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LIC net surges to Rs 234 cr in Q3FY22 due to change in surplus distribution

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In the same period last financial year, LIC's net profit totaled Rs 0.91 crore.Life Insurance Corporation


Ahead of its initial public offering (IPO), Life Insurance Corporation’s (LIC) net profit surged to Rs 234.91 crore in September – December quarter (Q3FY22), owing to the change in surplus distribution model, wherein shareholders will now get a larger share of the surplus than earlier. In the same period last financial year, LIC’s net profit totaled Rs 0.91 crore. For the 9 months ended FY22 (April – December), net profit of the insurer stood at Rs 1,642.78 crore.

 had a single “life fund” before Section 24 of the  Act was amended by the government to bring its surplus distribution mechanism at par with private life insurers. Now, the life fund has been segregated into two funds – participating policyholders fund and non-participating policyholders’ fund. Consequently, the surplus distribution in the participating policyholders’ fund has been modified to 90:10 in a phased manner, wherein 90 per cent will go to policyholders and 10 per cent to shareholders. Further, 100 per cent of the surplus generated out of the non-participating business will be available for distribution to all shareholders.

This change, according to M R Kumar, chairman LIC, will help  increase its profitability, a metric that will be closely tracked once it gets listed. “Going forward, with the change in surplus distribution, profitability will increase. Beyond that, it’s a question of how the product mix changes, penetration, more coverage to people, getting into sectors where we have been missing out. So, that should take care of the profits,” Kumar had said.

Premiums of the insurance behemoth increased 0.8 per cent to Rs 97,761 crore in Q3FY22 from Rs 97,008 crore in the year-ago period. In the first 9 months of FY22 (9MFY22), premiums of the insurer, which includes first year premiums, renewal premiums, and single premiums, totaled to Rs 2.84 trillion, up 1.67 per cent year-on-year (YoY).

Persistency ratio of the insurer dipped in Q3FY22, with the thirteenth month persistency ratio at 69.23 per cent compared to 72.98 per cent in the same period a year ago. But the 61st month persistency inched higher than the year ago period to stand at 57.28 per cent. Persistency ratio is the ratio of life insurance policies receiving timely premiums in the year and the number of net active policies. The ratio indicates how many policyholders are paying the due premiums regularly on the policies with the insurer.

The solvency ratio -- a measurement of the entity’s ability to meet its debt obligations and other financial commitments – of the insurer improved to 1.77 as of December, 2021, compared to 1.64 in the same period last year. The minimum regulatory requirement is 1.5.

The  (NPA) ratio also saw sharp improvement, with the  ratio at the end of Q3FY22 standing at 6.32 per cent compared to 7.78 per cent in the same period a year-ago. And, net  ratio improved to 0.04 per cent compared to 0.14 per cent in the same period.

LIC filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) on February 13, thus setting the ball in motion for the country’s largest-ever public listing. The government will sell 5 per cent of its stake, or 316.25 million shares of its over 6,325 million shares. The government owns 100 percent of LIC. Sebi has cleared the DRHP of the state-owned Life LIC. Following the market regulator’s nod to the IPO papers, the insurer can launch its share sale. However, LIC may not launch its IPO immediately given the current volatile market conditions.

The government is hoping to launch the IPO as soon as stock market volatility, sparked by the Russian invasion of Ukraine, recedes.

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India good at managing finances but global energy price rise will hurt it, says IMF MD Kristalina Georgieva

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During a media roundtable on Thursday on the Russian invasion of Ukraine and its global impact, Gita Gopinath, who is the First Deputy Managing Director of the IMF, observed that the war has posed a challenge to economies around the world, including India

Surge in global energy prices will hurt India, says IMF MD Georgieva |  Business Standard News.

India has been very good at managing its finances but the surge in global energy prices is going to have a negative impact on its economy, said Kristalina Georgieva, the Managing Director of the International Monetary Fund.

During a media roundtable on Thursday on the Russian invasion of Ukraine and its global impact, Gita Gopinath, who is the First Deputy Managing Director of the IMF, observed that the war has posed a challenge to economies around the world, including India.

"India relies heavily on energy imports and the price is going up. That has implications on the purchasing power of Indian households. "If you're looking at headline inflation numbers, inflation in India is close to around six per cent, which is the upper end of the inflation band for the Reserve Bank of India," Gopinath said.

This has implications on the monetary policy in the country and it is a challenge in many parts of the world, not just India, she said. Georgieva said, "Clearly the most significant channel of impact on the Indian economy is energy prices."

India is an importer and the increase in energy prices is going to have a negative impact, she said, adding, "India has been very good in managing its finances." She stressed that there are some fiscal spaces to be able to respond to the challenge.

"Our advice to our members is first and foremost make sure that you protect the most vulnerable populations from the shot up of prices, not only energy but also foot food prices for countries where this is going to be a significant factor," the IMF managing director said.

"Target your fiscal space to those that are in a grievous need to be supported. We would also be looking into monetary policy responses, as to how could they be calibrated appropriately to what is happening," Georgieva added.

Also Read | US steps up pressure on Russia for Ukraine war, calls for raising tariffs

US steps up pressure on Russia for Ukraine war, calls for raising tariffs

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Washington's moves to tighten the screws on Moscow come as US and European officials accuse Russia of war crimes.

