LIC Housing invests in SPR City, Piramal Enterprises exits from project

 LIC Housing has invested an unspecified sum in Chennai township, SPR City's ongoing residential project spread over an area of 1.7 million sq ft. The SPR group has used a part of the capital raised to provide an exit to Piramal Enterprises.

The company's Director Chetan Bohra said that the capital raised would be utilised for advacing the construction and ensuring the completion of the residential project within this financial year.

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"Part of the capital raised has been used to repay and provide an exit to Piramal Enterprises. With the exit of Piramal, the cost of capital is expected to go down by almost 35-40% in the current financial year, thereby accelerating the speed of construction,” he said.

SPR Director, Navin Ranka added, “Closure of fund raising from LIC Housing denotes the confidence of the country’s top financial institution into the Project. With our robust sales and delivery line up, we see growth in the coming year irrespective of Covid-19's impact on economy”.

LIC eyes sale of 25 mn indivijual policies, Rs 55k cr in premiums for FY20

State-run life insurer LIC is hopeful of crossing its fiscal target of selling over 25 million individual policies and a premium collection of more than Rs 55,000 crore before March 31, 2020.
This is 17 per cent growth in terms of number of individual policies sold compared to the number of policies sold in FY19.

"We have created a new record by selling 2,17,00,000 individual policies and a premium collection ofRs 50,500 crore as on March 21, 2020," the Life Insurance Corporation (LIC) said.
The life insurer said it is confident of crossing its target of 25 million individual policies well before March-end.
In the previous fiscal, the corporation had sold 2,14,03,905 individual policies.
Typically, March is considered an important month for insurance companies when they witness maximum sale of policies.
In the group insurance policies, LIC has collected a premium of Rs 1.15 trillion, so far, against a target of Rs 60,000 crore it had set in the beginning of the year.
As of end February 2020, the new business performance of LICshowed an impressive growth of 12.85 per cent in its first-year premium income and 21.84 per cent in number of policies.

LIC's new business premium crosses Rs 1.5 trn mark, income soars 18%

The IPO-bound Life Insurance Corporation (LIC) on Friday said its new business premium has crossed the Rs 1.5 trillion mark for the first time, helping the national insurer improve market share to 77.61 per cent.
The Corporation's total income grew by 17.79 per cent to Rs 2,97,017.28 crore as of September 2019 from Rs 2,52,149.60 crore a year ago, chairman MR Kumar said.

Total assets of the Corporation increased by 7.92 per cent to Rs 32,25,905.42 crore as of September 2019 from Rs 29,89,276.53 crore, he added.
The milestone was led by first year individual new premium, which as of January has expanded by 17.48 per cent, while the number of new policies sold jumped 29.42 per cent to Rs 45,199 crore, taking the total policies sold to 1,95,85,635, the chairman said.
The composite market share in terms of the number of policies and the first-year premium as of January end stood at 77.61 per cent and 70.02 per cent, respectively, which has increased from 73.54 per cent in number of policies and 66.26 per cent in first-year premium, the chairmansaid.
The pension and group schemes vertical, which looks after the group schemes and superannuation business of the Corporation, has created a new record by clocking over Rs 1 lakh crore in new premium income so far during the current financial year.
This vertical has contributed Rs 1,05,566 crore as new business premium income as against Rs 66,748 crore in the previous year. The vertical has covered 2.45 crore lives as of January under its social security schemes.
During the current fiscal year, LIC has paid 1,42,93,289 maturity claims amounting to Rs 69,748 crore as of end January, Kumar said, adding the Corporation also settled 5,99,881 death claims amounting to Rs 9,866 crore, of which 96.83 per cent claims which were non-early death, were settled within 15 days of intimation.
To comply with new Irdai regulations, LIC has modified its existing products with new features such as revised surrender value and extension of revival period from two years to five years.
During FY2018-19, LIC generated the highest valuation surplus of Rs 53,214.41 crore, registering a growth of around 9.9 per cent over the previous year and paid a dividend of Rs 2,610.74 crore to the government, again the highest in history.
On its online sales, the chairman said the Corporation's Customer Portal has 1,33,78,231 users. To increase its online presence, it launched a chatbot called LIC Mitra early January 2020.

