Corporate Information

Life Insurance Corporation of India (“Corporation”) is a Statutory Corporation established on 1^st September, 1956, under the Life Insurance Corporation Act, 1956 (‘Governing Act’) engaged in the business of Life Insurance in and outside India. Corporation is governed by the provisions of the Governing Act. It is also registered with the Insurance Regulatory and Development Authority of India (‘IRDAI’), Registration No. 512 dated 01.01.2001 for carrying on life insurance business. The Corporation's life insurance business comprises of participating and non participating products in the different segments of individual life, group, annuity, pension, health, variable, micro insurance, Linked and Capital Redemption and Annuity Certain (CRAC) business. The equity shares of the Corporation are listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) (w.e.f. 17^th May, 2022).

(A) SIGNIFICANT ACCOUNTING POLICIES:

1. Basis of Preparation:

The Financial Statements have been prepared and presented under the historical cost convention, except for certain items that are measured at fair value, as explained in the accounting policies. The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements. The accounting and reporting policies of the Corporation conform to Generally Accepted Accounting Principles in India (Indian GAAP) and in the manner prescribed by Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, Master Circular on Actuarial, Finance and Investment Functions of Insurers(“the Master Circular”), Regulations, Directions, Guidelines and other circulars issued by the IRDAI, The Insurance Regulatory and Development Authority Act,1999, the provisions of Life Insurance Act, 1956, provisions of the Insurance Act, 1938, as amended from time to time and in compliance with the Accounting Standards notified under Section 133 of the Companies Act, 2013, and amendments and rules made thereto, to the extent applicable.

2. Use of Estimates:

The preparation of Financial Statements is in conformity with Indian GAAP, which requires the management to make judgements estimates and assumptions in the application of accounting policies, reported amounts of income and expenses for the year, reported balances of assets and liabilities and disclosures relating to contingent liabilities as on the date of the Financial Statements. The reliance on estimates and assumptions used in the accompanying Financial Statements are based upon management’s evaluation of the relevant facts and circumstances up to and as on the date of the Financial Statements. Actual results may differ from the estimates and assumptions and the difference between the actual and estimates are recognised in the period in which the actual results materialize or are known. A continuous evaluation is done of the estimates and judgments based on historical experience and other factors, including expectations of future events. Any revision to the accounting estimates is recognised prospectively in the current and future periods.

3. Revenue Recognition:

(i) Premium Income:-

In case of Non Linked Business, premium is recognised as income (net of Goods and Service tax) when due from policyholders, for which grace period has not expired and the previous installments have been paid. In case of Linked Business, premium is recognised as income when associated units are created. Premium on lapsed policies is recognized as income when such policies are reinstated. Premium for products having regular premium paying plans with limited and/ or predetermined policy term is considered as regular business premium.

(ii) Income from linked policies:

Income from linked funds which include fund management charges, policy administration charges, mortality charges, etc. are recovered from linked fund in accordance with terms and conditions of policies and recognised when due.

(iii) Reinsurance premium ceded:

Premium ceded on re-insurance is recognised in accordance with the terms of the re-insurance treaty or in-principle arrangement with the re-insurer.

(iv) Investment Income:

• Interest Income

i) Interest income on investments is recognised on accrual basis. Pre-acquisition interest paid/received to/ from counterparty on purchase/sale transaction is recognised under interest accrued account.

ii) Premium, if any on redemption/maturity of investments is recognised on straight line basis over the balance period of holding/maturity.

• Amortization

For Non-Linked Business & Non Unit Fund of Linked Business: Debt Securities including Government Securities, Redeemable preference Shares where the historical cost is more than the face value, the premium is amortized on straight line basis over the balance period of holding/maturity. Where face value is greater than historical cost, discount is amortized on straight line basis over the balance period of holding /maturity.

• Dividend Income

Dividend on quoted equity shares is recognised as income on "ex-dividend" date. Dividend on unquoted Equity/ Preference Shares/Mutual Fund is recognised when the right to receive dividend is established.

