DR.B.R.AMBEDKAR MEMORIAL CONVENTION BY ICEU, CHENNAI-I photos

DR.B.R.AMBEDKAR'S 55TH MEMORIAL CONVENTION BY ICEU, CHENNAI-I

Addressing a Special Convention on the 55th death anniversary of Dr.B.R.Ambedkar, the architect of the Indian Constitution, organized by the ICEU, Chennai Division-I, Com.K.Samuelraj, General Secretary, Tamilnadu Untouchability Eradication Front (TNUEF) , made a comparison of similarities between Karl Marx and Dr.Ambedkar in their outlook and approach. He disclosed that although a nine-member committee was formed with Dr.Ambedkar and other leaders like Shri.T.T.Krishnamachari, to draft the Constitution, ultimately it was left solely to Dr.Ambedkar to complete the job even though he was critically ill at that time. Com.Samuelraj also recalled that Dr.Ambedkar was of the firm belief that the movement for securing freedom for India and that for the upliftment of the dalits and other oppressed sections of the population should go together. Com.Samuelraj also lauded the role of AIIEA, its  leaders and cadres and their involvement and support to the historic movement being conducted by the TNUEF for eradication of untouchability.

Greeting the Convention, Com.K.Swaminathan, General Secretary, SZIEF who is also actively involved in the TNUEF movement, described the multi-faceted roles played by Dr.Ambedkar in the Indian political scenario. His arduous struggles against social oppression, contributions for the economic development of the country on socialistic pattern and his unrelenting fight against British imperialism among many others had helped to understand his personality, Com.Swaminathan said and described the role played by the AIIEA from the very beginning on the issues of social reforms like reservation for the oppressed communities, etc. He concluded by stating that the TNUEF had afforded an opportunity to the AIIEA’s units and cadres for playing a very vital role in the task of fighting untouchability and eradicating all symbols of social oppression.

While Com.V.Shrikanthan, Vice-President, ICEU, Chennai Division-I, presided over the meeting, Com.S.Rameshkumar, General Secretary, ICEU, proposed a vote of thanks. The audience in the meeting comprised of comrades from both the life and general sectors and fraternal trade unions.

Flag Hoisting-on 54 th General conference

Gate meeting -massive turnout of employees-on parliament passed LIC Amendment Bill 2011.

54 th Divisional conference photos

IPO guidelines fail to excite insurers

The recent Initial Public Offer (IPO) guidelines notified by the Insurance Regulatory and Development Authority to raise capital may not excite too many life insurance companies given the poor sentiment in the equity market and doubts on the possibility of getting good valuations. On the contrary, eligible insurers (for IPO) would rather want to dilute their stake in favour of their foreign joint-venture partners rather than test the volatile equity markets since last last one year.

Insurance sector was opened up for the private sector in the year 2000. There are about 23 life insurance companies besides state insurer Life Insurance Corporation (LIC). According to IRDA, insurers that have complete at least 10 years in India would be eligible for raising capital through IPO.

IPO guidelines

The insurer’s overall financial position, track record, reasons for fund raising and the capital structure post issue would be the basic parameters insurance regulator would look at before granting its approval. Post IRDA’s approval, the applicant would have to file the Draft Red Herring Prospectus (DRHP) with the capital market regulator Securities and Exchange Board of India (SEBI) within a year.

The draft prospectus must mention the risk factors specific to the insurance companies, overview of the insurance industry, glossary of terms used in the sector and financial statements, among others. The insurance companies must have an embedded value (EV) of at least twice the paid-up-equity capital, according to the IRDA guidelines. The embedded value of a life insurance business is an estimate of the value of both its net assets and the income stream expected from policies already in force.

No issuance and allotment of capital by an insurance company should be, in any form other than as fully paid-up equity shares, the guidelines said. The insurance regulator would prescribe “the extent to which promoters shall dilute their respective holding, the maximum subscription which could be allotted to any foreign investors”, said the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011. IRDA, it added, would prescribe a lock-in period for the promoters to prevent them from exiting the company.

The regulations stipulate that no life insurance company should approach market regulator Securities and Exchange Board of India (SEBI) for an IPO without seeking prior approval of IRDA. “Almost all such companies who have completed 10 years are in urgent need of additional capital and the regulations would make it convenient for the promoters to address the issue,” said Kamalji Sahay, MD & CEO, Star Union Dai-ichi Life.

Valuation worry

Life insurance industry is going through a major and unprecedented haul since last 12-14 months starting from the Unit Linked Insurance Plan guidelines issued in September, last year. The series of measures be it on commissions or 4.5 per cent guarantee on pension products which were announced earlier this year and taken back last month left insurance industry reeling under the pressure of making substantial changes to their distribution model and overall marketing strategy along with the structure of various products.

This hit the bottomline of the insurance companies negatively affecting their profitability and forcing them to pare the operating expenses. Total premium collected by the life insurance industry stood at Rs 1,25,179 crore during April-September 2010-11, according to the Life Insurance Council.

"The fall in total premium is due to the drop in new business premium collection," it said. The total new business premium for the industry decreased 21 per cent year-on-year to Rs 49,046 crore from Rs 62,362 crore.

The IRDA in its guideline has removed the earlier suggested mandatory 3 year profitability clause which would come as a great relief for the insurers hit by the lowering margins.

A rather tepid two years on account of global slowdown and regulatory changes in the sector has seen companies focusing on rationalisation and consolidation rather than growth. “It will take at least a year for the situation to stabilise and for growth to return to the previous heady levels”, said SB Mathur, Secretary General, Life Insurance Council.