Private sector's share in LIC's portfolio plunges to 16-year low

The private sector has a lower share in the portfolio of Life Insurance Corporation of India (LIC) now than at any point since 2003. It accounts for 14.9 per cent of the total investments, according to numbers analysed from the Reserve Bank of India’s Handbook of Statistics on the Indian Economy.
The LIC has been reportedly helped by a number of public sector divestments, as well as banks such as IDBI, which may have resulted in a shrinking pool available to the private sector. This is despite the private sector companies outperforming their public sector counterparts.

The BSE PSU index has declined 4.9 per cent in 2019 so far. The Sensex, which is a broad index representative of the country’s largest companies including large private sector ones, has risen 8.4 per cent. In fact, the PSU index has underperformed the benchmark Sensex in 11 out of the last 16 years.
The private sector share had last slipped below 15 per cent in 2003, when it was 11.68 per cent. It peaked for the subsequent period in 2010 at 25.72 per cent. It has since fallen for nine years in a row, to reach its present level.
Meanwhile, the public sector’s share in total investments stands at its third-highest level since liberalisation. The 85.07 per cent share in 2019 is higher than any year except 2002 (87.15 per cent) and 2003 (87.22 per cent).
Private sector's share in LIC's portfolio plunges to 16-year low
The numbers don’t add up to exactly 100 per cent, given that there are investments in the joint and co-operative sectors included.
The two account for Rs 1,098 crore in total. The overall investment in LIC stands at Rs 26.61 trillion. Of this,
Rs 26.4 trillion is invested in stock exchange securities. It also has a loan book of Rs 24,909 crore. A look at the last available annual report shows the life insurer has a majority of its investments in government securities.
“In respect of non-linked business, corporation earned Rs 1,55,071.90 crore as interest and Rs 9,768.82 crore as dividend, returning a yield of 7.71 per cent for the year. The corporation also earned rent of Rs 455.98 crore on investment property, Rs 9,576.81 crore by way of interest on policy loans, and Rs 20.97 crore as interest on loan on mortgages. A further Rs 19,512.94 crore was realised as net profit from the sale of equities, government securities and other securities (including amortisation) taking the total yield to 8.66 per cent,” according to the FY18 annual report.
“Typically, LIC has supported the divestment programme of the government from time-to-time, and in a bigger way since 2014. The investments by LIC do not seem to be driven solely with the target of efficient allocation of capital. It has also been looking at social objectives. With more stake sales on the anvil, unless the government looks at pure strategic divestment, one might well see the private sector’s share in LIC’s investment falling further,” said Deepak Jasani, head of retail research at HDFC Securities.
The size and parentage of LIC may mean there is little impact for policyholders, according to Swapnil Pawar, founder of financial services firm Asqi Advisors.
“Most of the investors go in with an implicit assumption that LIC itself can’t possibly fail,” he added.

Ex-LIC chief S B Mathur to head IL&FS board, will replace Hemant Bhargava

S B Mathur, former chairman of Life Insurance Corporation (LIC), will be the new chairman of Infrastructure Leasing & Financial Services (IL&FS), which is facing a liquidity crisis. He will replace Hemant Bhargava, LIC’s managing director, who was also serving as non-executive chairman at IL&FS since July. The decision was taken at a meeting of the IL&FS board on Saturday.
Bhargava stepped down from the IL&FS board to avoid conflict of interest in view of his responsibility as the incharge of investment at the state-owned insurance company, sources said. He had come on the IL&FS board after Ravi Parthasarathy quit as chairman on health grounds.
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LIC is the largest shareholder in IL&FS, the group holding entity, with a 25.34 per cent stake as on March 31, 2018.
The IL&FS board had a meeting on September 7, but it was adjourned to September 15 to allow all directors to participate in the ongoing deliberations on ways to restore normalcy in the company. The board members were to discuss equity infusion, fundraising and asset divestment plan.
According to sources, a meeting of shareholders will be held in a fortnight to approve the proposal for a rights issue. The board of directors has already approved the rights issue of 300 million equity shares at Rs 150 apiece, aggregating to Rs 45 billion, to shore up the capital of IL&FS. The rights issue is to be completed by October 30. As on March 31, 2018, IL&FS’s net worth was Rs 74 billion.
There was no clarity on whether lenders like SBI and LIC have given immediate financial assistance to IL&FS to tide over the liquidity problem. The immediate assistance was needed to ensure that IL&FS had enough funds to meet its repayment obligations, sources said.
The group is facing the problem of overleverage and liquidity strain. The situation has arisen as a significant percentage of the group’s liquidity, aggregating to over Rs 160 billion, is stuck in claims and termination payments. Rating agencies have downgraded loans and debentures of IL&FS and its several group entities to ‘non-investment grade’ on delays in payment on due dates and defaults.
The board approved the recapitalisation of group companies to the extent of Rs 50 billion, in IL&FS Financial Services, IL&FS Transportation, IL&FS Energy, IL&FS Environment, and IL&FS Education.
The group has a specific asset divestment plan based on which it expects to reduce its overall debt by Rs 300 billion. The gross debt of ILFS was about Rs 910 billion at the end of March 2018.
Of the portfolio of 25 projects identified for sale, firm offers have been received for 14 projects. The company expects to complete its divestment plan over the next 12 to 18 months in a systematic and professional way to fulfil its commitments.