• Profit or loss on sale/redemption of Securities/Equity shares, Exchange Traded fund (ETF) infrastructure Investment Trusts (InvITs), Real Estate Investments Trusts (REITs) preference shares and mutual fund

Profit or loss on sale/redemption of Securities/Equity shares/ Equity Exchange Traded funds (ETFs), Infrastructure Investment Trusts (InvITs), Real Estate Investments Trusts (REITs) preference shares and units of mutual fund is calculated as the difference between sale proceeds/redemption proceeds net of sale expenses and the weighted average book value as on date of sale.

• Income on Alternate Investment Funds, Venture Capital Fund

Investment income on Alternate Investment Funds, Venture Capital Funds is recognised when the right to receive payment is established.

• Income on Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs)

Investment Income on Real Estate Investment Trusts (REITs) Infrastructure Investment Trusts (InvITs) is recognised as and when declared by respective Fund/Trust.

• Income on Zero Coupon Bonds

i) For Zero coupon bonds/debentures issued at a discount and redeemable at face value, the difference between the face value and cost of acquisition is amortized on straight line basis over the balance period of holding/maturity.

ii) For Zero coupon bonds/debentures issued at face value and redeemable at premium, the difference between the premium on redemption and face value is recognised in interest /premium on redemption account on straight line basis over the balance period of holding/maturity.

• Interest on Loan against Policies and Mortgage Loans

Interest on Loan against Policies and mortgage loans is recognised on accrual basis.

• Rental Income

Rent/license fees which is in arrear upto 6 months is recognised on accrual basis and rent/license fees which is in arrear for more than 6 months is recognised on receipt basis. Upfront premium on rent is recognized on receipt basis.

• Fees and charges

Processing fee and other fee for proposed investments, if any, is recognised when the right to receive payment is established.

• Income other than specified above, is recognised when the right to receive payment is established.

4. Acquisition Costs:

Acquisition Cost is expensed in the period in which it is incurred. Acquisition costs are those costs that vary with and are primarily related to the acquisition of new and renewal insurance contracts.

5. Benefits to Employees

The Corporation has both defined contribution and defined benefit schemes for its employees. The Corporation accounts for all the below mentioned long term employee benefits in accordance with Accounting Standard - 15 (Revised).

(A) Defined Contribution Plans:-

The Corporation makes contribution to following Defined contribution plan for its employees:-

• Employee Provident Fund Scheme: The employees who have opted for Provident Fund Scheme, matching contribution is made by the Corporation to the Provident fund Trust formed under LIC Act, 1956. The contribution paid or payable under the schemes is charged to the Revenue Account on an undiscounted basis during the period in which the employee renders the related service.

• National Pension Scheme: The Corporation makes contribution in National Pension Scheme for employees who joined Corporation after 2010. The contribution works on Defined Contribution basis and contribution to Tier - I Account is mandatory. National Pension Scheme is managed and administered by Pension fund management companies licensed by the Pension Funds Regulatory and Development Authority (‘PFRDA’).The contributions made to these schemes are on a monthly basis, when due, and charged to Revenue Account on an undiscounted basis during the period in which the employee renders the related service. The Corporation does not have any further obligation beyond the contributions made to the funds.

(B) Defined Benefit Schemes:-

The Corporation makes contribution to following defined benefit schemes for its employees:-

• Gratuity: The benefits are provided for through a Group Gratuity Insurance Policy issued by the Corporation and is included in the overall liability. The scheme provides a lump sum payment to eligible employees at retirement or termination or death based on the respective employee’s salary and years of employments with the Corporation. The Corporation’s obligation is actuarially determined based on the Projected Unit Credit method.

• Group Privilege Leave Encashment Liability: The benefits are provided for through a Group Leave Encashment Insurance Policy issued by the Corporation and is included in the overall liability. The benefits of privilege leave encashment are valued using Projected Unit Credit Method.

