LIC NOT AVERSE TO STAKE SALE IN SATYAM

New Delhi: Keeping an eye on engineering giant L&T's moves on the Satyam front, government-run life insurance major LIC, which has equity investment and board representation in both the companies, on Thursday said the IT firm was still valua ble and could be revived with right leadership. “We have an investment there (Satyam). If better returns come from a sale, then we (will) go for a sale,'' LIC Chairman told PTI but added that he would not give any instruction to two nominees that the insurer has on L&T board on the issue. The country 's top life insurer, which has over four per cent stake in Satyam, however, ruled out joining the race for acquiring the troubled IT firm, either alone or with L&T.

“We don't have the expertise to run an IT company. We are clear on Satyam issue that we are an investor... We are not interested in controlling the company. We are interested in the prosperity of the company as our money is still there,'' Vijayan said. Asked given its position as the single largest investor in L&T with about 18 per cent stake, LIC would want the engineering major to take over the IT firm. “We are the single largest shareholder, but L&T is a board-driven company. It is not proper for me to discuss.''
On its suggestion to LIC nominees on L&T board, he said that the insurer had two members on L&T board, but their brief was to focus on proposals made at the meeting and the issues arising out of those. When asked what LIC would prefer between a takeover or revival of Satyam, Vijayan said, “If somebody is taking over and giving us a better return, then we will do it

Source: PTIS, The Hindu Business Line, The Indian Express, Deccan Chronicle, The Pioneer, The Statesman

LIC'S NEW POLICY WON'T BE SUBSIDIZED BY POLICYHOLDERS: CHAIRMAN

Chennai: Existing Life Insurance Corp (LIC) policyholders will not have to subsidise holders of the insurer's new guaranteed return product Jeevan Aastha, LIC chairman T.S. Vijayan has said. Launched for 45 days, the scheme closed Wednesday and is expected to fetch LIC around Rs.90 billion (Rs.9,000 crore). "There is no question of robbing Peter (existing policyholders) to pay Paul (Jeevan Aastha holders)," Vijayan told IANS over phone from Delhi. "The funds collected under Jeevan Aastha will be kept separately and investments will be made from that. A triple A rated corporate bond gets a return of 11 percent. We will soon be locking the investments," he added. Vijayan said he was confident the fund will generate sufficient surplus to pay not only the guaranteed return but also the loyalty bonus. The single premium policy guarantees a return of Rs.90 and Rs.100 for every Rs.1,000 of sum assured for a five-year and a 10-year tenure, respectively. However, this has made competition to raise doubts as to how LIC is going to pay such high returns, as the compounded rate of interest works out around eight percent. An official of a private life insurer preferring anonymity said: "In the case of a guaranteed return policy, 50 percent of the premium collected will have to be invested in government securities and the balance in triple A rated corporate securities." "The return on government securities is around six percent and 8.5 percent in the case of corporate bonds. After factoring in expenses like agents commission and administrative costs, LIC's margin will be around seven percent. The question is how LIC will bridge the shortfall as similar products sold by private players offer lower returns." But according to Vijayan, LIC has taken sufficient precaution to avoid any asset-liability mismatch. "The policy will be for two periods, five years and 10 years, and the scheme closed on Wednesday. In a couple of days we will know the amount collected selling Jeevan Aastha." According to sources close to LIC, the product does not leave much margin for LIC.

Source: The Economic Times

ECGC NOT TO HIKE PREMIUM ON INSURANCE COVERAGE

Kolkata: Export Credit Guarantee Corporation (ECGC) has no plans to hike premium on its insurance coverage in near future. The coverage is offered to Indian exporters and bankers to protect them against payment defaults by overseas buyers. In a related move to make insurance coverage more attractive among exporters, the Corporation has resolved to expedite claim settlements on payment defaults against exports of Indian goods and services.
In the next MoU with the government, ECGC will make a commitment to settle 50% of the total claims within seven days, instead of ten days being taken now to do the job. The balance claims will be cleared in 50 days in case of micro, small and medium exporters (MSME) and 55 days for general category exporters. The existing time span is about 60 days. The next MoU, due for 2009-10, is expected to be signed at the beginning of the year.
“Exporters are increasingly becoming aware about the benefit of taking risk coverage for their exports, especially after the outbreak of financial turmoil and economic slowdown in the global space. This tendency is being more noticed among pharmaceutical, ready-made garments, and gems and jewellery exporters who have been hit hard due to the meltdown in markets like the US and the UK,” ECGC executive director S Prabhakaran told ET.
Already, claims against non-receipt of payments have started pouring in from those sectors. For instance, the insurer has cleared an insurance claim of Rs 23.5 crore, which was raised by a jewellery exporter from the eastern region for not getting back export receivables from a buyer in Hong Kong. With the ready-made garment exporters facing problems in getting their payments from the US market, ECGC has settled claims of Rs 95 crore last month against payment defaults by two American buyers.
Even as claims against payment defaults are expected to go up this year, it would not have any adverse impact on ECGC’s income. This is reflected in the growth of premium income in the current year, which grew 14% to Rs 571 crore till mid-January.

Source: The Economic Times

IRDA REVISES NORMS FOR OVERSEAS REP OFFICES

Mumbai: With global insurance companies taking a hit due to the economic recession, the Insurance Regulatory and Development Authority (Irda) has asked domestic insurance companies to provide information on the business gathered through the representative or liaison office, expenditure incurred, details of complaints received and redressed. The regulator has asked insurers to submit reports on a quarterly basis and at the close of a financial year in the annual report.

Source: Business Standard

SATYAMITES LOSE HEALTH INSURANCE COVER

Hyderabad: Thousands of Satyam employees working across the country are set to lose their health insurance cover from as the beleaguered IT giant has failed to renew the premium. The company did not pay the approximately the Rs 30 crore outstanding premium “despite repeated requests” to Iffco-Tokio General Insurance Company on Wednesday which is the last date for payment, according to reliable sources.

The personnel from the Third Party Administrator (TPA) – TTK Health Care Pvt. Ltd – also tried to reach Satyam top brass in vain. While the lower-level staff replied that a decision would be taken at the top level, none of them took any measures to pay the premium, the source said. “When we asked them for the payment a couple of days ago, we were told that the first priority was to run the office and pay the salaries but not health insurance,” the source said.

The immediate implication for the employees is loss of health cover. “Unlike life insurance there is no provision to pay later with fine. The company has to take a fresh policy. Till then no health claims would be valid,” he said. The limit of health insurance cover for Satyam employees varies at different levels beginning from Rs 2 lakh. The average claim size of Satyam has been between Rs 12,000 and Rs 15,000, according to data available with TTK Health Care.

Employees shocked
When contacted, some Satyamites were shocked to know that the premium was not paid.
“This is very painful as our life has already been ridden with uncertainities over the job itself. I see this as an indication of future shocks. I hope, I don’t lose my job by the month-end,” Mr A. Janardhan, a Satyam staffer, said.

Top brass under cover
Paradoxically, the top brass of Satyam still enjoy insurance cover (other than health) as on date under the D&O policy which protects the personal fortunes of individual directors and officers, in respect of personal liabilities arising out of their wrongful acts such as breach of duty, breach of trust, neglect, error, misstatement or misleading statement.

“As on date the insurance cover for Satyam top brass under Directors and Officers (D&O) and Errors and Omissions (E&O) policies is very much in force,” an official from ICICI Lombard said while refusing to give details about renewal date and premium dues.

Sources: The Hindu Business Line