The decline was on account of low sales of unit-linked products, especially individual pension segment, which has fallen drastically this year to 1.2 per cent from an average of 26 per cent for the earlier two years for the same period.

They want FDI, not IPO Cash strapped insurance industry has been demanding hike in the Foreign Direct Investment (FDI) limit to 49 per cent which currently is capped at 26 per cent. “Many private life insurance companies that started operations around a decade back are turning profitable. This is a time to consolidate to ensure a sustainable profitable growth. FDI is of critical importance to the sector at this juncture rather than an IPO,” said the CEO of a private insurance company requesting not to be named.

There are 5 private insurers that have completed a decade in India including Reliance Life, HDFC Standard Life, and ICICI Prudential Life Insurance. Reliance life recently completed its 26 per cent stake sale to Japan’s Nippon Life for over Rs 3,000 crore.

Amitabh Chaudhry, MD & CEO, HDFC Life had earlier told Indian Express, “We are not in a hurry to go for an IPO. Our shareholders are very clear that we would go for it only at the right time which implies the right valuation that can be sustained based on our business performance.”

According to insurance experts, most of the eligible insurers (for IPO) would rather want to dilute their stake in favour of their foreign joint-venture partners, should FDI in insurance is hiked to 49 per cent, rather than test the volatile equity markets.

Life insurance industry (private sector) in India is still in its nascent stage despite spending about a decade. It is trying its hand on various formats of distribution – agency, bancassurance and alternate channels but still needs to find the right mix of distribution strategy which would help it become profitable and break even. Given the economic uncertainty along with the fears of another global meltdown, the equity market visibility for next 12-18 months does not look very optimistic making the IPO guidelines not so exciting for the insurers.

IRDA to decide promoter stake dilution, foreign subscription in IPOs

Mumbai: The Insurance Regulatory and Development Authority (IRDA) on Thursday notified guidelines for life insurers to raise capital via initial public offering (IPO) or subsequent fund raising from the equity market with several riders relating to promoters’ equity dilution and participation by foreign investors.

IRDA will decide the size of the public issue, it said in a notification. As per the guidelines, promoters of the insurance companies will also be allowed to offload their stake in the company.

The insurance regulator would prescribe “the extent to which promoters shall dilute their respective holding, the maximum subscription which could be allotted to any foreign investors”, said the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011. IRDA, it added, would prescribe a lock-in period for the promoters to prevent them from exiting the company.

IRDA has stipulated that life insurance firms must be operating for at least 10 years before planning such fund raising. Also no life insurance company should approach market regulator SEBI for IPO without seeking prior approval from IRDA.

After IRDA’s approval, the applicant company would have to file the Draft Red Herring Prospectus (DRHP) with market regulator SEBI within a year, the norms said.

While granting approval, the regulator would take into consideration the company’s overall financial position, its record, the capital structure post issue and reasons for fund raising. In June, IRDA had issued draft guidelines on such listings for public comments.

No issuance and allotment of capital by an insurance company should be, in any form other than as fully paid-up equity shares, the guidelines said.

Besides, insurance companies are expected to have an embedded value of at least twice the paid-up equity capital, and should be fully compliant with the corporate governance guidelines issued by IRDA.

Further, the insurance companies would have to mention in the DRHP the risk factors specific to the insurance companies, overview of the insurance industry, glossary of terms used in the sector and financial statements, among others.

After the insurance sector opened up in 2000, only 23 private companies have entered the life insurance business.

While few companies would immediately become eligible for IPOs, the remaining would have to wait for completion of 10 years of operations.

The insurance companies, which will become eligible to come out with the IPOs, include ICICI Prudential Life, HDFC Standard Life and SBI Life.

IRDA asks LIC to settle death claims within 6 months

New Delhi: To ensure prompt settlement of claims, IRDA has asked Life Insurance Corporation of India (LIC) to complete all claims-related investigations within the stipulated time-frame of six months.

"The Authority advises the LIC to expeditiously complete all the claim investigations within the stipulated time frame and also put in place effective systems to settle the claims promptly," the IRDA said.

The Insurance Regulatory and Development Authority (IRDA) said that while examining the documents submitted by LIC it found there were 300 cases as on March 2010 where investigations were pending beyond six months.

"Despite huge number of death claims being handled by LIC, there is still scope for LIC to improve the claim settlement performance and adhere to provisions of regulations," IRDA said.

The IRDA Regulations warrant an insurance company to complete investigation within of death claims in 6 months from the date of lodging of claims. Further, a life insurer has to pay or dispute the claim giving reasons for the same within 30 days of receipt of all relevant papers.

In September, IRDA had asked insurance companies not to mechanically reject claims on technical grounds, like delay in filing claim documents.

IRDA has issued these directives following complaints that claims are being rejected on grounds of delay in intimation and submission of documents to insurers.