• Employee Pension Scheme 1995:- For the employees who have opted for Pension Scheme, in lieu of Provident Fund Scheme, the Corporation’s contribution is made to the Pension Fund Trust, in accordance with the Pension Rules notified by the Government of India. The Corporation’s contribution is made on the basis of Actuarial calculation and charged to Revenue account during the period when related services are rendered. The benefits payable to the employees are valued using Projected Unit Credit Method.

6. Leases:

Operating Lease: Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are classified as operating lease. Where the Corporation is the lessee, operating lease rentals, being paid on monthly basis, are recognised as operating expenses.

Where the Corporation is the lessor, Assets subject to operating leases, are treated as Investment property. Lease income, received on monthly basis, is recognized as income in the Revenue/ Profit and Loss Account.

7. Benefits Paid:

Benefits paid consist policy benefits and claim settlement costs, wherever applicable.

Non linked Business

• Death and rider claims are recognized, on receipt of intimation.

• Survival, Maturity and Annuity benefit claims are recognized, when due.

• Withdrawals and surrenders are recognized, on receipt of intimation.

• Amount payable on lapsed/discontinued policies are recognized, for as and when due.

Linked Business

• Death and rider claims are recognized, on receipt of intimation.

• Maturity claims are recognized, on due basis when the associated units are cancelled.

• Surrenders and withdrawals are recognized when associated units are cancelled.

• Amount payable on lapsed/discontinued policies are recognized on the expiry of lock in period of these policies.

Repudiated claims disputed before judicial authorities are provided for based on management prudence considering the facts and evidences available in respect of such claims.

Claims settled by the Corporation for reinsurance ceded cases which are receivable from the reinsurer are recognized for in the same quarter or subsequent quarters.

8. Investments

A] Non Linked Business and Non Unit Fund of Linked Business

Debt securities (including Government Securities and Preference Shares)

All Debt Securities including Government Securities and Redeemable Preference Shares are considered as ‘held to maturity’ and stated at historical cost subject to amortization of premium and discount on straight line basis over the balance period of holding/maturity. A provision for diminution is made for diminution in value if other than temporary, where fair value, usually the market price (quoted price not later than 30 days prior to valuation date) of listed redeemable preference share is lower than amortized cost. All unlisted redeemable preference shares are valued at historical cost less provision for diminution, if any.

All listed Irredeemable Preference Shares are valued at historical cost if last quoted price (not later than 30 days prior to valuation date), is higher than historical cost. In case last quoted price is lower, it is valued at historical cost less provision for diminution. All unlisted Irredeemable Preference Shares are valued at historical cost less provision for diminution.

Equity Shares, Equity Exchange Traded Funds (ETFs), Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs)

(i) Listed equity securities that are traded in active Markets are measured at last quoted closing prices at the National Stock Exchange (NSE) (last quoted price should not be later than 30 days prior to valuation date). In case of the scrips not listed on the NSE, the last quoted closing prices on the BSE have been taken (last quoted

price should not be later than 30 days prior to valuation date). The change in the carrying amount of equity securities is recognised under “Fair Value Change Account”.

(ii) Unlisted equity securities and thinly traded equity securities are measured at historical cost less provision for diminution in the value of such investments. Such diminution is assessed and accounted for in accordance with the Impairment Policy of the Corporation. A security is considered as being thinly traded as per SEBI guidelines governing mutual funds.

(iii) Investment in ETFs are valued at traded price or at NAV as on the reporting date. Unrealized gains or losses arising due to change in fair value of mutual fund units are recognised under “Fair Value Change Account”.

(iv) Investment in InvITs and REITs are valued at Market value (last Quoted price should not be later than 30 days prior to valuation date). Where Market Quote is not available for last 30 days prior to valuation date, the Units are valued at the latest NAV (not more than 6 months old). Unrealized gains or losses arising due to change in fair value of units are recognised under “Fair Value Change Account”.

