S C 11th Oct—POSSIBILITIES & PREPAREDNESS

NOTE: 10 cases are listed before the Bench for the said day on       11.10.2018- r k sahni

Dear Mr Chhabra,

When ours is the only case on that day,naturally all the counsel of the six petitioners should be ready with their arguments.First thing in the day,there may be reporting of compliance by the LIC counsel of the order dated 30th July,2017.Naturally all the petitioners’ counsel would like to point out to the SC about the violations by LIC of the DHC directions.We have to see what call SC takes on our refutation.

Then comes the stage of arguments on the case proper.We can expect Mr KTS Tulsi being the senior most counsel to argue with his points for about an hour at the most.Then the turn of the other counsel will come in the order of their seniority.So naturally all the counsel will have to be fully prepared as Dusserah vacation will start from 12/10/2018 as is reported.

As far as use of LIC Annual Report  2017-18 data are concerned,if LIC harps on the impact of upgradation of pension on policyholder surplus ,we need to rebut by stating that the cost of opgradation of pension will be only a small percentage of about 12% of Management Expenses which  again constitute a little more than 15% of the total premium income. In other words,the cost of upgradation of pension will be at the most  about 1.8% of the Total Premium Income.Policyholder rewards  depend on the manner in which Life Fund is managed by the LIC,viz.ensuring persistency in policies,ensuring that claims payments are well matched with the actuarial design of policies,ensuring effective steps to arrest policy surrenders and above all prudent and productive investment of policyholders’ fund.L I C needs to pay particular attention to the rising ratio of NPAs(Non-Performing Assets) which has risen to the record figure of 6.23% as at 31/3/2018.The absolute volume of NPAs works out to Rs 25241 cr.The provision made for the year 2017-18 by LIC of Rs 18196 cr  deprives the policyholders of  such amount provided   reducing the surplus that can fetch them more bonus under their with profit policies if there was no need for such NPA provision.

LIC has made an additional contribution  of Rs 5921.05 cr to the  Pension fund In 2017-18.This is more the consequence of the wage revision effected for employees  in 2016 effective from 1/8/2012.The contribution for the  existing retirees and family pensioners is minuscule , merely restricted to the six monthly increases in Dearness Relief.

L I C ‘s Life Fund has increased to Rs 25.84 lk crores as at 31/3/2018 compared to 23.24 lk crores as at 31/3/2017.Despite this increase, tha Valuation Surplus as at 31/3/2018 was Rs 48436 cr which was less than Rs 49939 cr on the back of a lesser quantum of Life Fund of Rs 20.58 lk crores as at 31/3/2016. With increase in the number of policyholders,and more than 25% increase in the Life Fund,there is a decline of about 3% in Valuation Surplus  in two years despite expense ratio being stable .This only means that post- expenses management of premium income of the Corporation and prudent management of the investments of policyholders’ fund  are critical to rewards for the policyholders under their policies.It is significant to note that Investment income constitutes more than 34% of the net total income of the Corporation as at 31/3/2018.

So the financial parameters are no impediments for upgradation of pension.The additional cost towards upgradation of pension for a closed group of beneficiaries can  be eminently absorbed by the increasing premium income  of the Corporation over the period of  the next five years or so.
Kind regards.

C H Mahadevan
On Monday, October 8, 2018, Somnath <somnathchhabra458@yahoo.com> wrote:

Sir,
I understand ours is the only case fixed for hearing before the Justice Lokur
Bench on 11th Oct, 2018. Do you think it is a warning for our advocates to be
ready for the battle Royal?
I don't understand why Sri Parmod Bhatnagar of theAIIRF has said we should
not expect much to happen on 11th Oct.
I have not been able to open the latest LIC Report on my I pad.I could not make
much of it anyway.If convenient,you may kindly bring to the notice of Mr Savla
some points that may be useful to him.
With regards
S N Chhabra