Demonstration at Chennai-against FDI in retail trade

      As per the call given by AIIEA to protest against the central governments move to introduce 51% of foreign direct investment in multi brand retail trade, a powerful demonstration was held in the LIC Building in Chennai, which is the landmark building. A huge gathering of employees, officers and agents were present to express their opposition to the government’s move to allow FDI in retail trade. The protest demonstration was held on 1.12.2011 at 1.00 p.m. Sri.Vellayan President of Tamil Nadu Traders association addressed the protest rally.  The class I officers association and the agents association led by LICOAI also joined the protest rally. More than 300 women including class I women officers attended. Sri.Vellayan in his address praised the AIIEA for its valuable support for the traders in their fight against FDI in retail. He fondly remembered that AIIEA Chennai unit released a booklet in the year 2006 against the evils of allowing FDI in retail. He assured the insurance employees the unequivocal support in their fight against the government’s attempt to destablise the public sector LIC. Com.S.Ramesh kumar ,General Secretary, ICEU, Chennai division-I, presided the protest rally. While welcoming Sri.Vellayan, he reminded the employees about the dangers of the insurance bills which are pending in parliament for approval and also reminded Sri.Vellyan about the convention held in Chennai in the year 2006 against allowing FDI in retail trade, in which he participated and addressed, in which  Com.Deepankar Mukharjee, then Deputy Leader of Rajya Sabha,CPI(M),  was the chief guest at that convention, On behalf of AIIEA he assured full support for the traders in their fight against FDI in retail trade. Com.K.Swaminathan, General Secretary was present in the meeting.

Oppose FDI in Retail

நாடு ஒரு வேதனையான தருணத்தை நோக்கி நடைபோட்டுக் கொண்டிருக்கிறது. சில்லரை வர்த்தகத்தில் அன்னிய முதலீட்டை அனுமதித்திருக்கும் செயலானது மென்மேலும் சிறு வியாபாரத்தைச் சீரழிக்கும். வேலை வாய்ப்பை இழந்து தெருவுக்கு வரும் மக்களுக்கு உணவளிக்கவோ, மாற்று வேலைகளை ஏற்படுத்திடவோ அரசிடம் திட்டங்கள் இல்லை. மாறாக விலையேற்றமும், கட்டண உயர்வுகளுமே நிதர்சனமாகி வருகின்றன. தமிழன், தெலுங்கன், சீக்கியன் என்றில்லாமல், இந்தியாவின் எல்லாப் பகுதிகளிலும் இருப்பவனுக்கும் இல்லாதவனுக்குமான இடைவெளி மேலும் அதிகரிக்கிறது. பசியால் வாடும் குழந்தைகளின் எண்ணிக்கையும், ஒரு கவளச் சோற்றுக்காக அலைந்திடும் கர்ப்பிணிகளின் எண்ணிக்கையும் குறைந்தபாடில்லை.

இந்தியா என்ற தேசம் மிக அண்மைக் காலத்தில் உருவானது. சாதி, மத, மொழி, பண்பாட்டு வேறுபாடுகள் இருந்த போதும் “இந்தியன்” என்ற உணர்வை ஏற்படுத்தும் ஒரே காரணி இருக்குமானால் அது நாம் ஏகாதிபத்தியத்தை எதிர்த்து விடுதலை பெற்றவர்கள் என்பதுதான். இன்று அதே ஏகாதிபத்தியம், உலகப் பெரும் நிதி மூலதனமாக மாறி பங்குச்சந்தைகளின் வடிவில் நம்மை ஆக்கிரமிக்க வருகிறது. பட்டுத்துணியிடம் ஏற்பட்ட வியாபாரப் போட்டியால் கட்டை விரல்கள் வெட்டுப்பட்ட இந்திய நெசவாளர்கள் நினைவுக்கு வருகிறார்கள். அவுரிக்காகவும், இன்ன பிற செல்வங்களுக்காகவும் நிர்மூலமாக்கப்பட்ட நமது மண் சிவந்து கிடக்கிறது. அதே வரலாற்றை மீண்டும் அனுமதிக்கப் போகிறோமா? ... வரலாற்றுச் சக்கரம் பின் நோக்கிச் சுழலுமா?

 

Life insurance premium collection down 2%

Mumbai: The life insurance industry reported 2 per cent dip in premium collections to Rs 1,22,661 crore in the first half of this fiscal because of fall in new business.

Total premium collected by the life insurance industry stood at Rs 1,25,179 crore during April-September 2010-11, according to the Life Insurance Council.

"The fall in total premium is due to the drop in new business premium collection," it said.

The total new business premium for the industry has decreased 21 per cent year-on-year to Rs 49,046 crore from Rs 62,362 crore.

The decline was on account of low sales of unit-linked products, especially individual pension segment, which has fallen drastically this year to 1.2 per cent from an average of 26 per cent for the earlier two years for the same period.

"It is evident from the data that voluntary contribution from retail investors under individual pension segment has dried up," said S B Mathur, Secretary General, Life Insurance Council.

According to the council, the life insurance industry, however, has added more than 5,400 direct employees and 26,000 new agents as compared to last quarter.

Overall, the outlook for the remaining six months this fiscal appears to be better in view of lack luster performance of the industry in the first half.

However, companies need to introduce new products at regular intervals to sustain the interest of the consumers, the council said.

FDI in retail is a suicidal step

The Centre's decision to allow 51% foreign direct investment (FDI) in multi-brand retail sector is akin to suicide for a country like India, said Bhavarlal H Jain a pioneer of micro-irrigation in India. Jain, the founder-chairman of Jain Irrigation Systems Ltd, was speaking at the 13th edition of Confluence-2011 at the Indian Institute of Management, Ahmedabad (IIM-A) on Saturday. He said India already had Tata and Reliance who are smart retailers as well. "We don't need Walmart or US smart. I don't blame (prime minister) Manmohan Singh for this, nor do I blame the government because I don't see any government here," he quipped. Jain said that India, being a major market, would understandably attract other countries who want to sell their products. "But why should the Indian government compromise the interest of our farmers? An Indian farmer with one acre of land is no match for a US farmer with 20,000 acres of land," he said. Jain added that the decision would affect poor farmers adversely. "The decision is like committing suicide. They (other countries) want to sell their goods and need markets. But is it necessary for us to buy their products? Today's world needs markets and India provides that market. It means we have the upper hand. So why can't we frame strict rules for Western countries that are keen to enter our market?" Jain asked.

