Managing director Mohanty named LIC interim chairperson as Kumar era ends

Ending protracted speculation, the central government appointed Siddhartha Mohanty as the interim chairperson of the Life Insurance Corporation of India (LIC) for three months, via a notification on March 11.

Mohanty, who currently holds the position of managing director at the insurance behemoth, takes charge on March 14. He will discharge duties as the chairperson of state-owned LIC in addition to his own duties as MD.

“…in view of the completion of the term of Shri Mangalam Ramasubramanian Kumar as Chairperson of LIC of India, effective from the close of business hours on March 13, 2023, the Department of Financial Services, Ministry of Finance, Govt of India, has … conveyed the approval of the Competent Authority, for entrusting financial and administrative powers and functions of Chairperson, LIC in the interim to Shri Siddhartha Mohanty, Managing Director in addition to his own duties, for a period of three months, with effect from March 14, 2023, or till assumption of the charge by the regular appointee to the said post, or until further orders, whichever is the earliest,” the corporation said in a notification to the stock exchanges.

Kumar has been serving as LIC chairperson since March 2019. His term was to end in March 2022 but was extended by a year for the smooth sailing of the impending initial public offering of the state-owned insurer. Initially, multiple reports suggested that Kumar is likely to get a six-month extension again till the government finds a permanent successor to his post. But that was not to be.

Mohanty takes over as interim chairperson of LIC at a time when the insurer has been mired in controversies because of its investment in the Adani Group. The insurer has faced a lot of criticism from all quarters on its investment strategy, especially after the value of its holdings in Adani Group companies turned negative due to consistent a fall in their share prices post the report published by the short-selling firm Hindenburg Research.

While the Adani Group’s share prices have spiked recently, and would have raised the value of LIC’s investments, Mohanty still has to navigate these tricky waters in his short stint as chairperson of the insurer.

Mohanty took over as the MD of LIC in February 2021 from T C Suseel Kumar, and is scheduled to serve at his post until his superannuation in June 2023. Mohanty is one of the three MDs currently placed at LIC. The other two are Mini Ipe and B C Patnaik. Generally, LIC has one chairperson and four MDs as its key managerial personnel.

Prior to joining LIC as MD, Mohanty was serving as MD & CEO of LIC Housing Finance, one of the largest mortgage financiers in the country, and a subsidiary of LIC in which the insurer holds a little over 45 per cent. Before being appointed as CEO, Mohanty was the company’s chief operating officer (COO).

Mohanty is a veteran in the financial services industry with almost four decades of experience. He started his career as a direct recruit officer with LIC in 1985 and rose through the ranks. Before joining LIC Housing, Mohanty was the executive director at LIC in charge of the legal department of the insurer. In the corporation, Mohanty has worked in the areas of marketing, HR, investments, and legal. He has served as Chief of Investments (Monitoring), Regional Head of marketing vertical of LIC’s Western Zone spanning the States of Maharashtra, Gujarat and Goa. He was also the senior Divisional Manager in-charge of Raipur and Cuttack divisions of LIC.

Mohanty is a post graduate in Political Science with a degree in law. He has also done his post-graduation in Business Management and is a Licentiate from the Insurance Institute of India.

Among other challenges that await Mohanty is the drop in LIC’s market share in terms of new business premiums (NBP). Since the September quarter, LIC’s market share has dropped by 445 basis points to 63.80 per cent as of February 2023. Similarly, the value of new business (VNB) margins of LIC have not improved significantly. Despite a rise in the share of its non-participating plans, its VNB margins–a measure of profitability of life insurers– stood at 14.6 per cent in the 9MFY23 period because during this period, it sold more unit-linked plans, which typically have lower margins than non-par savings products.

Further, another concern is the erosion in LIC’s share price. Since listing, LIC shares have fallen by as much as 47 per cent. So delivering strong growth in the non-par segment, which in turn will boost the margins, will perhaps be something Mohanty will have on his priority list after he replaces Kumar as the chairperson of LIC.