State-run Life Insurance Corporation of India (LIC) booked a record Rs 37,000 crore profit from several share sales in 2020-21.
The latest profit is the highest in the insurer's 65-year history, as the stock market logged record highs. LIC's FY21 profit is a 44.4% leap against its Rs 25,625 crore profit from share sales in fiscal 2020.
During the fiscal, the insurer bought stocks worth Rs 94,000 crore, also its highest ever.
"We booked maximum profit by churning the equity portfolio, depending on available opportunities and also to maintain a long-term high-performing portfolio. The sale has been across sectors and driven by our focus on generating reasonable profits and available market opportunities," LIC MD Mukesh Kumar Gupta told Mint.
The state-run insurer is also the largest investor in its markets, handling assets amounting to approx. Rs 34 lakh crore.
LIC has been the Centre's biggest financial backer, particularly in its divestment programmes. Its profits mainly come from the sale of stocks in its large, non-linked portfolio, comprising traditional life insurance policies.
The record profit enhances LIC's capacity to pay better bonuses and returns to policyholders as well as better dividend to the Centre. It also widens LIC's investible surplus which can sustain stock markets at uncertain times and help draw new customers owing to its capacity to generate such profits.
"The corporation's investment strategy is to acquire and maintain quality assets... We also churn the portfolio to realise some profits and also switch some stocks. Our investment strategy aims to meet the reasonable expectations of policyholders along with the safety of the funds," Gupta told the publication.
The whopping gains have been partly aided by a resurgent stock market. Gupta further stated that LIC takes "advantage of emerging market opportunities to enter and exit companies to generate profits as well as to create a strong equity portfolio to give reasonable returns over a long-term horizon."