54 th Divisional Union Conference

The 54 th divisional union conference of ICEU chennai division I is proposed to be held on 10 and 11 th december 2011. Our All India General Secretary Com.K.Venugopal is going to inagurate the conference. The conference is held in the background of the financial meltdown through out the wrold economies. The UPA-II government is very particular that the insurance bills pending before indian parliament should be enacted. This will put the interest of our people in jeopardy. Manmohan singh is trying to open the economy further and want to allow the international financial capital to access the peoples savings. This move is fraught with dangerous proportions. To safeguard the well being of the nation we have to fight the ill conceived move of the government.

Noam Chomsky

All over the place, from the popular culture to the propaganda system, there is constant pressure to make people feel that they are helpless, that the only role they can have is to ratify decisions and to consume.
Noam Chomsky 

Announced Job Cuts in U.S. More Than Triple From Year Ago

U.S. employers announced the most job cuts in more than two years in September, led by planned reductions at Bank of America Corp. (BAC) and in the military.

Announced firings jumped 212 percent, the largest increase since January 2009, to 115,730 last month from 37,151 in September 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Cuts in government employment, led by the Army’s five-year troop reduction plan, and at Bank of America accounted for almost 70 percent of the announcements.

While the bulk of firings are not “directly related” to economic weakness, they “could definitely be a sign of more cuts to come,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Bank of America is not the only bank still struggling in the wake of the housing collapse, and the military cutbacks are probably just the tip of the iceberg when it comes to federal spending cuts.”

More reductions will add to the pool of job seekers competing for work as policy makers, including President Barack Obama and Federal Reserve officials, strive to spur the labor market. Payrolls probably didn’t rise fast enough last month to lower the jobless rate, according to a Bloomberg News survey of economists before the Labor Department’s monthly jobs figures in two days.

Compared with August, job-cut announcements climbed 126 percent, the Challenger report showed. Because the figures aren’t adjusted for seasonal effects, economists prefer to focus on year-over-year changes rather than monthly numbers.

Government agencies announced 54,182 reductions in September. Of those, 50,000 resulted from the troop reductions announced by the Army, Challenger said.

Financial Companies

Financial companies announced 31,167 cuts, the second most layoffs. Bank of America, the biggest U.S. lender by assets, said on Sept. 12 it will eliminate 30,000 jobs in the next few years as part of Chief Executive Officer Brian T. Moynihan’s plan to bolster profit. The reductions, equal to about 10 percent of the staff, are part of an overhaul that aims to remove about $5 billion in annual costs by the end of 2013.

Today’s report also showed that employers announced plans in September to hire 76,551 workers, up from 15,201 the prior month, while down from 123,076 in the same month last year. Retailers led the gains, planning to add 70,912 positions ahead of holiday.

September Employment

Employers probably added 60,000 jobs in September as the unemployment rate held at 9.1 percent, according to the median forecast in a Bloomberg News survey of economists ahead of the Oct. 7 Labor Department figures.

The Fed ‘will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in a context of price stability,” the central bank’s Chairman Ben S. Bernanke said yesterday in testimony to Congress.

“Recent indicators, including new claims for unemployment insurance and surveys of hiring plans, point to the likelihood of more sluggish job growth in the period ahead,” he said.

Challenger’s data do not always correlate with figures on payrolls or first-time jobless claims as reported by the government. Many job cuts are carried out through attrition or early retirement. Some employees whose jobs are eliminated find work elsewhere in their companies and many announced staff reductions never take place because business improves. The totals also include foreign affiliates.

India gold ETF demand likely to explode: World Gold Council

MUMBAI: Demand for gold exchange traded funds(ETF) in India is likely to "explode" as investors get accustomed to "click-and-park" mode of investing, shying away from sagging stock markets and as high inflation eats into bank savings, a trade body head told Reuters on Thursday. 

"Clearly people are seeing convenience in the form of ETF, going through the same broker which he has for equities," said Ajay Mitra, managing director - India and the Middle East, World Gold Council (WGC). In the last four years, volumes in gold ETFs have grown over 164 percent. Mitra said another reason for the attractiveness of paper gold is that unlike in jewellery there are no intermediate costs. Currently, volume in gold ETFs in India, the world's largest consumer of bullion, is more than 15 tonnes-minuscule compared with the country's annual physical gold demand of 900 tonnes. Gold prices in India have gained 29 percent since the start of the year, compared with just 15 percent gains in the stock market. The WGC is working on a number of gold-based investment products, but they are still at the "concept stage". "It is still work in progress. The government is looking at various options to fund the economy," said Mitra. He, however, declined to give details. The council expects gold prices on India Multi Commodity Exchange to stabilise in between 27,000 rupees and 28,000 rupees ($549-$569) per 10 grams in October. This will boost demand during Dhanteras, the biggest gold buying festival, along with Diwali. "There has been marginal build-up (in inventory) but September has also been bad month from volatility point of view," said Mitra. With volatility at 21 percent, retailers had not stocked up, while other consumers were "not sure if tomorrow's price is better than today". OPTIMISTIC Outlook for gold in India is bright for the festival quarter during Oct-Dec due to the latent demand, Mitra said. "The trade is optimistic that we will see a better Diwali this year... but they are still a little sceptical of the volatility in prices and they want volatility to ease off a bit. Demand is there and price is not the factor as consumers are aware of the returns that gold has given," said Mitra. India gold demand rose 37 percent to 284.9 tonnes in the last quarter of 2010. "There is latent demand and the conditions are conducive for cause and case for gold. As inflation rate is high, real interest rates is negative," Mitra added. India's food price index rose 9.32 percent and the fuel price index climbed 15.10 percent in the year to Oct. 1. The stubborn inflation has prompted the RBI to raise interest rates a dozen times in the past 18 months and its key policy rate stands at 8.25 percent. The WGC said the flow of scrap, which is the raw material for gold refiners in India, has dried up. "Indian refineries will have to find some other business or some other way to value add to that business," said Mitra.