(v) InvITs and REITs which are not regularly traded are valued at Historical cost subject to diminution in value of the assets.

Mutual Funds & Venture Funds / Alternative Investment Funds

(i) Investments in Mutual Fund are valued at - NAV on the reporting date. Unrealised gains or losses arising due to change in fair value of mutual fund units are recognised under “Fair Value Change Account”.

(ii) Investments in Venture Funds (VF), Alternative Investment Funds (AIF) and Security Receipts are valued at cost, subject to provision for diminution, if any, in the value of such investments determined separately for each individual investment. Fixed Deposits and Reverse Repo are valued at cost.

Money Market Instruments

(i) Investments in Money Market Instruments like commercial paper, treasury bills, Tri-party Repo (TREPs), Reverse Repo and certificate of deposit etc are measured at historical cost.

Investments in Subsidiaries, Associates and Joint Ventures

(i) Investments in Subsidiaries, Associates and Joint Ventures are carried at cost less provision for diminution, if any.

All Investments are accounted on settlement basis except for purchase or sale of equity shares and Government

securities from the secondary market. Purchase or sale of equity shares and Government securities from the

secondary market are accounted on trade date.

Derivatives

(i) Interest Rate Derivative (IRD) contracts for hedging of highly probable forecasted transactions on insurance contracts and investment cash flows in Life, Pension and Annuity business are recognised for in accordance with the ‘Guidance Note on Accounting for Derivative Contracts’ issued by the Institute of Chartered Accountants of India (ICAI) and IRDAI Investment Master Circular as amended from time to time.

(ii) The Forward Rate Agreement (FRA) contract is valued at the difference between the market value of underlying bond at the spot reference yield taken from the Financial Benchmarks India Private Limited (FBIL) and present value of contracted forward price of underlying bond including present value of intermediate coupon inflows from valuation date till FRA contract settlement date. Mark-to-market valuation / fair valuation of the derivative financial instruments is done independently by both the parties i.e the Corporation and the counter party. The

counter party (Bank) valuation is considered for margin settlement as the counter party (Bank) is the valuation agent as per FRA.

(iii) Hedging instruments are initially recognised at fair value and are re-measured at fair value at subsequent reporting dates. The effective portion of fair value gain/loss on the interest rate derivative that is determined to be an effective hedge is recognised in “Hedge Fluctuation Reserve” or “HFR” in the Balance Sheet and the ineffective portion of the change in fair value of such derivative instruments is recognised in the Revenue Account / Profit & Loss Account in the period in which they arise.

(iv) The fair value gain/loss on the interest rate derivative that is determined to be an ineffective hedge is recognised in the Revenue Account / Profit & Loss Account in the period in which they arise.

(v) The accumulated gains or losses that were recognised in the “Hedge Fluctuation Reserve” are reclassified into Revenue Account / Profit & Loss Account, in the same period during which the income from investments acquired from underlying forecasted cash flow is recognised in the Revenue Account / Profit & Loss Account. Hedge accounting is discontinued when the hedging instrument is terminated or it becomes probable that the expected forecast transaction will no longer occur or the risk management objective is changed or no longer expected to be met. On such termination, accumulated gains or losses that were recognised into Hedge Fluctuation Reserve are reclassified into Revenue Account / Profit & Loss Account.

B] Linked Business:

Debt securities:

Central Government securities, State Government securities, Other Approved Securities, Debentures & Bonds of unit

funds are valued at last available market rates as declared by FIMMDA/FIBIL. Provision for non- performing debts is

made as per IRDAI/RBI guidelines as amended from time to time.

Equity Shares:

(i) Listed equity securities that are traded in active Markets are measured at last quoted closing prices at the National Stock Exchange (NSE)(last quoted price should not be later than 30 days prior to valuation date). In case of the scrips not listed on the NSE, the last quoted closing prices on the BSE have been taken (last quoted price should not be later than 30 days prior to valuation date). The change in the carrying amount of equity securities is recognised under “Fair Value Change Account”.

