Insurer gets time till Jan ’23 to dispose of ‘other investments’

Life Insurance Corporation (LIC) has received the insurance regulator’s nod for time till January-end 2023 to dispose of investments in pension, group and life annuity funds, which do not fall in the “approved investment” category.

Had the Insurance Regulatory and Development Authority (Irdai) denied more time to transfer the investments to shareholders’ fund at amortised cost, the loss that would have accrued in the profit and loss account (shareholders account) would have been Rs 5,365.83 crore as of September 2021, LIC said in its draft red herring prospectus (DRHP).

LIC is mandated to transfer those investments to shareholders’ fund at amortised cost, 90 days after such investments are reclassified as “other investments”, which it is yet to be undertaken.

Irdai has allowed LIC to hold those investments under “other investment” category till January 2023, subject to the latter complying with the regulator’s investment regulations by the same date as there will be no further extension. Further, LIC has to comply with the extant regulations with regard to all its new investments in pension, group, and annuity funds.

In the DRHP, LIC has said that as of September 2021, it had “other investments” of Rs 11,289.36 crore (of which Rs 24.74 crore was in equity and Rs 11,264.62 crore in debt instruments) in the pension, group, and life annuity funds that have not been transferred even after 90 days of them becoming part of “other investments”.