State-owned insurer Life Insurance Corporation of India has recorded historic growth in the past couple of years on the back of huge rise in first year premium and sale of annuities, says LIC Chairman MR Kumar. With the increased business, the market share of the insurer has touched 73.1 per cent (as of July 2019) and the company has made over Rs 13,000 crore profit on equity this year alone.
But how and where does LIC invest to keep its financials strong? A large part of LIC's investment is in equities, bond market and government dominated instruments, says Kumar. "We buy when the market is down, we are contrarians that way but then we make sure that the policyholder interest is kept at heart and that is why most of our investments are in G-Secs," the LIC Chairman said during an interview with The Economic Times.
Kumar said the NCD as part of LIC's corporate debt investment is around Rs 40,000 crore, G-Secs Rs 1,87,000 crore, equities Rs 33,000 crore. He added LIC invests more in G-Secs than equity or debt market. "If you look at equity as a percentage, it would hardly be enough. In terms of volumes, it looks big but in terms of percentage, our debt and GSecs are far more," said the LIC Chairman.
LIC, with its huge war chest of funds, is now also diving in deep with long-term investment in the battered NBFC sector. Two NBFCs with established background that got a credit line from LIC are M&M Financial Services and Piramal Capital & Housing Finance.
The insurance giant is known to have stepped in to bail out public sector companies including banks over the last couple of decades whenever they were in dire need of funds. In the past, the corporation has also pumped in much needed debt and equity capital into public sector banks (PSBs) -- including IDBI Bank -- when government finances were tight.
The insurance behemoth's total assets under management crossed the historic figure of Rs 30 lakh crore for the first time in FY19 to Rs 31.11 lakh crore, a rise of 9.38 per cent year-on-year. As per the audited figures for the fiscal released last month, its market value was pegged at Rs 28.74 lakh crore at end-March 2019, up 8.61 per cent. The total income of LIC, which includes total premium and investment income, was around Rs 560,784 crore in 2018-19, a rise of 7.10 per cent.
Edited by Manoj Sharma