LIC makes Rs 2,600 cr in bear mkt

In a year when equity markets fell by 38 per cent, the country’s largest insurance company, state-run Life Insurance Corporation of India (LIC), has booked a profit of Rs 2,600 crore through sales of Indian stocks.

According to industry estimates, LIC has sold shares in 75-80 Bombay Stock Exchange (BSE)-listed companies during the past financial year, when most domestic institutions were either booking losses or buying more shares. The 30-stock bellwether BSE index fell from 15,771.72 in April last year to 9,708.50 at the end of March 2009, marking one of the worst-ever falls of Indian stocks during any financial year.

During this period, while most insurance companies and mutual funds were incurring losses, LIC managed to book profit by selling in equities. It had also booked a profit of around Rs 10,000 crore during FY07-08.

“THOUGH the profit booking numbers have come down from that of fiscal 2007-08, LIC still considers that a profit-booking amidst falling markets were possible during FY08-09 because our investments were made for a long term. Now, as the markets tend to improve, given the formation of a stable government, we expect the profit booking numbers to go up again,” said a senior LIC executive.

Apart from the Ranbaxy open offer, where LIC had offloaded a massive 8.56 per cent stake, a sale of about 1.11 per cent in Colgate-Palmolive, about 1 per cent stake sale in Cadila Healthcare, a 1.32 per cent offloading in Bajaj Electricals, a 1.45 per cent sale in Hindustan Unilever, a 5.42 per cent sale in Hero Honda and a 2.56 per cent sell-off in Kirloskar Electric were some of the biggest profit booking deals done by the insurer during the past financial year.

Despite the Sensex rising by about 40 per cent from 9,745.77 since April 1, the insurer could not book much profit, as most of the bull runs have come over the past few days. Monday’s historic jump kept most investors away from profit booking, as the circuit filters were broken in just 60 seconds.

“We have been booking profit even this financial year, but not so aggressively. Also, there were fewer profit booking occasions during April, as the markets were suffering from negatives due to political uncertainties. Now that we have a stable government, the markets look steady. Most of our investments in equities are meant for the long term, so profit booking gains come from those sales where investments were made long back,” said Thomas Mathew, Managing Director.

Source:business-standard

Sensex jumps 14.1% on week; best in 17 years

MUMBAI: The BSE Sensex rose 1.1 per cent on Friday and took gains for the week to 14.1 per cent, its most in 17 years, buoyed by hopes for pro-market reforms after the ruling coalition won general election last weekend.

Manmohan Singh was sworn in as the prime minister for a second term, along with his new cabinet and the outlook for the market would depend on how quickly they are able to push asset sales in state firms, ease rules for foreign investment and boost sagging growth.

Some analysts believe the market is overbought after it leapt more than 17 per cent at the start of the week following the unexpectedly easy election win. The BSE index has risen 73 per cent from a 2009 low in early March and has climbed for 11 weeks in a row in the longest winning streak in four years.

"Valuations have become high, but people are buying because they may be left out otherwise," D.D. Sharma, vice president at Anand Rathi Securities, said.

The BSE index ended up 150.61 points at 13,887.15, with gainers and losers evenly matched. Trading was choppy with the index falling 0.9 per cent at one stage.

Brokerages and investment houses polled by Reuters expected the benchmark to reach 15,750 by the end of December, gaining another 13 per cent.

"There are so many desperate buyers because nobody is betting on the market going down. You will see people buying at every dip from now," Sharma said.

Energy giant Reliance Industries, private-sector lender ICICI Bank and infrastructure firm Larsen & Toubro led the market higher after a lower start.

Reliance, which has the biggest weight in the main index, rose 3.1 per cent to 2,183.10 rupees, while private-sector lender ICICI gained 4.5 per cent to 702.80 rupees.

Larsen & Toubro climbed 4.7 per cent to 1,301.40 rupees.

The market has largely been powered by foreign funds, which have pumped about $5 billion into the market in the past two months, including more than $1 billion in this week.

Outsourcers Tata Consultancy and Wipro, which get most of their revenue from overseas, fell about 2 per cent as the rupee climbed past 47 to a dollar to its highest since December.

The rupee is set to extend its gains in the remainder of 2009 after rising sharply this week following the ruling Congress-led coalition's decisive victory in the elections, a Reuters poll showed.

Asian shares eased after a drop on Wall Street overnight on fears the United States, with its increasing budget deficit and weakened economy could lose its AAA rating.

Japan's Nikkei dropped 0.4 per cent, while MSCI's measure of other Asian markets edged down 0.02 per cent.

European shares were higher after falling more than 2 per cent in the previous session. The FTSEurofirst 300 index of top European shares was up 0.4 per cent at 1117 GMT.

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Private sector life insurance companies' market share rise

MUMBAI: The market share of private companies in life insurance business has gone up from 36.4 per cent in 2007\08 to 39.2 per cent in 2008\09, according to Bajaj Finserv, a major private insurance player.

The company while releasing the results today said in 2008\09, the life insurance industry declined by 6.3 per cent against a growth of 23 per cent during the year before.