(ii) Unlisted equity securities and thinly traded equity securities are measured at historical cost less provision for diminution in the value of such investments. Such diminution is assessed and accounted for in accordance with the Impairment Policy of the Corporation. A security is considered as being thinly traded as per SEBI guidelines governing mutual funds.

Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs):

(i) Investment in InvITs and REITs are valued at Market Value (last Quoted price should not be later than 30 days prior to valuation date). Where Market Quote is not available for last 30 days prior to valuation date, the Units are valued at the latest NAV (not more than 6 months old). Unrealized gains or losses arising due to change in fair value of mutual fund units are recognized under “Fair Value Change Account”.

(ii) InvITs and REITs which are not traded, valued at Historical cost subject to diminution in value of the assets. Mutual Funds:

Investments in Mutual Funds are stated at last declared NAV by the Mutual Funds.

Money Market Instruments like commercial paper, Certificate of Deposit, TREPs etc.:

Money Market Instruments like commercial paper, Certificate of Deposit, TREPs etc are valued at Historical cost.

All Investments are accounted on settlement basis except for purchase or sale of equity shares and government securities from the secondary market. Purchase or sale of equity shares and government securities from the secondary market are accounted on trade date.

• Impairment of Investments :-

The Corporation on each reporting date assesses impairment of unlisted or thinly traded equity shares, preference shares, and affiliated equity investments in accordance with its Board-approved impairment policy, aligned with guidelines issued by the IRDAI from time to time.

This assessment is conducted to determine whether there is any indication of impairment or reversal of a previously recognised impairment loss. Impairment losses, if any, are recognised as an expense under the head ‘Provision for diminution in value of Investment (net)’ in the Revenue Account/Profit and Loss Account. If, at the Balance Sheet date, it is determined that the impairment loss recognised earlier no longer exists, the loss is reversed, and the investment is restated accordingly.

9. Revaluation of Investment Property

The Investment Property is carried at the Revalued amounts and the change in the carrying amount of the investment property is taken to Revaluation Reserve. Investment property is revalued at least once in every three years. The basis adopted for revaluation of property as per methods approved by the Board of Directors.

10. Loans:

Loans are measured at historical cost less repayments, subject to impairment provisions and provision for non performing asset (NPA), if any.

Loans are classified as short term in case of maturity is less than twelve months. Loans other than short term are classified as long term.

11. Provisioning for Non-Performing Assets :

In line with Master Circular on Actuarial, Finance and Investment Functions of Insurers dated May 17, 2024 on ‘Prudential norms for income recognition, asset classification, provisioning and other related matters in respect of loans and advances, adequate provisions are made for estimated loss arising on account from/ under recovery of loans and advances (including outstanding interest) outstanding at the balance sheet date.

12. Fixed Assets and Depreciation:

• Tangible assets

Fixed assets are carried at cost (inclusive of GST) less accumulated depreciation and impairment, if any. Cost includes the purchase price and any other cost which can be directly attributed to bring the asset to its working condition for its intended use. Subsequent expenditure incurred on existing assets is expensed out except where such expenditure increases the future economic benefits from the existing assets.

• Intangible Assets

Intangible assets are stated at cost of acquisition(inclusive of GST), including any cost attributable for bringing the same to its working condition for its intended use, less accumulated amortization and impairment, if any. Subsequent expenditure incurred on existing assets is expensed out except where such expenditure increases the future economic benefits from the existing assets.

All fixed assets costing upto ' 25000 each are being capitalized and simultaneously fully depreciated in the month of purchase.

• Capital Work in progress

Cost of Assets not ready for their use and other work in progress of capital nature are disclosed as capital work in progress.

• Depreciation:

Depreciation on fixed assets is provided using the straight-line method, based on the useful life of assets as estimated by the management. Depreciation is charged on monthly pro-rata basis for assets purchased/sold during the year.

