Sunday, 1 May 2016

LIC continues to dominate new premium collection

Life insurers reported a growth of 22.6 per cent in first year premium collection for the period ended March 2016 as compared to same period last year, shows data released by IRDA.


Life insurers reported a growth of 22.6 per cent in first year premium collection for the period ended March 2016 as compared to same period last year, shows data released by IRDA.
Individual non-single premium collection increased by 8.6 per cent for the same period. Total first year premium collection of 24 life insurers for the period ended March 31, 2016 stood at Rs 1,38,657.3 crore including Rs 42,497 crore from individual, non-single premiums.
State-owned LIC continues to be the leader with 77 per cent of total market share as per IRDA data. LIC issued more than 2 crore new policies as against 62 lakh policies issued by private insurers for the period ended March 2016. Its first year life business grew by 24.7 per cent against 17.6 per cent for private insurers y-o-y basis for the period ended March 2016. LIC's total first year premium for the period ended March 2016 was Rs 97,674 crore, including Rs 20,100 crore from non-single premium policies.
Among private players, Tata AIA life reported a sharp growth of 158 per cent in individual non-single business for the period as compared to last year. Total premiums for period up to March 2016 for the insurer stood at Rs 604 crore. Despite the rise in Tata AIA's first year business, SBI Life, HDFC Life and ICICI Pru Life remain market leaders among the private players with 4.7 per cent, 4.3 per cent and 2.1 per cent share in total first year business.
SBI life, Kotak Mahindra, Shriram Life, Canara HSBC OBC Life, India First Life and Edelweiss Tokio Life reflected a growth of over 30 per cent in their first year non-single business for period ended March 2016 as compared to last year. On the other hand, Reliance Life , Aviva Life and Aegon Life lost more than 25 per cent of their first year business from non single policies as compared to figures upto March last year.


Thursday, 7 April 2016

LIC to auction Unitech’s land in Noida to recover Rs184 crore

New Delhi: Insurance major LIC will next month auction Unitech’s 14 lakh sq meter plot of land in Noida if the real estate company does not repay the entire dues of Rs.184 crore before that date.
Unitech had borrowed money from LIC by mortgaging the plot but with the real estate company defaulting on repayments, Life Insurance Corporation of India (LIC) issued an e-auction notice for sale of the plot on 6 May at a reserve price ofRs.2,660.56 crore.
When contacted, a Unitech spokesperson said the company would repay the outstanding amount to LIC soon.
“We are in the process of making the payment for outstanding shortly. We are close to finalising the funding for the same,” the spokesperson said.
People familiar with the matter said Unitech has recently raised Rs.85 crore from Piramal Group and is in talks with two private equity players to raise more funds for the development of this land parcel in Noida and to repay the LIC loan.
The notice for “public sale of immovable property mortgaged to the corporation under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002” was issued on Tuesday.
In the notice, LIC said that the outstanding dues for recovery of which property are being sold is Rs184.12 crore as on 31 March 2016 plus interest from 1 April 2016 and other costs, charges and incidental expenses.
The property consisting of land measuring 14,07,327.68 square meter is located in Noida, Uttar Pradesh. This land is on lease of 90 years from Noida Authority by a lease deed executed on 28 December 2006 in favour of Unitech Hi-Tech Developers Ltd.
“This is also a notice to the above named borrower/ mortgagor (Unitech and Unitech Hi-Tech Developers) about holding of e-auction sale on the above mentioned date if the dues are not repaid in full before the date of e-auction,” the notice said.
LIC said that it would be the responsibility of the interested bidders to inspect and satisfy themselves about the property before submission of the bid.
Unitech’s consolidated net debt as of 31 December 2015 stood at Rs.6,802.05 crore.
Net debt to equity ratio was 0.64. The company’s share price closed at Rs.5.04 apiece on the BSE, up 1.82%.


