Managing director Mohanty named LIC interim chairperson as Kumar era ends

Takes charge on March 14 for three months, faces challenges of LIC's falling market share and share price, apart from depleted value of its holdings in Adani group

Ending months-long speculation, the central government on March 11, via notification, appointed Siddhartha Mohanty, who is currently holding the position of managing director (MD) at Life Insurance Corporation (LIC) of India, as interim chairperson of the insurance behemoth for three months (with effect from March 14).

Mohanty will discharge his duties as chairperson of state-owned LIC, in addition to his role as MD.

“…in view of the completion of the term of Mangalam Ramasubramanian Kumar as chairperson of LIC, effective from the close of business hours on March 13, 2023, the Department of Financial Services, Ministry of Finance has … conveyed the approval of the competent authority, for entrusting financial and administrative powers and functions of chairperson, LIC, in the interim to Siddhartha Mohanty, MD, in addition to his duties, for 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 stock exchanges.

Kumar has been serving as chairperson since March 2019. His term was supposed to end in March 2022 but got extended by a year for the smooth sailing of the impending initial public offering of the state-owned insurance behemoth.

Multiple reports suggested that Kumar was likely to get a six-month extension until the government found a permanent successor to his post. But that was not to be.

Mohanty is taking over as interim chairperson at a time when the insurer has been mired in controversies because of its investment in Adani Group companies. There has been a lot of criticism of the insurer from all quarters on its investment strategy, especially after the value of its investments in Adani Group companies moved into negative territory due to consistent fall in its share prices after the scathing report published by US-based short seller Hindenburg Research.

While Adani Group’s share prices have seen a sharp spike of late, which would have increased the value of LIC’s investments, Mohanty still has to navigate these tricky waters in his short stint as chairperson of the insurer.

Mohanty was appointed MD of LIC in February 2021, taking over from T C Suseel Kumar, and is scheduled to serve in his post until his superannuation in June this year. 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.

Before joining LIC as MD, Mohanty was serving as MD and chief executive officer of LIC Housing Finance - one of the largest mortgage financiers in the country.

LIC Housing Finance is a subsidiary of LIC, where the insurer holds a little over 45 per cent. Before being appointed CEO, Mohanty was the company’s chief operating officer.

Mohanty is a veteran in the financial services industry with nearly four decades of experience. He started his career as a direct recruit officer with LIC in 1985 and rose from the ranks. Before joining LIC Housing, Mohanty was executive director at LIC looking at the legal department of the insurer.

In the Corporation, Mohanty has worked in areas of marketing, human resources, investments, and legal. He has served as chief of investments (monitoring), regional head of the marketing vertical of LIC’s west zone covering Maharashtra, Gujarat, and Goa. He was also a senior divisional manager in charge of the Raipur and Cuttack divisions of LIC.

Mohanty is a postgraduate in political science with a law degree. He has also done his postgraduation 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. Since the July-September quarter, LIC’s market share has dropped 445 basis points to 63.8 per cent (as of February 2023). Similarly, the value of LIC's new business (VNB) margins has not seen significant improvement. Despite a rise in the share of its non-participating plans, its VNB margins - a measure of the profitability of life insurers - stood at 14.6 per cent in the nine months of 2022-23. During this period, it sold more unit-linked plans, which typically have lower margins than non-par savings products.

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