 "We'll launch Ulip in the second quarter: S K Roy")
Life Insurance Corporation of India (LIC), the country's largest insurer, which was absent from the unit-linked insurance plan (Ulip) segment for one-and-a-half years, is set to launch one in the second quarter of this financial year. S K Roy, chairman of LIC, tells M Saraswathy and Manojit Saha that the insurer has set an ambitious target of selling 30 million policies this year. Edited excerpts:
LIC's equity investments were Rs 58,000 crore in the previous financial year. What will be the investment strategy in FY16, particularly in equities?
Last year, it was a rising market. As a contrarian investor, we tend to sell in a rising market. In a falling market, we will tend to buy. Which of the two will happen will depend on the behaviour of the market. So, it is very difficult to give a figure.
Our last year's profit was an all-time high. We booked more than Rs 24,000 crore of profits last year.
The stock markets fell sharply during early trade on Monday, but recovered later. Was it an opportunity for LIC?
The markets fell on Monday and theoretically, it should appear as a buying opportunity. But the market was very shallow. So even when a buyer is willing to buy a large quantity, the volumes are very low.
What is the target for first-year premium growth in 2015-16?
We are targeting first-year premium of Rs 31,000 crore this financial year from individual sales, which is about 15 per cent growth over last year. And we are targeting to sell more than 30 million new policies.
The targets for the number of policies look ambitious compared with last year...
Last year was an aberration in the recent history of LIC for a variety of reasons. Those reasons have disappeared this year. Last year, not only did we have a fewer number of products, but the sales team also had to get used to the new products. That took a fair amount of time. Now, the sales team is more accustomed to the products, which will help in boosting sales.
How many products are you looking to launch this year?
We plan to add five to seven products in this financial year. It will include health, Ulips, conventional products, among others.
Have you received regulatory approvals for the products, particularly the Ulip, which LIC has been planning for a long time?
We have all the necessary approvals for the Ulip and we will be launching it during the second quarter (July-September). Historically, our Ulip products have done quite well. We are optimistic on the new product.
The Reserve Bank of India had expressed some concerns about LIC's investments in public sector banks, especially due to contagion risks. Do you view it as an issue?
We are absolutely compliant. Whatever thresholds are permitted by Irdai (Insurance Regulatory Authority of India), we are working within those thresholds. Till such time we are compliant, there is no need for us to worry. There has been no violation of regulations from our side. We are required to work within the four corners of regulations that are made. If regulations need review, the persons who made it will have to take a call.
But public sector banks are not in a good shape as bad loans are rising...
Public sector banks have been created by the same entity that created us. Where is the scope for worry? They will always remain government-owned banks. There could be balance-sheet risks such as NPAs (non-performing assets) going up or profits coming down. But these are balance-sheet risks; there are no institutional risks.
It is often said that LIC as a minority shareholder in companies across India Inc is not very active. What are your thoughts?
We are very clear that in every company we are a minority shareholder and LIC Act gives us a responsibility that we safeguard our interests. It is a statutory responsibility that we cannot run away from. I believe in the history of the corporation, we have never run away from the responsibility of protecting our interests as a minority shareholder.
I don't think this history is going to change in the future. We will continue to take steps to protect the interests of the corporation. But will we indulge in activism, in what manner, etc will be decided on a case-to-case basis.
LIC has traditionally been the largest recruiter of agents. What are the plans for this financial year?
This time, we have set an ambitious target. We want to close this year with 1.5 million agents. This would mean adding 300,000 a year. We might not reach there, but that is the short-term goal to reach there. The slight simplification in the process by Irdai will help us achieve this objective.
Has LIC taken the steps to digitise insurance policies through the insurance repository (IR) system?
The final guidelines on these have come. Our team is working on it and what will happen is online IR will start. We are already selling term policies online and as we are able to put in place systems, we will be going into the IR for non-online segment as well.
Are you looking to expand the online product portfolio?
