Eyeing extra capital earlier than IPO, LIC withheld dividend to govt
In a bid to preserve capital, IPO certain Life Insurance Corporation (LIC), has not paid any shareholder dividend to its proprietor, the Government of India, within the final two years — 2019-20 and 2020-21. The complete revenue reported by the state-run insurer throughout FY21 was Rs 2,901 crore as in opposition to Rs 2,713 crore within the earlier 12 months. It paid a dividend of Rs 2,611 crore in FY19.
Sources at LIC stated the Corporation has already amassed Rs 6,300 crore of capital by not paying any dividend to the federal government within the final two years and it’s planning to lift extra.
For a long time, LIC has adopted a effectively laid out ratio of 95:5, the place 5 per cent of its revenue — known as surplus — goes to the federal government as dividend, whereas 95 per cent is distributed amongst its participatory coverage holders. Unlike non-public sector life insurers, LIC distributes its whole revenue between the federal government and its coverage holders.
LIC at present has a a lot smaller capital base of Rs 100 crore and a small reserve, although it controls belongings price Rs 38 lakh crore and companies over 30 crore insurance policies. Though the federal government raised the authorised capital base of the Corporation to Rs 24,900 crore within the Budget 2021-22 in view of its deliberate mega preliminary public providing (IPO), it’s not identified when this capital shall be infused into the Corporation.
Whether the fee of enormous dividend by LIC to the Centre will proceed or not sooner or later, shouldn’t be identified but. The insurer may have an enormous base of retail and different establishments as new shareholders as soon as it will get listed after the IPO. The income which have been distributed between the federal government and coverage holders should be shared with new shareholders yearly.
LIC had an funding revenue (policyholder’s and shareholder’s,) together with capital good points, and its different revenue was Rs 2.79 lakh crore in 2020-21 (Rs 2.37 lakh crore in 2019-20). Its declare settlement ratio was 98.62 per cent as at March 31, 2021, in comparison with 96.69 per cent as at March 31, 2020, and the proportion of its claims repudiated/rejected fell to 1.0 per cent in 2020-21 from 1.09 per cent within the earlier 12 months.
The declare settlement ratio of personal insurers was 97.02 per cent throughout FY21 (97.18 per cent throughout FY20) and the proportion of repudiations got here all the way down to 2.0 per cent within the 12 months 2020-21 from 2.50 per cent in earlier 12 months.
During the pandemic, when insurers have been saddled with numerous claims, the life insurance coverage trade’s settlement ratio elevated to 98.39 per cent in 2020-21 from 96.76 per cent in 2019-20, and the repudiation/rejection ratio decreased to 1.14 per cent from 1.28 per cent in FY20.
LIC paid advantages of Rs 2.86 lakh crore in 2020-21, constituting 70.85 per cent of the premium underwritten (Rs 2.53 lakh crore in 2019- 20, 66.62 per cent of the premium underwritten).
The advantages paid on account of surrenders/withdrawals of the life insurance coverage trade elevated to Rs 1.29 lakh crore in 2020-21 (Rs 1.17 lakh crore in 2019-20), of which LIC accounted for 61.89 per cent and the remaining 38.11 per cent was by the non-public sector.
As of March 31, 2021, LIC has workplaces in 669 districts, i.e. 91 per cent of the 735 districts within the nation, whereas non-public insurers have workplaces in 596 districts, overlaying 81 per cent of all districts.