The suggestion to retain the policyholders’ share of surplus at 95% of the valuation surplus appears to be pragmatic one and will avoid all problems of legal nature and the necessity to value the policy liabilities for pre- divestment period policies and post divestment fresh policies separately. But if the policyholders’ share of surplus has to be retained it is for LIC, in the post divestment situation it will be only proper for IRDAI to increase the same to 95% for other private players also to create a level playing field.The shareholders of private life insurance companies may suffer reduction in their dividends,if more new business results on account of policyholders welcoming the change,the growth of the private life insurers will increase and higher volume of surplus can emerge. There should not be a problem for taking a decision to that effect as in the environment of falling interest rates,investors are already suffering reduced interest rates and share dividends cannot be having a consistent growth.The shareholders must be prepared for some temporary sacrifice,In any case investors in share market are risk takers. C H Mahadevan
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The suggestion to retain the policyholders’ share of surplus at 95% of the valuation surplus appears to be pragmatic one and will avoid all problems of legal nature and the necessity to value the policy liabilities for pre- divestment period policies and post divestment fresh policies separately.
But if the policyholders’ share of surplus has to be retained it is for LIC, in the post divestment situation it will be only proper for IRDAI to increase the same to 95% for other private players also to create a level playing field.The shareholders of private life insurance companies may suffer reduction in their dividends,if more new business results on account of policyholders welcoming the change,the growth of the private life insurers will increase and higher volume of surplus can emerge.
There should not be a problem for taking a decision to that effect as in the environment of falling interest rates,investors are already suffering reduced interest rates and share dividends cannot be having a consistent growth.The shareholders must be prepared for some temporary sacrifice,In any case investors in share market are risk takers.
C H Mahadevan
Really incredible
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