India’s largest life insurer, Life Insurance Corporation, has raked in tidy gains on its equity investments so far this fiscal, thanks to a sanguine capital market.
LIC has booked profits of ₹14,857 crore as against ₹11,437 crore last year for the same period (April to September) showing a growth of 30.37 per cent.
LIC’s investment in capital market and G-Secs this year has also grown compared to last year. In the current financial year (up to September 30), LIC’s total investments in G-Sec, SDL, corporate bonds and equity was to the tune of ₹2,63,845.98 crore as against ₹2,44,931.33 crore last year for the same period, implying a growth of 7.7 per cent.
“In government securities and equities we have found good investment opportunities. In corporate bond investments we are a bit cautious,” said MR Kumar, Chairman, LIC, is an exclusive interview with BusinessLine. He added that LIC plans to invest at least a further ₹2 lakh crore, in the remaining part of this fiscal.
On its debt portfolio, LIC is not expecting any major defaults, as it believes that with the economic activity gaining momentum in the last two months, corporate financials should improve further.
“LIC follows strict due diligences and very few companies have taken moratorium, which is not even 2 per cent of our corporate debt,” adds Kumar.
Also, LIC’s 8.25 per cent stake sale in UTI AMC (via IPO) should fetch the insurer some tidy gains, this fiscal.
Steady growth ahead
On the business front, the LIC chief is confident of seeing steady growth for the rest of the fiscal and believes that its efforts to rebalance the overall portfolio with equal focus on linked/ULIP products, can help mitigate reinvestment risk, amid the sharp fall in interest rates.
To improve persistency ratios (number of policies or premium amount retained with an insurer across different time periods), LIC has been focusing on digital payment modes and ensuring constant contact with its customers. Additionally, its special revival campaign has also helped bring in business back to the books.
Interestingly, total surrenders amounted to ₹7,352 crore between April and August this year, down from ₹9,133 crore last year. “The decrease in surrender is heartening as it could imply that people are increasingly appreciative of the importance of a life risk cover,” adds Kumar.