Photo: BloombergU.S. President  on Friday will call for an end of normal trade relations with Russia and clear the way for increased tariffs on Russian imports as punishment for its invasion of Ukraine, a source said.

Washington's moves to tighten the screws on Moscow come as U.S. and European officials accuse Russia of war crimes over its bombardment of civilians in Ukrainian cities, amid repeated violations of ceasefires which each side blames on the other.

Satellite images showed a Russian military column threatening Kyiv from the north had dispersed to new positions, private U.S. company Maxar Technologies said, possibly in preparation for an assault on the capital.

Removing Russia's status of "Permanent Normal Trade Relations" with the United States will require an act of Congress, one senior administration official said. Lawmakers in both houses of Congress have expressed support.

The move would be another escalation in the push by the United States and its allies to pressure Russian President Vladimir Putin to end the largest conflict in Europe since World War Two.

Russia calls its actions in Ukraine a "special operation" to disarm Ukraine and unseat leaders it calls neo-Nazis. Ukraine and Western allies call this a baseless pretext for a war of choice that has raised fears of wider conflict in Europe.

RUSSIAN COLUMN REDEPLOYS

Images provided by Maxar show armoured units manoeuvring in and through towns close to Antonov airport northwest of Kyiv, while other elements further north had repositioned near Lubyanka with towed artillery howitzers in firing positions.

Reuters was unable to independently verify the images but the Ukrainian armed forces' general staff said late on Thursday Russian forces had regrouped after heavy losses, without specifying which elements they were referring to.

The U.S. Senate on Thursday voted to approve legislation providing $13.6 billion to help Ukraine in its fight against Russia.

"We're keeping our promises to support Ukraine as they fight for their lives against the evil Vladimir Putin," Senate Majority Leader Chuck Schumer said. The aid for Ukraine is designed to finance ammunition and other military supplies, as well as humanitarian support.

After three weeks of war Russia has failed to reach its stated objectives of disarming the Ukrainian military and ousting the democratically elected government, but it has caused thousands of deaths and forced more than 2 million people to flee the country, where several cities are under siege.

Putin, facing global condemnation and increasingly isolated, said on Thursday Russia would emerge stronger after what he calls the special military operation. "There are some questions, problems and difficulties but in the past we have overcome them and we will overcome them," he said.

Russian Foreign Minister Sergei Lavrov said the operation was going to plan after holding talks with his Ukrainian counterpart, Dmytro Kuleba, in Turkey on Thursday, the highest-level meeting since Putin ordered the invasion on Feb. 24.

Kuleba said afterwards that Lavrov had refused to promise to hold fire to allow aid distribution and the evacuation along humanitarian corridors of civilians trapped in the besieged southern port city of Mariupol and elsewhere. Lavrov repeated Moscow's accusations that Ukraine posed a threat to Russia, which wants Kyiv to drop any aspirations of joining the NATO military alliance.

CIVILIANS TRAPPED

Hundreds of thousands of civilians remained trapped in Ukrainian cities, sheltering from Russian air raids and shelling despite repeated Russian promises to provide humanitarian corridors for evacuations.

Russia's defence ministry said it would declare a ceasefire on Friday and open humanitarian corridors from Mariupol as well as Kyiv, Sumy, Kharkiv, Mariupol and Chernihiv, although previous ceasefires have broken down with both sides blaming the other.

Officials in Mariupol said Russian warplanes again bombed the city on Thursday, a day after a maternity hospital was pulverised in an attack the United States said was evidence of a war crime.

Linda Thomas-Greenfield, the U.S. ambassador to the United Nations, said Washington was "working with others in the international community to document the crimes that Russia is committing against the Ukrainian people".

"They constitute war crimes; there are attacks on civilians that cannot be justified by any "in any way whatsoever," said in an interview with the BBC. Lavrov said the hospital struck on Wednesday had stopped treating patients and had been occupied by Ukrainian "radicals".

Russia's Defence Ministry later denied having bombed the hospital at all, accusing Ukraine of a "staged provocation". Ukrainian President Volodymyr Zelenskiy said on Thursday that Ukrainian authorities had managed to evacuate almost 40,000 people from the cities of Sumy, Trostyanets, Krasnopillya, Irpin, Bucha, Hostomel and Izyum.

Efforts to send food, water and medicine into Mariupol failed when Russian tanks attacked a humanitarian corridor, Zelenskiy said. "This is outright terror ... from experienced terrorists," he said in a televised address.

SANCTIONS BITE

The war in Ukraine and massive sanctions against Russia have triggered a contraction in global trade and sent food and energy prices sharply higher, dealing a blow to global growth, International Monetary Fund Managing Director Kristalina Georgieva said on Thursday. The sanctions had already triggered an abrupt, significant contraction of the Russian economy and it faced a "deep recession" this year, she told reporters.

The resulting massive depreciation of the rouble was driving inflation higher and denting the standard of living for "a vast majority of the Russian population". At a summit in France, European Union leaders on Thursday differed over the reach of sanctions against Moscow and refused Kyiv's appeal for rapid accession to the bloc.

Some EU leaders pushed for tougher sanctions that would hit Russia's oil and gas industries even if that meant repercussions for those European nations reliant on Russian fossil fuels.

"The war in Ukraine is an immense trauma ... But it is also most definitely something which is going to lead us to completely redefine the structure of Europe," French President Emmanuel Macron said.


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