Wednesday, 6 April 2016

LIC may sue Essar Power for missing interest payments on 11-year bonds

MUMBAI: Life Insurance Corporation of India may sue the Ruia-run Essar Power for missing interest payments on 11-year bonds it sold in 2013 to raise Rs 1,000 crore, said two people aware of the matter. But the company said it would soon be able to catch up on payments.
Essar Power has not paid interest in the past six months on the papers. The country's largest insurer may move court to recover its dues by forcing Essar Power to sell some assets, said the people cited above.
However, improved fuel supply has allowed the utility to restart power plants, putting it on the path to recovery, it said in an emailed release. Apart from that, some of its own dues are liable to be paid soon.
"More than Rs 1,000 crore in receivables from GUVNL (Gujarat Urja Vikas Nigam Ltd) is stuck in court cases where lower courts have ruled in our favour," it said. "We expect matters to be finalised shortly. Recovery from these cases will be used to pay debt of the holding company, Essar Power Ltd, including that owed to LIC."
LIC had bought the bonds that offered an attractive coupon rate of 12.5%, when yield on highly rated paper was coming off.
Essar Power is among infrastructure companies that haven't been able to keep up with payments as projects got stalled over delays in approvals and other reasons. Some power units were mothballed Others borrowed excessively, leading to defaults. Banks are now being forced by the Reserve Bank of India to clean up their books and are in turn forcing Lanco, Jaypee Group and others to sell assets to get their money back. The drop in fuel prices has been good news for Essar Power.
"Most of these issues are getting resolved since gas prices have fallen sharply, helping us to restart our gas-based projects,'' the company said. "Our imported coal-based project has improved performance significantly because of better operational efficiency and falling coal prices. We are also restarting our domestic coal-based plant shortly because of increased availability of domestic coal. Overall, the power scenario is improving with regulatory certainty now in place."
This marks a turnaround from its previous straits. "Its operational gas-based projects were not operating because of high gas prices and the power sector in general was stressed," the company said. "All these factors led to a delay in servicing debenture holders." Essar Power said that it has repaid a significant amount of debt, primarily taken for the development of electricity generation projects, and is planning to bring this down to zero in the next two years.

Tuesday, 5 April 2016

LIC rides to the rescue of public sector banks

The Life Insurance Corp. of India (LIC) has been helping the government pump in money into capital-starved public sector banks. It has been increasing its stake in public sector banks for the past few years, as you can see from the chart compiled by Kotak Institutional Equities Research. The latest addition came on 31 March when IDBI Bank sold its 2% stake with the National Stock Exchange to LIC for around Rs.351 crore, a part of the turnaround plan for the bank.
In fiscal year 2016, LIC has infused a total of Rs.2,539 crore in public sector banks Allahabad Bank, Andhra Bank, Bank of India, Central Bank, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Oriental Bank of Commerce, Syndicate Bank and Vijaya Bank. This after LIC infused a total of Rs.1,850 crore in 2015 and Rs.366 crore in 2014 in the PSBs. These capital infusions aid the government in its efforts to infuse badly needed capital into publicly-owned banks.
Given its fiscal constraints, the government has decided to infuse Rs.25,000 crore in FY17 after infusing a similar amount in FY16 in select PSBs. But these amounts are not enough, especially because massive bad loans have severely eroded several banks’ net worth. Therefore, LIC has ridden to the rescue, increasing its stake in at least half of the capital starved small and medium sized PSBs in the past 16 months.
Clearly, “the small and mid-sized PSBs need capital badly due to low capital adequacy ratio. The smaller PSBs can’t go to the market and raise money through tier 1 bonds or do private placement because of cheap valuations and ratings downgrade. Hence LIC is bailing them out,” said Siddhartha Purohit, senior research analyst from Angel Broking.
Apart from funding public sector banks, the Kotak note also points out that a third of the government’s divestment receipts has come from LIC since FY12. It adds, “LIC has also been roped in by the Indian Railways, another arm of the Government of India, to subscribe to Rs.1.5 trillion of its bonds over the next five years. Such internal transfers between ‘government entities’ do not provide the checks and balances that a market fund-raising does.”


Sunday, 3 April 2016

LIC expands globally to begin Bangladesh operations soon

In line with its international expansion strategy, Life Insurance Corporation of India (LIC) will begin operations in Bangladesh soon. Sources said its joint venture company, Life Insurance Corporation (LIC) of Bangladesh Limited is incorporated in mid-December 2015 and business operations will start shortly.

LIC, through its branches/joint venture companies/wholly-owned subsidiary, is present in 14 countries including places like Singapore, Kenya, Sri Lanka, Nepal and Bahrain among others.

Business growth in the overseas markets has also seen positive results in the past years. First Year Premiums and Total Premium Income from LIC's global operations, as a whole, was Rs 1479.13 crore and Rs 2403.74 crore in 2014-15, which has been growing at 39 per cent and 30 per cent over the previous five financial years.

With respect to opening up operations in other countries said that they will take a a call on further expansion at an opportune time. As per LIC's Annual Report for 2014-15, the foreign branches put together issued 11,176 policies with first premium Income of Rs 122.85 crore.