• Impairment of fixed assets:

The carrying amount of assets at each Balance Sheet date are reviewed for impairment. If any indication of such impairment exists, the recoverable amounts of those assets are estimated and impairment is recognised.

The recoverable amount is the higher of the asset’s net selling price and their value in use, which is the present value of the future cash flows expected to arise from the continuing use of asset and its ultimate disposal. When there is an indication that an impairment loss recognised for an asset in earlier accounting periods is no longer necessary or may have decreased, such reversal of impairment loss is recognised, except in case of revalued assets. Reversal is recognised to the extent that post reversal, the carrying amount does not exceed the amount that would have resulted, had impairment loss not been recognised in previous reporting periods.

13. Taxation:

a) Direct Tax: Provision for current income tax is made on an accrual basis after taking credit for all the allowances and exemptions in accordance with Income Tax Act.

b) Indirect Tax: Goods and Service Tax (“GST”) collected (net of refunds) is considered as a liability against which GST paid for eligible input services, to the extent claimable, is adjusted and the net liability is remitted to the appropriate Authority.

Unutilized credits, if any are carried forward in the Balance Sheet, for future set off and are deferred for recognition to the extent that there is reasonable certainty of utilization.

14. Policy Liability Valuation

The determination of policy liability for each policy under which liability exists or may arise, is based on prudent assumptions

of all relevant parameters, in accordance with the relevant provisions, as amended from time to time, of LIC Act, 1956,

Insurance Act, 1938, IRDAI Regulations, circular, guidelines, applicable Actuarial Practice Standards.

The methodology for valuation is:

• The Liability for Individual and Group policies under Non-Linked business is calculated for each policy using the Prospective Gross Premium Method or Unexpired Premium Reserve, as applicable. The Reserve for each policy is atleast equal to the Guaranteed Surrender Value or Special Surrender Value, whichever is higher. The negative reserve is set to zero while arriving at reserve under a policy.

• The Unit Liability for Linked business is determined as the Net Asset Value of units as on the valuation date, while the non-unit liability is calculated using discounted cash flow method.

• The liability in respect of Rider Benefits are determined as the higher of Unexpired Premium Reserve and reserves calculated using the Gross Premium Reserve Method.

• The Liability for Group Cash Accumulation Schemes is valued at fund value of all the schemes as on the date of valuation. The Liability in respect of One Year Renewable Group Term Assurance is the sum of the unearned risk premium under all such policies based on the period up to the next annual renewal date under each policy.

• Additional aggregate provisions are made for revival/reinstatement of policies, AIDS/HIV, Incurred But Not Reported (IBNR) claims, and catastrophe risks etc.

The liability under Individual “Capital Redemption and Annuity Certain” policies is determined for each policy using the Prospective Gross Premium Method.

15. Funds for future appropriations:

For Non- linked Participating business, the balance in the funds for future appropriations account represents funds, the allocation of which, either to participating ‘Policy Holders’ or to ‘Shareholders’, is not been determined at the Balance Sheet date. Transfers to and from the fund reflect the excess or deficit of income over expenses and appropriations in each accounting period arising in the Corporation’s ‘Policy holders’ fund. In respect of participating policies any allocation, to the policyholder would also give rise to a shareholder transfer in the required proportion.

The fund for future appropriations held in the Unit-Linked funds, represents surplus that has arisen from lapsed policies unlikely to be revived. This surplus is held within the ‘policyholders’ fund till the point at which the policyholders’ can no longer revive their policy.

16. Unclaimed amount of policyholders:

Assets held for unclaimed amount of policyholders are created and maintained in accordance with the guidelines issued by the IRDAI from time to time.

Accordingly, unclaimed amount of policyholders are maintained in a single segregated fund and are invested in money market instruments, liquid mutual funds and/or fixed deposits of scheduled banks.

Amounts remaining unclaimed for a period of 10 years as on 30^th September every year along with all respective accretions to the fund are deposited into the Senior Citizen Welfare Fund (SCWF) on or before 1^st March of the financial year.