'Life insurance is India's pet investment'

New Delhi: Life insurance products are the hot favorite of most urban Indians as an investment option and they are likely to earmark over half of their investable income for these products in future, says a study by market research firm Nielsen.

According to Nielsen's study on the life insurance sector and investment patterns, 'LIFE 2011', a little over 60 per cent of urban Indians hold insurance policies, which are likely to account for a large share of their future investments as well.

A look at the shift in investment habits over the last two years indicates that people are returning to fixed investment products, while investment in risky categories like equity is on the decline.

The study said that Indians, in practice, remain "risk averse" and the main drive behind an urban Indian's investment is returns, followed by unforeseen emergencies and child education.

"Given the recent volatility in equity markets and rise in commodity markets, urban Indians, being traditionally risk averse, are returning to safer, more traditional investment products like life insurance, given the tax benefits and limited risk associated with the product," Nielsen Head - Finance Practice Subhash Chandra said.

As per the study, there is a sizeable opportunity waiting to be tapped. The young investor segment accounts for nearly a fifth of the population and most of them currently do not hold a life insurance policy. This space is the also the most enthusiastic to invest in life insurance in the immediate future.

"With the youth entering the workforce at high salaries these days, the young investor segment is a huge opportunity for most financial service organisations. Coupled with the historical acceptance of life insurance as a safe investment and the added tax benefits that it provides, life insurance seems to have retained favour with even the young investors," Chandra added.

There is also an opportunity to expand coverage by way of additional policies, as around 16 per cent of life insurance holders are open to investing in a new policy within the next six months.

"While in the short-term, marketers can look at ensuring conversions from this segment, the long-term opportunity for life insurance marketers lies in increasing dual policy ownership. Hence, marketers need to promote the benefits of opting for a second policy to current policyholders," Nielsen Finance Practice Head Insurance and Investments Anand Parameswaran said.

Indians are still not open to making insurance purchases over the internet, going by the response of current policyholders, Neilsen said.

External Debt

Bhagat singh

Delayed settlements only to those who withold info: HDFC Life

Mumbai: Private insurer HDFC Life, which has been penalised by the regulator Irda for delayed settlements, today said it clears all claims on time unless there is a non-disclosure of material facts and that in all such cases it pays penal interest to the affected party.

"HDFC Life has a philosophy of paying all claims (on time) unless and until there is a non-disclosure of material fact or a fraud against the company (claimant). We have a practice of investigating such claims, which involve additional information," the company Chief Executive Officer, Amitabh Chaudhary, said in a statement here.

"However, HDFC Life pays penal interest for compensating policyholders as specified in the regulations, wherever these delays take place," he stated.

The delay in investigation in cases, which were part of the showcause notice by Irda, was due to non-cooperation of the claimants, hospitals or other public authorities to provide the requisite information or evidence, he said.

Earlier in the week, the regulator had imposed a penalty of Rs 5 lakh on HDFC Life for delaying settlement of claims and has asked the insurer to streamline its processes.

The watchgod had also directed the insurer "to put in place (within 15 days) effective claim settlement procedures and take all such measures that deem fit for both pro-active and timely settlement of all types of claims."

The order was issued on a complaint filed with the Insurance Regulatory and Development Authority (Irda) in April 2009 for delay in settlement of death claims by HDFC Life.

Reliance Cap completes stake sale in Reliance Life to Nippon

Mumbai: Seven months after announcing a 26 per cent stake sale in Reliance Life Insurance to Nippon Life for a consideration of Rs 3,062 crore ($680 million), Reliance Capital completed the transaction on Sunday. This makes the deal the largest foreign direct investment (FDI) in the Indian financial services sector.

Reliance Capital said it received the entire transaction proceeds of Rs 3,062 crore from Nippon Life.

The deal had got the go-ahead from insurance regulator Irda and the Reserve Bank of India in September. Reliance Capital completed the stake sale before the completion of ten years of business. In August, the Finance Ministry issued a circular saying that Indian promoters of insurance companies will not have to wait for completion of 10 years in business to be able to divest their holding.

The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore ($2.6 billion).

Commenting on the development, Reliance Capital CEO Sam Ghosh said that Nippon was coming on board as a valued strategic partner in Reliance Life Insurance.

“Nippon’s vast experience of over 122 years will help strengthen Reliance Life Insurance’s position as a leading and world class insurance company in India,” said Sam Ghosh, CEO, Reliance Capital.

Nippon Life, also known as Nissay, is the seventh-largest life insurer in the world and the largest private life insurer in Asia and Japan.

It posted revenues of Rs 3,49,834 crore and a profit of Rs 12,199 crore for the fiscal year ended March 31, 2011.