Among the foreign joint venture companies, LIC (International) B.S.C. (c), Bahrain was established in Bahrain as a joint venture company which commenced its operations on 23.07.1989 catering to the life insurance needs of Non-Resident Indians (NRIs) and local population in the Gulf by issuing life insurance policies in US Dollars. The company operates in 5 GCC countries of Bahrain, Kuwait, UAE (Dubai & Abu Dhabi), Qatar and Oman.

Similarly, LIC (Nepal) Ltd., a joint venture company between LIC of India and Vishal Group of Companies with holding of public of Nepal was established in December 2001. It is a listed company whose shares are traded on the Nepal Stock Exchange.

The Corporation directly operates through its branch offices in Mauritius (Port Louis), Fiji (Suva & Lautoka) and United Kingdom (Wembley).

Wednesday, 23 September 2015

What is Term Insurance?

Concept of Term Plan

Term Insurance Plan is a pure insurance cover in which one should not seek financial benefits, it is just for risk cover to protect your source of income from any uncertainty. Let's suppose there is a single bread-earner of a family on which there are 2-3 dependents. If that person unfortunately dies, it is obvious that there will be an emotional loss for that family, but there will be a financial loss too that can lead them to financial crisis. That single source of income will end-up with the person. So at this moment if that person would have taken term plan then his family could utilise the sum assured money of this term plan as a new source of income, as if they would deposit that money in a bank they could have regular interest every year which will work as their new source of income.
                So points to keep in mind regarding term insurance
·         Term plan can be availed by only those persons who are earning (who have some source of income to secure).
·         Term plan should be taken up to the age of retirement not beyond that because:
Ø  Term plan’s concept is to secure our income and we earn up to the age of retirement.
Ø  At the age of retirement, i.e. 60-65 years of age, our children are good enough capable take care the responsibility of our family and if any mis-happening occurs with us our children can handle. So it is unnecessary to continue with a term policy after the age of retirement.
Ø  Because after retirement we won’t have any regular or easy source of income to pay the premium.
·         Term plan is not a policy to make money or do investment; it is pure insurance cover to take care of our family in our absence. It is just like your car insurance or bike insurance whose cover will be given at the moment when your bike/car is stolen or met with an accident. For that you would never like this kind of situation happens with your bike or car, the same way we would never like to get into any uncertain mis-happening to get the benefits of term plan for our family. So never treat term insurance as a money-back policy, as if what would happen if I don’t die between that period, it would be a waste of money, so increase the Policy term so that if I die at the age of 70-75 then it will benefit my family. Remember no one would like to face the situation where our family needs term plan benefits. If you want good return then go for an investment or money-back plan.

Why do I need Term Insurance?
We know that we are healthy and there is no chance of getting ill or getting into any uncertainty. But life is very uncertain, no one knows that what will happen the next moment. Term insurance is same as a helmet. When we are driving, we know that we are very skilled and experienced driver, even then we wear helmet for safety, in the same way term insurance is just a safety for your family.

How to choose a good term insurance plan?

Remember that, to get the benefit of term policy the policy holder will not be alive. It will be the situation when policy-holder’s family will not be in a condition to run behind the policy company every frequent to get the claim. So choose that company by its Claim Settlement Ratio, not by the features they are providing. There are 24 Life Insurance Companies in the market, and different companies are providing different features like some are providing the coverage upto the age of 75-80 years, some are providing policy at cheapest rates, some of them offering permanent disability benefits too, etc. But you should focus the Claim Settlement Ratio of the company that will show the company’s past-year’s record that the company has settled how many claim of which they received and within how much duration. Because after all we want our claim to be settled. The policy-holder’s family don’t want different features, they just want the claim to be settled within the least possible duration.
Points to focus before buying a term policy:-
·         Go through the claim settlement ratio of the company
·         Don’t get trapped by the attractive schemes, discounts or features of the plan.
·         Buy the term policy upto the age of retirement
·         Premium must not be very high because this is a non-refundable policy.
Some company may offer you cheapest plan, some company will offer you highest coverage upto the age of 80yrs, so don’t get confused and go through the Claim Settlement Ratio, that will show you the real face of the company that which company has settled highest number of claims and within how much duration. Example- Bharti AXA, Aviva and Reliance Life selling strategy is Cheapest plan in the market. And  Aegon Religare and TATA AIA sells Term policy for highest policy term upto 75 and 80 years of age. Let’s suppose if a person buys Cheapest plan or if he buys highest years of coverage or lots of rider options and at the end-of-day if his claim doesn’t get settled after his death, then what will be the benefit of taking a term policies.