New business premium for the industry as a whole was around Rs 87,108 crore compared to Rs 92,989 crore the year before, the company said.

While LIC had to contend with a negative growth of 10.5 per cent , the private sector companies grew marginally by one per cent in 2008\09.

"Accordingly, the market share of private players increased from 36.4 per cent last year to 39.2 per cent in 08\09", the company said.

Bajaj Finserv itself reported new business premium of Rs 4,492 crore compared to Rs 6,674 crore in the previous year.

Sanjiv Bajaj, managing director said the company chose not to pursue businesses that were not profitable which led to fall in the company's market share but it helped the company post a profit of Rs 45 crore against a loss of Rs 16 crore last year.

Source:ET

Switch In Time

Through switching, you can rebalance your Ulip portfolio to adjust to market movements and maintain the desired asset allocation Deepti Bhaskaran-outlook

How To Switch Step I Fill up a fund switch request form Step II Fax or deposit the form at the nearest branch. You could also contact your agent Step III The request will be processed the same day if the insurer receives it before 3 pm. Otherwise, it will be processed the next day Online investors can log in with their ID and password, provide policy details and fill up the request form online. Worried that the returns on your unit-linked insurance plan (Ulip) will nosedive along with the market? Planning to pull out from the plan to cut future losses? Don’t take that step yet. Ulips come with various fund options, ranging from pure equity to pure debt, and give you the freedom to move between these. In insurance parlance, this is called switching. Ulips give long-term investors the option to rebalance their portfolio in accordance with the movement of the markets. Says G. Murlidhar, chief operating officer, Kotak Mahindra Life Insurance: "Markets are still bottoming and one could systematically switch from debt to equity if the horizon is long." Fund options All Ulips offer three basic fund options—debt, equity and balanced. A debt fund primarily invests in government securities, company deposits and money market instruments. An equity fund invests in equities and a balanced fund invests both in equity and debt instruments. Among other fund options are security-specific funds like money market and gilt funds, and sectoral equity funds like mid-cap and energy funds. At the time of buying a policy, the premiums are invested in one or more funds of your choice. Switching Typically, up to four switches are free in a year. Once you have exhausted your free switches, the insurer charges Rs 100-500 from your fund value for every switch. Says Murlidhar: "Switches enable customers to rebalance their portfolio to maintain their asset allocation in the long term. There is a limit on the number of free switches as there is a cost implication. If an investor switches more than four times in a year, he could be actively trading and timing the market. Such cost should be borne by him as he could be gaining from the exercise." However, some policies offer a very high number of free switches in a year. For instance, HDFC Standard Life’s Unit Linked Endowment Plus II offers 24 switches per year, while Reliance Super InvestAssure Plan offers 52 free switches in a year. "For a long term investor, frequent switching makes little sense as that would border on trading," says Murlidhar. You can also redirect your fund allocation at the time of policy renewals. Says Sanjay Tripathy, executive vice-president and head (marketing), HDFC Standard Life: "Policyholders can stagger the premiums in various funds as per their choice. Rebalancing of existing funds can be done through switching and new premiums could be redirected." When to switch? "Switches should be seen as a tool to maintain asset allocation," says Murlidhar. Financial planners advise that those with an investment horizon of 20 years or more should have a debt-equity ratio of 20:80. As they approach the fag end of their term, the allocation should slowly change to the exact opposite—80:20. Switching gives the opportunity to maintain this allocation. Switching can also be used to secure your investments as you come closer to your policy’s maturity year. Says Murlidhar: "Switching should be based upon factors like the time left for policy maturity or the time left for one’s income to stop as that would determine one’s risk-taking ability. The principle of more debt with higher age is applicable here. Also, when one approaches a goal, one could lock in the returns from equity by switching to debt." Use switching smartly to get over the downturn blues and to stick to the desired asset allocation. Source.outlook

Tax exemption limit may go up

NEW DELHI: The full budget to be presented by the new government in the forthcoming session of Parliament to begin sometime next month may come packed with some concessions for the middle class by way of raising the tax exemption limit to up to Rs 1.75-Rs 2 lakh from the current Rs 1.50 lakh.

The other benefit in the direct tax segments could be withdrawal of the Fringe Benefit Tax. If through, both these measures will result in a tax outgo of around Rs 10,000 crore. Proposals in this regard are under active consideration, indicated a senior official in the finance ministry.

Raising of the tax exemption limit along with the withdrawal of FBT will act as another stimulus since the large middle class population will be left with more money in hand, especially at a time when the government is likely to release the remaining 60% salary arrears of the 6th Pay Commission.

The removal of FBT has also been mooted by the commerce ministry. It had also sought continuation of interest rate subsidy while seeking to further raise it from the existing 2% to 4%.

Sources in the finance ministry said there is no scope for any further cuts in excise duty, customs or service tax as the indirect tax collections had slipped into negative domain towards the end of the last fiscal. With the widening fiscal gap, it is equally important for the government to keep its revenue stream rejuvenated to fund its developmental and social schemes.

The commerce ministry is firmly backing industry's proposals for extending tax sops to export-oriented units, besides the continuation of interest rate subvention till March 2010. In their proposals to the finance ministry, industry chambers had asked the government to include measures in the budget that would promote investment and create additional demand.

