Chennai: For the first time in its history, the Life Insurance Corporation of India (LIC) is making a major entry into real estate development, with a Rs200-crore plan in the south zone.

Included in the plans — an IT park and a Rs100-crore commercial complex in the heart of Chennai, housing complex for policyholders in Chennai and Trivandrum, commercial buildings in various cities like Madurai, Karur and others.

According to zonal manager G Prabhakara, construction on residential apartments is expected to commence this July. Adds chief engineer V P Rajamurthi, "We will be flexible in providing an opportunity for the allottees to design the interiors to their taste and comfort." LIC has plans to construct 485 apartments (344 in Chennai and 141 in Trivandrum) in phases.

However, the corporation's prestige project is its proposed IT park and the commercial complex. "It will be a twin-tower structure going up to eight floors with 3.5 lakh sq.feet space. We are on the lookout for a competent construction company to execute the project," says Rajamurthi. The IT park will be on a build-operate-transfer (BOT) or build-operate-lease-transfer (BOLT) basis. Interestingly the IT park will involve bringing down a landmark structure, another insurance building. "We will see to it that the new structure will have a similar façade," he adds.

LIC is also upgrading its existing buildings to realise higher rent. "We have to convince the existing tenants about this." The corporation is also planning to rent out two floors at its 14 floor of the LIC building on Chennai's Anna Salai.

Apart from constructing its own buildings, LIC also provides construction consultancy to other public sector organisations. After selling a 3-acre plot to Indian Overseas Bank, it is now building a residential complex there.

Meanwhile LIC's south zone has made impressive progress in its primary business of selling life insurance policies. For the fiscal 2004-05 its total income was Rs10,509 crore against Rs8,914 crore the previous year.

Selling 28.79 lakh policies, the zone has registered a new business premium income of Rs1,894.84 crore. The bancassurance tie-ups chipped in Rs33.37 crore. According to LIC officials, the bancassurance channel brings in high-premium policies — the average premium per policy being around Rs2.63 lakh. Out of the 215 high value policies — sum assured over Rs1 crore — 56 policies were sold by banks.

In the pension and group schemes, the south zone notched up a premium income of Rs358.10 crore.

Speaking about the claims settlement, Prabhakara says that the zone settled 11.87 lakh maturing and survival benefit claims totalling Rs2,245 core.

Looking ahead, Prabhakara says the new business target for the current fiscal is Rs2,400 crore through the sales of not less than 39 lakh policies. "As on 15^th May, 2005 we have procured new business worth Rs132.21 crore selling 12.92 lakh policies. According to him, the corporation is planning to add two more unit-linked life insurance products to its existing two product portfolio — BimaPlus and FuturePlus. The existing unit-linked products fetched LIC's southern zone Rs959.12 crore. The FuturePlus policy launched in March 2005 brought in Rs379.43 crore in a matter of 27 days, he adds.

According to Prabhakara, LIC as a whole earned a first premium income of Rs15,480 crore last fiscal. The total income works out to Rs1,06,540 crore. Nearly 35 per cent of the new business was contributed by the two unit linked policies.