LIC board to meet on Monday to finalise acquisition of stake in IDBI Bank

The board of insurance behemoth LIC is scheduled to meet tomorrow to finalise the acquisition of 51 per cent stake in IDBI Bank, sources said.
The due diligence process by LIC is complete as per the directions of Insurance Regulatory and Development Authority of India (Irdai), they said.

State-owned Life Insurance Corporation will approach markets regulator Sebi after getting approval from its board, which will meet in Mumbai.
Irdai has already given its approval to LIC for the stake purchase, a move which will help the debt-ridden state-owned bank get a capital support of Rs 100- 130 bn.
"The LIC-IDBI Bank deal will trigger an open offer to protect the interest of minority shareholders in the bank," said a source.
As per Sebi takeover code, an acquirer has to give an open offer to the shareholders of target company on acquiring shares or voting rights of 25 per cent or more.
Irdai at its meeting held in Hyderabad last month, had permitted LIC to increase its stake from 10.82 per cent to 51 per cent in IDBI Bank.
As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firms.
LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.
It will get about 2,000 branches through which it can sell its products, while the bank would get massive funds of LIC.
The bank would also get accounts of about 22 crore policy holders and subsequent flow of fund.
If the deal goes through, IDBI Bank, which is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 556 bn at the end of the March quarter, will get much needed capital support to revive its fortune.
During the January-March quarter of last fiscal, the lender's net loss stood at Rs 56.6 bn. The government would not get the proceeds from the stake reduction as the money would be utilised for the bank's revival.
It could happen through issuance of fresh equity so that the government's stake which is presently at 80.96 per cent comes down to below 50 per cent as announced in the Budget.

LIC lost money in 18 out of 21 public sector bank shares in last 2.5 years

Even as the Life Insurance Corporation (LIC) looks at buying up to 51 per cent stake in IDBI Bank, its investment record in public sector banks (PSBs) is disappointing. LIC has lost money in 18 out of 21 PSBs in the last two and a half years.
At the end of March this year, the government-owned insurance major had equity investments of over 1 per cent in 21 PSBs but only three of them are now trading at a higher stock price than their prices at the end of December 2015. The country’s largest insurer’s three profitable investments include Indian Bank, which is ...

IDBI, LIC boards to decide stake deal, won't micromanage: FinMin official

The government on Monday sounded evasive about the media reports that it was planning to ask LIC to take a controlling stake in the crippled IDBI Bank, saying the boards of the respective entities will take a call on the matter.
"Both IDBI Bank and LIC are independent organisations. We have left all the decisions to bank boards and we are not going to micromanage them," a senior finance ministry official told reporters on the sidelines of the two-day annual summit of the Asian Infrastructure Investment Bank.

When pressed that both the entities are government- owned, the official quipped does that mean there cannot have business relationship between two government entities?
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There have been reports that having failed to a get a buyer for its stake in IDBI Bank, the government might ask LIC, which already owns over 10 per cent in the infra-lender turned commercial bank, to take at least 40 per cent more in it, something it had done with Axis Bank in the past.
The media reports also said the government had sought the views of insurance regulator IRDAI and markets watchdog Sebi on the move. IRDAI does not allow LIC or any other insurer to own more than 15 per cent in any company.
On the Sunil Mehta committee, set up to draft guidelines for a bad bank, the official said within a short period the panel has "come up with a fantastic report".
Interim finance minister Piyush Goyal on June 8 had announced setting up of a committee under the chairmanship of Punjab National Bank's non-executive chairman Sunil Mehta to make a draft on setting up an asset reconstruction or an asset management company for faster resolution of bad loans.
On the special dispensation that power companies have been demanding to tide over the bad debt problem, the official said there is an Allahabad High Court judgement and we have to respect that but added quickly that the banking secretary will sit down to find a solution.