Reliance Life started operations in 2005 after the acquisition of a life insurance company by Reliance Group.

UPA-II: United in commiting atrocity on people

Most Ohio union workers affected by insurance rule

Employees of more than 550 school districts, townships and other government units across Ohio will see their share of health care costs rise if voters approve a collective bargaining law this fall, state data show.

Widespread impact of the provision is fueling arguments on both sides.

Supporters say having employees pay a bigger share of their health care costs will bring them in closer alignment with private sector workers and help balance local budgets. Opponents say the data validate that the union-limiting bill will hurt tens of thousands of average workers around the state, who will be required by the law to spend more on benefits.

An Associated Press review of data kept by the State Employment Relations Board finds that state workers and many county and health-district employees already pay more on average than the 15 percent share that will be required under the law. About 77,000 of Ohio's 360,000 unionized government workers are in state and county government.

Unionized township and fire district employees pay the lowest percentages toward health insurance on average, between 2.2 percent for employees of the smallest townships and 5.6 percent, the board's data show. That means those employees would see the biggest jump in costs in their health care premiums if November's Issue 2 passes.

School district employees -- not only teachers, but janitors, bus drivers, cooks and others -- are contributing 9.5 percent toward individual health insurance coverage and 11 percent toward family coverage on average, data show. City employees' contributions average around 8 percent, while college and university employees' contributions average about 13 percent.

Ohio Education Association spokeswoman Michele Prater said the averages mask a trend toward unions agreeing to pay larger shares of their health care and pension costs around the state, often alongside a pay cut or freeze. In other words, half of Ohio's 196,000 school district employees are already paying above the average for their sector, and half less.

Prater pointed to suburban Columbus' Southwestern Schools, where employees contribute between 28 percent to 35 percent toward health care and make $38,000 a year on average. Licking Valley Local Schools employees pay nearly 36 percent toward health insurance and make $31,000 a year on average, she said.

The health care provision of Senate Bill 5, signed by Gov. John Kasich in March, has been characterized in statewide advertising by Building a Better Ohio, the campaign defending the sweeping law, as a nod to basic fairness. The campaign's commercial also includes a reference to the bill's requirement that union workers will have to pay at least 10 percent toward their pensions.

Jason Mauk, a spokesman for the "vote yes" campaign, said private sector employees are already paying more than 15 percent toward their health care on average.

"The disparity between the public and private sectors, particularly in the area of health care, is financially unsustainable," he said. "You have some government employees in Ohio who pay nothing for their health care and you have private sector employees who are paying on average between 25 and 31 percent. That's an issue of fairness, and certainly an issue of affordability."

Melissa Fazekas, a spokeswoman for We Are Ohio, the campaign seeking to repeal Senate Bill 5, said health insurance contributions are just one small part of a voluminous, dangerous bill.

"Issue 2 fundamentally takes away the collective bargaining rights of hard-working Ohioans," she said. "It is a flawed bill that is unfair and unsafe for firefighters, police officers, teachers, nurses and our communities."

Opponents of the bill emphasize that union contracts around the state contain salary and benefits packages that were bargained in good faith and should not be negated by the state legislation.

IRDA slaps Rs 5 lakh fine on HDFC Standard Life

Insurance regulator IRDA on Wednesday imposed a penalty of Rs 5 lakh on HDFC Standard Life for delaying settlement of claim and has asked the insurer to streamline its processes."Considering the nature of the violation, the Authority has come to the conclusion that it is just and proper to impose a penalty of Rs 5 lakh on HDFC Standard Life Insurance," the IRDA said in its order      It has also directed the private life insurer "to put in place (within 15 days) effective claim settlement procedures and take all such measures that deem fit for both pro-active and timely settlement of all types of claims."The order was issued on a complaint filed with Insurance Regulatory and Development Authority (IRDA) in April 2009 for delay in settlement of death claims by HDFC Standard Life. Upon investigation the insurance regulator found that HDFC Standard Life did not have the effective mechanism to comply with the IRDA regulation for settlement of claims."On examining the documents and submissions of the Life Insurer it is observed that the Insurer did not have in place effective procedures to comply with the above regulation," IRDA observed.  

RBI OK's Reliance Cap's RL stake sale

Mumbai: The Anil Dhirubhai Ambani Group's (ADAG) financial services arm Reliance Capital today said it has received approval from the Reserve Bank of India (RBI) for its proposed 26 per cent stake sale in Reliance Life Insurance to Japan's Nippon Life.

The company had signed a definitive agreement to sell a 26 per cent stake in Reliance Life Insurance to Nippon Life Insurance for Rs 3,062 crore earlier this year. The deal was subject to regulatory approvals.

The Insurance Regulatory Development Authority (IRDA) has already granted in-principle approval for the proposed stake sale. Following RBI clearance for the deal, IRDA will now grant final approval for completion of the transaction, Reliance Capital said in a filing to the Bombay Stock Exchange.

Commenting on the development, Reliance Capital CEO Sam Ghosh said, "We are delighted to receive the RBI approval, bringing us closer to concluding this transaction very shortly."

"This is great news as we move closer to completing the transaction," Nippon Life Insurance President Yoshinobu Tsutsui said.

This transaction pegs the total valuation of Reliance Life Insurance at around Rs 11,500 crore.

Nippon Life is a 122-year-old Global Fortune 100 company and the seventh largest life insurer in the world. It is a leading private life insurer in Asia and Japan.

R-Cap figures among the country's top-four private sector financial services and banking groups in terms of net worth.

