LIC spins off firms for credit cards, pensions

MUMBAI: Life Insurance Corporation (LIC) of India — the country's largest life insurer has appointed two chief executive officers for new ventures that will be spun off into separate companies.
Hemant Bhargava has been appointed as CEO for LIC Credit Cards, an initiative that LIC has been talking about for a while now. It is expected to take off over the next three-four months and will be registered as a separate entity.
This is per the licensing regulations of the Reserve Bank of India which requires a new registered entity to be formed before LIC can enter the credit card business.LIC is still to finalise the partner for the credit card venture. "We are likely to finalise all the details shortly. As per the RBI regulations we cannot conduct the business through an internal department," said Bhargava. Until very recently, Bhargava headed LIC's micro insurance business.
LIC had appointed consulting firm KPMG to assist in forming a business plan for this venture. According to sources, several banks including Citibank, Standard Chartered, HSBC, Barclays, ICICI Bank, Centurion Bank and UTI Bank have shown an interest in partnering with LIC for this initiative.
In its second appointment, LIC has elevated Dr H Sadhak, currently ED, HR as CEO of the pensions business. This is in keeping with guidelines issued by the new Pension Fund Regulatory and Development Authority (PFRDA). It mandates that insurance firms have to float a different entity to manage pension funds. This will be different from the current pensions and group schemes business that LIC currently has.
LIC already has subsidiaries like LIC Housing Finance and LIC Mutual Fund. With these new ventures, LIC will be able to compete with other insurance firms like ICICI Prudential Life and Bajaj Allianz Life which have plans to enter the pensions business. The corporation hopes it will be able to leverage its huge 19 crore policy holders and network of 1.2 lakh agents to sell their credit cards.
The corporation registered a growth of 118% during the year 2006-07 with a first premium income of Rs.39,541 crore as against Rs.18,085 crore during 2005-06.