We are interested in bringing more products to the online segment. Going forward, we see it as part of the overall facility to migrate towards insurance repositories. In the future, we could also have online versions of the off-line products that we file with the regulator for approval.
LIC's equity investments were Rs 58,000 crore in the previous financial year. What will be the investment strategy in FY16, particularly in equities?
Last year, it was a rising market. As a contrarian investor, we tend to sell in a rising market. In a falling market, we will tend to buy. Which of the two will happen will depend on the behaviour of the market. So, it is very difficult to give a figure.
More From This Section
So there was profit booking last year...
Our last year's profit was an all-time high. We booked more than Rs 24,000 crore of profits last year.
The stock markets fell sharply during early trade on Monday, but recovered later. Was it an opportunity for LIC?
The markets fell on Monday and theoretically, it should appear as a buying opportunity. But the market was very shallow. So even when a buyer is willing to buy a large quantity, the volumes are very low.
What is the target for first-year premium growth in 2015-16?
We are targeting first-year premium of Rs 31,000 crore this financial year from individual sales, which is about 15 per cent growth over last year. And we are targeting to sell more than 30 million new policies.
The targets for the number of policies look ambitious compared with last year...
Last year was an aberration in the recent history of LIC for a variety of reasons. Those reasons have disappeared this year. Last year, not only did we have a fewer number of products, but the sales team also had to get used to the new products. That took a fair amount of time. Now, the sales team is more accustomed to the products, which will help in boosting sales.
How many products are you looking to launch this year?
We plan to add five to seven products in this financial year. It will include health, Ulips, conventional products, among others.
Have you received regulatory approvals for the products, particularly the Ulip, which LIC has been planning for a long time?
We have all the necessary approvals for the Ulip and we will be launching it during the second quarter (July-September). Historically, our Ulip products have done quite well. We are optimistic on the new product.
The Reserve Bank of India had expressed some concerns about LIC's investments in public sector banks, especially due to contagion risks. Do you view it as an issue?
We are absolutely compliant. Whatever thresholds are permitted by Irdai (Insurance Regulatory Authority of India), we are working within those thresholds. Till such time we are compliant, there is no need for us to worry. There has been no violation of regulations from our side. We are required to work within the four corners of regulations that are made. If regulations need review, the persons who made it will have to take a call.
But public sector banks are not in a good shape as bad loans are rising...
Public sector banks have been created by the same entity that created us. Where is the scope for worry? They will always remain government-owned banks. There could be balance-sheet risks such as NPAs (non-performing assets) going up or profits coming down. But these are balance-sheet risks; there are no institutional risks.
It is often said that LIC as a minority shareholder in companies across India Inc is not very active. What are your thoughts?
We are very clear that in every company we are a minority shareholder and LIC Act gives us a responsibility that we safeguard our interests. It is a statutory responsibility that we cannot run away from. I believe in the history of the corporation, we have never run away from the responsibility of protecting our interests as a minority shareholder.
I don't think this history is going to change in the future. We will continue to take steps to protect the interests of the corporation. But will we indulge in activism, in what manner, etc will be decided on a case-to-case basis.
LIC has traditionally been the largest recruiter of agents. What are the plans for this financial year?
This time, we have set an ambitious target. We want to close this year with 1.5 million agents. This would mean adding 300,000 a year. We might not reach there, but that is the short-term goal to reach there. The slight simplification in the process by Irdai will help us achieve this objective.
Has LIC taken the steps to digitise insurance policies through the insurance repository (IR) system?
The final guidelines on these have come. Our team is working on it and what will happen is online IR will start. We are already selling term policies online and as we are able to put in place systems, we will be going into the IR for non-online segment as well.
Are you looking to expand the online product portfolio?
We are interested in bringing more products to the online segment. Going forward, we see it as part of the overall facility to migrate towards insurance repositories. In the future, we could also have online versions of the off-line products that we file with the regulator for approval.