Most Trusted Brands 2011: LIC retains number 1 spot in life insurance category

From the year 2003 to 2007, LIC reigned supreme in Brand Equity's Most Trusted Brands Survey - in the services list of the survey - the insurance major was the numero uno service brand for five consecutive years. 

But call it a reflection of the market dynamics on-the-ground, the big daddy of life insurance in India slipped to No. 4 in the overall services list last year and is ranked No. 12 in the services list this year. The slip is owing to the rise of other service brands, particularly telecom services providers who have kept a scorching and an aggressive go-to-market strategy touching millions of lives across India. 

Telecom services and banks may have dislodged LIC from the overall list, but the company still rules the life insurance category. LIC is at No. 1 spot, followed by competitors SBI Life and Reliance Life at No. 2 & 3 respectively. LIC today has 78% market share in the life insurance space and services 28 crore individual policies besides covering more than 9 crore people under group insurance /superannuation schemes and more than 3 crore families under social security schemes. 

While LIC still dominates the category by a wide margin, there are clear indications that competition is hard at work to narrow the gap. The Brand Equity's Most Trusted Brands survey reveals that in the four zones, SBI Life comes a close second after LIC in the North zone. SBI Life also beats LIC as the most preferred life insurance brand in Chandigarh. Reliance Life Insurance is the other life insurance brand that has managed to beat LIC in the cities of Chennai, Bengaluru and Chandigarh. 

The brand has been quite visible through advertising recently and its efforts at improving distribution two years back through the introduction of the Chief Life Insurance Advisors (CLIA) scheme to leverage cream of its agent pool has also yielded positive results. In less than 24 months after CLIA was first introduced, LIC managed to get close to 15 lakh agents. 

The first year premium coming from just the CLIA scheme was so significant, that if the proceeds from CLIA were taken in isolation, it'll be the sixth largest amongst the 22 life insurance companies operating in India. For the year 2010-11, LIC earned Rs 203,358 crore as premium and settled a mind-boggling 183 lakh claims for the same time period paying Rs 52,160 crore. 

General insurance industry to reach Rs 90K cr by 2015

New Delhi: The general insurance industry is estimated to grow by over 18 per cent to reach a size of Rs 90,000 crore by 2015, industry chamber Assocham said.

The current size of the non-life industry is Rs 47,000 crore.

Motor insurance would continue to remain the largest category, contributing over 40 per cent of industry premiums, Assocham said in a statement.

"India will be one of the fastest growing markets in Asia and globally -- next only to China among major markets," it said.

India will become the third largest car market globally by 2020, with over 70 lakh cars sold annually, driving growth in motor insurance, Assocham said.

Besides, total expenditure on healthcare will be Rs 20 lakh crore, creating significant opportunities for coverage through health insurance.

"The health insurance segment will grow the fastest and account for close to 30 per cent of total industry premiums by 2015," Assocham secretary general DS Rawat said.

Within health insurance, the government sponsored health schemes will grow the fastest while retail will emerge as the largest opportunity, he said.

Further, with increase in infrastructure spending, there would be opportunities for insuring these projects as well.

In the next 5-year Plan beginning April 2012, investment is infrastructure sector involving road, port, railway and power is envisaged at USD 1 trillion.

Reliance Life gets IRDA OK for stake sale

Mumbai: The Anil Ambani Group's financial services arm Reliance Capital today said it has received in-principle approval from insurance sector regulator Insurance Regulatory Development Authority for its proposed 26 per cent stake sale in Reliance Life Insurance to Japan's Nippon Life.

The company has received in-principle approval from Insurance Regulatory Development Authority (IRDA) and final approval for the proposed sale would be granted upon receipt of RBI consent, Reliance Capital said in a statement.

"We are delighted to receive the IRDA approval and expect to conclude this transaction within the next few weeks," Reliance Capital CEO Sam Ghosh said.

Commenting on the development, Nippon Life Insurance President Yoshinobu Tsutsui said, "This is great news for both of us. We hope we will be able to close the transaction in the near future."

Earlier this year, Nippon Life had signed a definitive agreement for acquiring a 26 per cent stake in Reliance Life Insurance for Rs 3,062 crore.

This transaction pegs the total valuation of Reliance Life Insurance at around Rs 11,500 crore.

Nippon Life is a 122-year-old Global Fortune 100 company and the seventh largest life insurer in the world. It is a leading private life insurer in Asia and Japan.

R-Cap figures among the country's top-four private sector financial services and banking groups in terms of net worth.

Company INFO More on Reliance Capital

LIC hikes stake in PFC to 5.01 pc

New Delhi: Life Insurance Corp has hiked its stake in Power Finance Corp (PFC) to a little over 5 per cent after purchasing additional shares worth over Rs 3.82 crore through open market purchases.

PFC, a leading lender for power projects, today said Life Insurance Corp (LIC) bought more than 2,64,667 shares or 0.020 per cent stake valued at over Rs 3.82 crore. With this transaction, which happened on September 5, LIC's total stake in the power sector lender has increased to 5.017 per cent.

The details were disclosed by PFC in a regulatory filing to the Bombay Stock Exchange.

Prior to the latest acquisition of shares, LIC had 4.997 per cent stake in PFC. Shares of PFC jumped three per cent to close at Rs 150.20 on the BSE.

PFC's product portfolio includes project term loan, equipment lease financing and consultancy services, according to its website.