17. Foreign Currency Transactions:

In accordance with requirements of Accounting Standard 11,’The Effects of changes in Foreign Exchange rates”, transactions in foreign currency are recorded in Indian Rupees at the exchange rate prevailing on the date of transaction, at the time of initial recognition. Monetary items denominated in foreign currency are converted in Indian Rupees at the closing rate of exchange prevailing on the balance Sheet date. Non Monetary items like fixed assets, which are recorded at historical cost, are reported using the exchange rate at the date of transaction. Non monetary items other than fixed assets, which are recognised at fair value or other similar valuation are reported using exchange rate at the date when such value was determined. Exchange differences arising on such conversions or on settlement are recognised in the period in which they arise either in the Revenue account or the Profit and Loss account, as the case may be.

Operations carried at the foreign branch offices are of non integral nature. The Financial Statements of these branches are prepared in accordance with respective local laws. The assets and liabilities, are translated at the closing rate and income and expense items are translated at average exchange rate. The resulting exchange differences are accumulated in the exchange fluctuation reserve.

18. Income arising from Available Solvency Margin (ASM) fund:

Income arising from Available Solvency Margin (ASM) fund (net of tax) forms part of the Surplus of Non- Participating business.

19. Provisions, Contingent Liabilities and Contingent Assets.

Provision is recognised in respect of the present obligations arising out of past events where it is probable that an outflow of resources will be required to settle the obligation and the amounts of which can be reliably estimated. Provisions are determined on the basis of best estimate of the outflow of economic benefits required to settle the obligation at the Balance sheet date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

A disclosure of contingent liability is made when there is a possible obligations arising out of past events that may, but probably will not, require an outflow of resources or it cannot be reliably estimated. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Contingent assets are neither recognised nor disclosed.

20. Segmental Reporting:

A) Identification of Segments:

Segments are identified based on the primary segments specified under Regulations issued by the IRDAI from time to time read with Accounting Standard 17 on “Segmental Reporting” notified under section 133 of the Companies Act 2013 and rules there under. Accordingly, the Corporation has prepared the Revenue Account (Policyholders Account) and the Balance Sheet for the primary business segments namely Participating Life Individual, Participating Pension Individual, Participating Annuity Individual, Non Participating Life (Individual & Group), Non Participating Pension (Individual & Group), Non Participating Annuity Individual, Non Participating Variable individual, Non Participating Health individual, Non Participating Unit Linked (Life, Pension and Health) and Capital Redemption and Annuity Certain Business (CRAC). The Corporation operates in various geographical segments.

B) Basis of allocation of expenditure to various segments of business:

Operating Expenses relating to life insurance business after adjusting for expenses attributable to Shareholders Account is allocated to various lines of business such as Non-Linked Participating, Non-Linked Non-Participating, General Annuities, Pensions, Health, Group Business and Unit Linked Business on the following basis.

a. Expenses which are directly identifiable to the respective lines of business have been recognised in the respective lines of business on actual basis, and

b. Expenses which are not directly identifiable to the specific lines of business are allocated out of the common pool on the following basis or a combination of these:

i. Number of policies

ii. Total premium income

iii. Sum assured

Allocation of expenses among various lines of business is based on the approved expense policy of the Corporation.

21. Earnings per share:

Basic earnings per share is computed by dividing the net profit or loss after tax attributable to equity shareholders by weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the net profit or loss after tax attributable to the equity shareholders by the weighted average number of equity shares outstanding during the period adjusted for the effect of all dilutive potential equity shares.

22. Cash and Cash Equivalents

Cash and cash equivalents for the purpose of Receipts and payments account include cash and cheques in hand, bank balances, deposits (including Fixed Deposits) with banks, liquid funds, remittances in transit. Receipts and Payments Account is prepared and reported using Direct method in accordance with Accounting Standard (AS) 3, Cash Flow Statements as per guidelines issued by the IRDAI from time to time.