, to 39728 tracking weak  Also, LIC's 8.25 per cent stake sale in
         the items of compliance.           global cues.                       UTI AMC (via IPO) should fetch the in-
                                                                               surer some tidy gains, this fiscal.
         The second part is a legislative amend-
         ment that the Department of Financial LIC's equity investments        On the business front, the LIC chief is
         Services (DFS) is working along with  ride high on market surge       confident of seeing steady growth for the
         DIPAM, he said.                                                       rest of the fiscal and believes that its
                                            Books profit of about Rs. 14,800 crore  efforts to rebalance the overall portfolio
         This amendment would facilitate the  on its investments in equities so far this  with equal focus on linked/ULIP products,
         initial public offering (IPO) of LIC, by  fiscal                      can help mitigate reinvestment risk,
         making changes in the LIC Act.                                        amid the sharp fall in interest rates.
                                            India's largest life insurer, Life Insur-
         "Third, is the issue of internal changes  ance Corporation, has raked in tidy  To improve persistency ratios (number
         in LIC like software changes to come  gains on its equity investments so far  of policies or premium amount re-
         out with embedded value. LIC has been  this fiscal, thanks to a sanguine capital  tained with an insurer across different
         doing old-style actuarial valuation. But  market.                     time periods), LIC has been focusing on
         for IPO they need to do embedded                                      digital payment modes and ensuring
                                            LIC has booked profits of Rs.14,857
         value," he said.                                                      constant contact with its customers.
                                            crore as against Rs. 11,437 crore last
         He said DIPAM would come out with  year for the same period (April to Sep-  Additionally, its special revival cam-
         an RFP to appoint an actuarial firm  tember) showing a growth of 30.37 per  paign has also helped bring in business
         that will independently verify the ac-  cent.                         back to the books.
         tuarial value produced by LIC.                                        Interestingly, total surrenders
                                            LIC's investment in capital market and  amounted to Rs. 7,352 crore between
         LIC keen to divest its stake       G-Secs this year has also grown com-  April and August this year, down from
                                            pared to last year. In the current finan-  Rs. 9,133 crore last year. "The de-
         in IDBI Bank: Report               cial year (up to September 30), LIC's  crease in surrender is heartening as it
         The country's biggest institutional in-  total investments in G-Sec, SDL, corpo-  could imply that people are increas-
         vestor Life Insurance Corporation of  rate bonds and equity was to the tune  ingly appreciative of the importance of
         India (LIC) is keen to divest its stake in  of Rs. 2,63,845.98 crore as against Rs.  a life risk cover," adds Kumar.


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