Source:E.T

LIC to invest Rs 1.05 lakh cr in equity, debt this fiscal

MUMBAI: Life insurance major LIC plans to invest a whopping Rs 1,05,000 crore in equity and debt instruments in the current financial year, a top company official said.

"In FY 10, our gross investments in equity will be Rs 50,000 crore while we plan to invest Rs 55,000 crore in debt instruments," Life Insurance Corporation of India (LIC) Managing Director Thomas Mathew told media here.

During the last financial year, the company's gross investments in equity was Rs 40,300 crore and around Rs 48,000 crore in various debt instruments, Mathew said.

For the current financial year, LIC increased its investments in debt instruments and equity by around 20 per cent, sensing an opportunity with Indian companies looking at raising funds from domestic sources.

The company would invest in various debt instruments like corporate loans, non convertible debentures and project loans, he said.

"Our investments in debt instruments will be demand-driven," he said

Source: E.T

LIC Health plus Vs Health protection plus from LIC

Life Insurance Corporation of India (LIC) launches Health Protection Plus, a unique long term health insurance plan that offers health insurance covers for the entire family (husband, wife and the children) – Hospital Cash Benefit (HCB) and Major Surgical Benefit (MSB) along with a ULIP component (investment in the form of Units) that is specifically designed to meet Domiciliary Treatment Benefit (DTB)/ Out Patient Department (OPD) expenses for the insured members. Hospital Cash Benefit (HCB) is a daily benefit payable in case of hospitalization. It can range from Rs.250/- to Rs.2500/- for the Principal Insured (the person who proposes for insurance). For the Spouse or the children, the maximum amount of HCB is Rs.1500/-. The amount of daily benefit doubles in case of hospitalization in ICU. The IDB (Initial Daily Benefit) is applicable during the first year of risk cover. The amount of daily HCB will increase @ 5% simple per annum every year on policy anniversary until it hits a cap of 1.5 times the initial benefit. Major Surgical Benefit (MSB): In the event of the insured undergoing one of the major surgeries defined in the policy, a lump sum benefit (regardless of the actual costs incurred) equivalent to the percentage of the sum assured mentioned against that surgery will be payable. The sum assured for major surgical benefits will be 200 times of the HCB you choose. Domiciliary Treatment Benefit (DTB): The Principal Insured can claim an amount equivalent to the actual expense he or she has incurred in respect of any domiciliary treatment or to meet the medical expenses incurred over and above the hospital cash/major surgical benefits in respect of either oneself or the others insured under the policy. Both HCB and MSB covers are available subject to a waiting period from the commencement of the risk cover – in respect of each insured member. No death insurance cover is available under the plan. All eligible existing family members are to be covered at the beginning (proposal stage) itself. New members can however be added under certain specified conditions. Modes of Payment allowed are, yearly, half-yearly, & monthly (ECS mode only). The premiums allocated to purchase units will be strictly invested in a Health Protection Plus Fund (Income and Growth – Low Risk). The premiums paid under the policy are eligible for Tax Rebate under Section 80(D) of Income Tax Act, 1961.

Comparing Major differences between the two Health plans from LIC

Health Plus (plan 901)	Health Protection plus Plan (902)
Income tax exemption under sec 80D is only for the premium portion paid for major surgical benefit and Hospital cash benefit.	Here the total premium paid under the policy subject to a limit of Rs.15000 is taken for exemption under section 80D of income tax
----	Lesser health risk charges for major surgical benefits from age 61 onwards
----	Maximum Hospital cash benefit of Rs 2500 can be taken independently, apart from what ihas been already availed under health plus plan 901
Policy ends at age 65 of Principal insured	Policy is for whole life for each of the insured. However you can terminate the policy after age 75 by claiming full fund value as Domiciliary treatment benefit.
Premium is paid till end of term, viz age 65	premium to be paid only till age 65. MSB, HCB cover till age 75 and domiciliary cover for life.
HCB, MSB cover only available upto for Principal insured age 65, spouse age 65, children 25	HCB, MSB cover only available upto for Principal insured age 75, spouse age 75, children 25
Cover stops if premium payment ceases before three years from date of commencement of policy. If premium payment ceases after three years from date of commencement of policy then risk cover condinues until policy fund sufficient to cover regular charges subject to minimum of one annualized premium in the policy fund.	Health cover continues for all insured until fund sufficient to cover all health risk charges.
Policy can be revived with payment of arrears of premium and interest but if within 3 years from date of commencement then have to provide satisfactory evidence of health of all the lives.	Policy can be revived with payment of arrears of premium and interest
Policy can be surrendered after completion of three years from the date of commencemtn of the policy	Policy cannot be surrendered
Fund value if any is paid at the end of the term	Policy continues for the whole life as long as fund is available to recover health risk charges.
In the last policy year no limit for the balance of the fund value to be retained for claiming Domiciliary treatment benefit.	No restricition in the minimum balance in the fund value for claiming Domiciliary treatment benefit after age 75. Policy can be brought to an end immediately by claiming the full amount as domicilary treatment benefit.

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