LIC arm in Saudi venture, Dubai move to follow

The overseas arm of Life Insurance Corporation (LIC), Life Insurance Corporation International, will launch insurance joint ventures in Saudi Arabia and Dubai during 2005.

R N Bhardwaj, chairman, LIC, said here on Wednesday: "LIC has already signed a memorandum of understanding with the Al Hokair group of Saudi Arabia. We expect to get the approval in the next three months. Dubai would be the next destination after Saudi."

Apart from LIC and Al Hokair, the other major stake holders of the Saudi venture will be LIC International Bahrain and New India Assurance.

On funding the ventures, Bhardwaj said, "As and when requirement, the government will help with the funds."

Consultant Deloitte & Touche has recommended that LIC should place thrust on four parameters which include leveraging the large assets held by the company in real estate, utilise the opportunities available from overseas operations.

Two other areas will be increasing the number of alternate channels to garner premium income and focus on the segment group and super annuation policies.

Bhardwaj pointed out that the actuarial department is in the process of calculating its embedded value.

He said contribution from its overseas operations have been increased over two per cent of the total premium income earned by LIC from less than a per cent in 2001.

LIC international joint venture insurance companies in countries like Sri Lanka and Nepal while it has branches in London, Fiji and Mauritius.

He also said the proposal of setting up a joint venture insurance company in United States has been dropped as the proposed joint partner declined further negotiations after September 11, terrorist attack on the world trade centre.

LIC has budgeted about Rs 75 crore for its technology and information technology initiative during the current financial year as the company is concerned on servicing the policy holder in every possible way whether its through Internet, ATM etc, he added.

The company has about 11 lakh agents and will recruit over 1 lakh agents during the current financial year. When asked whether the life insurance monolith will be able to meet its solvency margin of 150 per cent by March 2005 Bhardwaj said that the solvency would "not be an issue" with the Irda in this regard.

The Insurance Regulatory and Development Authority (Irda) had asked the public life insurer to meet its solvency margin which was Rs 16,800 crore of which LIC had put aside about Rs 14,000 crore in 2003-04 that is about 110 per cent solvency margins.

Meanwhile, LIC south zone (includes Tamil Nadu, Kerala and Pondichery) has so far received 268 claims worth Rs 2.38 crore.

Claims predominantly came from Thanjavur amounting Rs 1.70 crore and the rest from Pondicherry, Tirunelveli and Vellore. R R Nair, zonal manager, South zone said we expect the number of claims to increase to over 1,000 as the zone had insured a number of people in Pondicherry under its scheme of insuring people living below the poverty line.