IPO-bound LIC to have CEO, managing director as Centre scraps chairman post

Govt amends another rule to appoint a full-time actuary for state-owned insurance behemoth

As the Life Insurance Corporation of India (LIC) readies itself for public listing, the government has abolished the position of chairman at the insurer, which will have a chief executive officer (CEO) and managing director (MD).

The changes have been notified by the Department of Financial Services (DFS) through rules in the LIC Act, 1956. Various rules have been amended in the LIC Act to replace the post of chairman and create the position of CEO.

The insurer will continue with the post of MD. Both CEO and MD will be appointed by the central government.

Presently, MR Kumar is the LIC chairman, whose tenure was extended by another two years last week. Currently, LIC has four MDs — Vipin Anand, Mukesh Kumar Gupta, Raj Kumar and Siddhartha Mohanty.

Besides, the government has also amended the Life Insurance Corporation of India (Special Allowance for In-House Development of Actuarial Capability) Rules, 2002 to appoint a full-time actuary for LIC. The designated actuary will have to be a member of the Institute of Actuaries of India or Institute of Actuaries, London, and be nominated by the CEO or a committee authorised by him.

The changes have been made as the insurer has been preparing for its initial public offering (IPO) that is expected to be the country’s largest. Several changes in the constitution of LIC’s board were also made through the Finance Act in the Budget session to align it with the listing guidelines of Securities and Exchange Board of India (Sebi). To make the functioning of the insurer driven by its board, several rules have been amended to empower the board to take decisions regarding pension schemes, among others.

In March, the government had made changes in the board composition of LIC through the Finance Act that included appointment of a chairperson of the board who will be appointed by the Centre and will be a whole-time director; four managing directors, who will also be whole-time directors; two central government officers not below the rank of joint secretary; and two independent members to represent the interest of policyholders.

The government has been readying the ground for the listing of LIC, and plans to launch the insurer’s IPO in the last quarter of the current financial year. The government has already reached out to investors to apprise them about LIC’s growth and prospects. Preliminary presentations have been made to inform investors on how the organisation is being restructured ahead of the IPO, along with its financials, so that the IPO process can be hastened once its embedded value is derived. The exercise to derive the embedded value of LIC is expected to be completed by August.

The Centre has also approached the Insurance Regulatory and Development Authority of India (Irdai) to seek an exemption for listing of a “corporation” to allow the public listing of LIC. Irdai’s current guidelines allow listing of only insurance companies that are governed by the Companies Act on the exchanges, and LIC does not come under the statute.