LIC set to foray into venture capital biz

Mumbai: Diversifying its operations further the state owned Life Insurance Corporation (LIC), with over R12 lakh crore assets, has decided to participate in infrastructural debt funds (IDF) and to foray into the venture capital business.

While sorting out the technicalities with the segment regulator Insurance Regulatory and Development Authority (Irda) on infrastructural debt funds, the life insurance behemoth is launching a R500-crore venture capital fund.

Confirming the development, DK Mehrotra, acting chairman, LIC, said, “We will launch a R500 crore venture capital fund in the next few days, through our housing subsidiary LIC Housing Finance, with a focus on infrastructure.”

VK Sharma, chief executive officer, LIC Housing Finance (LICHFL), said the LICHFL venture capital fund, to be headed by Arun Goel,would raise the money over a month from banks, high net worth individuals and institutions.

“The venture capital’s focus will be to invest primarily in urban real estate and infrastructure. If the need arises, we may look at partnering with someone in future.’’

On the infrastructural debt fund Mehrotra said, “We want to participate, but the regulator has to agree to our picking up a stake of more than 10%. We are in talks with the regulator to be able to more.”

Mehrotra said LIC has not been able to fulfil its mandated 15% investments funds in the infrastructure sector having invested only 13% during 2010-11 due to lack of opportunities.

The finance ministry which finalised the guidelines for IDFs in June this year, allowed IDF to be set up either as a trust regulated by capital market regulator Securities and Exchange Board of India (Sebi) or as an non-banking financial company (NBFC) regulated by Reserve Bank of India.

A trust-based infrastructural debt fund would normally be a mutual fund. LIC has three subsidiaries — LIC Mutual Fund , LIC HFL and LIC Pension Fund.

Govt to bend rules for Reliance Life?

New Delhi: Government is thinking about relaxing equity dilution norms for insurers.

The government is likely to soon relax the norms for dilution of equity stake by Indian promoters of insurance companies, a move that will pave the way for Reliance Life to sell a 26 per cent stake to Nippon of Japan.

The proposed order will help remove the ambiguity of Section 6AA of the Insurance Act. The ambiguity came to light when Reliance Life announced its plans to go for a public offer in 2009, but could not obtain regulatory approval as it had not completed 10 years of existence.

"We will soon issue a circular which will enable insurance firms to dilute promoters' stake though permissible means before 10 years of operations," official sources said.

Section 6AA of the Insurance Act, 1938, stipulates that a promoter holding over 26 per cent in an insurance company, including re-insurance, will be required to divest their stake and bring it below this threshold limit in a phased manner "after a period of 10 years from the date of the commencement of the said business by such Indian insurance company or as prescribed by the central government".

This provision does not apply to the foreign promoters of insurance firms, as per the explanation of the section.

Sources said even the Law Ministry is of the view that there are no regulatory hurdles if promoters of life and general companies and re-insurance firms dilute their stake before the 10-year period stipulated in the clause.

With the enabling provision, insurance firms can dilute their stake anytime, sources said.

ADAG-promoted Reliance Life came into existence with the acquisition of AMP Sanmar in 2005. AMP Sanmar started operations in January, 2002, which implies Reliance Life would complete 10 years of operations in January next year.

Insurance for USD 680 million (about Rs 3,060 core), subject to regulatory approval.

In March this year, Japanese insurance firm Nippon Life Insurance Company agreed to acquire a 26 per cent stake in Reliance Life 

The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore (USD 2.6 billion).

As per the current rules, a foreign entity can hold up to a 26 per cent stake in an Indian insurance firm.

Nippon is the sixth largest life insurer in the world and the No 1 private life insurer in Asia and Japan.

Govt to bend rules for Reliance Life?

New Delhi: Government is thinking about relaxing equity dilution norms for insurers.

The government is likely to soon relax the norms for dilution of equity stake by Indian promoters of insurance companies, a move that will pave the way for Reliance Life to sell a 26 per cent stake to Nippon of Japan.

The proposed order will help remove the ambiguity of Section 6AA of the Insurance Act. The ambiguity came to light when Reliance Life announced its plans to go for a public offer in 2009, but could not obtain regulatory approval as it had not completed 10 years of existence.

"We will soon issue a circular which will enable insurance firms to dilute promoters' stake though permissible means before 10 years of operations," official sources said.

Section 6AA of the Insurance Act, 1938, stipulates that a promoter holding over 26 per cent in an insurance company, including re-insurance, will be required to divest their stake and bring it below this threshold limit in a phased manner "after a period of 10 years from the date of the commencement of the said business by such Indian insurance company or as prescribed by the central government".

This provision does not apply to the foreign promoters of insurance firms, as per the explanation of the section.

Sources said even the Law Ministry is of the view that there are no regulatory hurdles if promoters of life and general companies and re-insurance firms dilute their stake before the 10-year period stipulated in the clause.

With the enabling provision, insurance firms can dilute their stake anytime, sources said.

ADAG-promoted Reliance Life came into existence with the acquisition of AMP Sanmar in 2005. AMP Sanmar started operations in January, 2002, which implies Reliance Life would complete 10 years of operations in January next year.

Insurance for USD 680 million (about Rs 3,060 core), subject to regulatory approval.

In March this year, Japanese insurance firm Nippon Life Insurance Company agreed to acquire a 26 per cent stake in Reliance Life 

The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore (USD 2.6 billion).

As per the current rules, a foreign entity can hold up to a 26 per cent stake in an Indian insurance firm.

Nippon is the sixth largest life insurer in the world and the No 1 private life insurer in Asia and Japan.