LIC Singapore arm, to apply for licence
State-run Life Insurance Corporation of India (LIC) will seek licence from the Singapore government to set up a subsidiary to sell policies.
In 2009, LIC had sought the approval from the Singapore government to set up office which was turned down as the insurer did not have a rating in place.
The corporation has got the rating done from the international credit rating agency Moody’s Investors Service.
Rating agency S&P has assigned ‘BBB-‘ long-term and ‘A-3’ short-term.
Moody’s has upgraded the government’s sovereign rating ‘BA1’ for the financial year ended March 31, 2011.
The rating, which looks at a country’s financial and political climate, suggests its ability to repay loans.
LIC’s rating, like any public sector unit, is based on standard parameters. The entity is unique in terms of functioning with nominal capital. Its paid-up capital is only 5 crore and it had been assigned the sovereign credit rating on India.
“We have our representative office in Singapore. Now that we have a rating in place, we will apply for the licence to set up the subsidiary,” LIC managing director AK Dasgupta said. Harbhajan Mann Yaara o Dildaara
LIC is reserved under law to re-invest profits as the entire surplus is distributed between the government and policyholders.
It’s financial strength is derived from the government guarantee for every policy issued by the corporation.
The insurer plans to expand in east African countries as well. Mr Dasgupta said LIC gets around a marginal 0.5% business from its overseas expansion.
“Overseas business is more profitable compared to the domestic one,” he said. As LIC does not have any capital of its own, international operations are funded through budgetary allocation whenever required.
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