Revision as of 11:16, 25 August 2016

Life Insurance Corporation of India (LIC)

The Life Insurance Corporation with its Central Office in Mumbai, 8 Zonal Offices at Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Kanpur, Bhopal and Patna, 109 Divisional Offices including one Salary Savings Schemes (SSS) Division at Mumbai, 2048 Branch Offices and 1004 Satellite Offices as on 31 March 2010, spreads the message of Insurance through the length and breadth of India, with the help of 14,02,807 agents.

LIC also transacts business abroad. International Operations were set up with an endeavor to establish global presence and also to acquire the best practices being followed internationally so that LIC may become a world class organization. LIC's endeavour is to further consolidate their Brand Image across the world. At present LIC is operating internationally through Branch Offices in Fiji, Mauritius and UK and through Joint Venture Companies in Bahrain Nepal, Sri Lanka, Kenya and Saudi Arabia. Its Representative Office in Singapore was opened on 06.11.2008. LIC is now in the process of establishing a Wholly-Owned Subsidiary (WOS) there.

In 2009-10, all foreign units put together procured new business of 82,794 policies with First Premium income of Rs 207.92 crores, registering a growth of 31.75 per cent (NOP) and 23.81 per cent (FPI). The total Premium Income of all units in 2009-10 was Rs 736.61 crores.

During the financial year 2009-10, the total First Year Premium under Individual Assurances was approximately Rs 50,527.31 crores under 368.38 lakh policies. The Group Insurance brought a new business premium of approximately Rs 20,542.11 crore under 18,573 schemes covering 2,37,57,262 lives.

The Life Fund, as on 31.3.2010, amounts to approximately Rs 9.98,501 crores. The Corporation made payments of around Rs 7,031.62 crores under Death Claim cases, around Rs 46,917.93 crores under Maturity Claims and around Rs 3,770.41 crores under annuities.

(i) JANASHREE BIMA YOJANA

The Janashree Bima Yojana (JBY) was launched in 10 August 2000. The Scheme has replaced Social Security Group Insurance Scheme (SSGIS) and Rural Group Life Insurance Scheme (RGLIS). 45 occupational groups have been covered under this schme.

The Scheme provides for an insurance cover of Rs 30,000 on natural death. On death/total permanent disability due to accident, the benefit is Rs 75,000/-. On partial permanent disability due to accident, the benefit is Rs 37,500/-. The premium for the scheme is Rs 200/- per member per annum, 50 per cent of which is met out of Social Security Fund. The balance premium is to be borne by the member and/or Nodal Agency. As on 31 March 2010, about 184.43 lakh have been covered. The balance in Social Security Fund as on 31 March 2010 is Rs 618.83 crore. (Provisional)

(ii) SHIKSHA SAHAYOG YOJANA

The Scheme was launched on 31 December 2001, with the object to lessen the burden of parents in meeting the educational expenses of their children. It provides scholarships to students of parents living below or marginally above poverty line and who are covered under Janashree Bima Yojana and children are studying in 9th to 12th standard (including ITRI courses).

A scholarship amount of Rs 600/- per half year per child is paid for a maximum period of four years and for maximum two children of a member covered under Janashree Bima Yojana.

No premium is charged for this benefit. During the financial year 2006-2010 scholarship were disbursed to 9,13,281 beneficiaries amounting to Rs 67.58 crores.

(iii) AAM ADMI BIMA YOJANA

AAM ADMI BIMA YOJNA, a new Social Security Scheme for rural landless households was launched on 2nd October, 2007 by the then Union Finance Minister at Shimla. The head of the family or one earning member in the family of rural landless household is covered under the Scheme.

The premium of Rs 200/- per person per annum is shared equally by the Central Government and the State Government. Head of the family or one earning member of the family aged between 18 and 59 years is covered for an amount of Rs 30,000/- under the Scheme. In case of death or total disability (including loss of 2 eyes/2 limbs) due to accident, a sum of Rs 75,000/- and in case of partial permanent disability (loss 1 eye/1 limb) due to accident, a sum of Rs 37,500/- is payable to the nominee/ beneficiary. As on 31 March 2010, 1,30,45,666 heads of the families of rural landless households were covered under the Scheme.

A free add-on benefit for the children of the members of AAM ADMI BIMA YOJANA is provided under the Scheme in the form of a scholarship at the rate of Rs 100/- per month and is given to maximum two children studying between IX to XII Standard payable half yearly on 1st July and 1st January each year. During the financial year 2009-2010, scholarship were disbursed to 86,906 children amounting to Rs 54.48 Crores.

`Indian control' norms affect insurers' valuations

The Times of India, Nov 27 2015

Mayur Shetty 

Indian insurers, buyers, sellers and valuation, 2011-15; Graphic courtesy: The Times of India, November 27, 2015

`Indian control' norms hurt insurers' valuation

The valuation of a inancial services firm is usually a straightforward business as there are ample benchmarks available. But in the case of insurance, a host of issues are queering the pitch for arriving at a value appropriate for a stake sale. Primary among his is the issue of Indian-owned and controlled', which is among the softer aspects of negotiations outside he hard numbers. By January , each of the 24 life insurance companies will have to rework their joint venture agreements to ensure that they are in compliance with the norms pertaining to Indian management. According to Sanket Kawatkar, head of life insurance consulting for Milliman India, which has conducted valua ions for 17 of the 24 companies, “A large component of the va uation would include softer aspects -the keenness of the oreign partner to do business n India and the desire to conti nue with the Indian partner.“

This is weighed with the fact that, under the new norms, multinationals can no longer enter into agreements which give them a veto power.

Companies' promoters are now scrambling to find out the worth of the business they have invested in. The traditional method of computing an insurance firm's valuation would be to arrive at an embedded value -a number which factors in not just present earnings but also takes into account future profits. But this global measure is not the basis on which deals are being worked out.

Foreign promoters running joint ventures will suddenly find themselves in a weaker position than they were in before the legislation allowing 49% was passed. This has changed the dynamics and many are unwilling to pay the premium they might have done earlier. In the case of Reliance Life, the deal for sale of an additional 23% stake to Nippon Life valued the company at Rs 10,000 crore -marginally lo wer than the Rs 11,500 crore at which the earlier investment was done. In HDFC Life, the foreign partner has bought stake at a lower valuation when compared to what strategic investor Azim Premji paid in 2014.

The other disruptions in the valuation process has been the regulator's push for an open architecture in banks.

“People also tend to forget that interest rate on 10-year government bonds had fallen close to 5.5% some years back. If this happens, the margins in some policies will turn negative because of the assured maturity benefits,“ said Kawatkar. He added that the assured maturity benefit portfolio of private insurance companies ranged between 10-20%.

The other disruption is likely to come from online. “India is arguably leading the way in the online experience. It is quite likely that future entrants will not follow what others are doing and will take the direct route for selling,“ said Richard Holloway , MD, South East Asia & India, Milliman.