Life Insurance Corp, the country’s biggest institutional investor locked in an impressive 68% jump in profits, about Rs 16,000-crore, from equity sales in the first nine months of the financial year.
Last financial year, the corporation had earned a profit of Rs 9,500 crore from equities in the same period. Its equity investment was subdued for the period as it has invested Rs 39,000 crore against Rs 64,000 crore in the same period last year.
“We have booked profits of Rs 16,000 crore in the year so far by selling about Rs 38,000 crore of equity,” said V K Sharma chairman LIC. “We are a contrarian player and we have deliberately taken this decision given the way markets have moved.”
He said that equity is only 12% of their investible corpus. Sharma did not talk about individual stocks that LIC has invested in. “We are not a trader but long-term investor,” he said.
LIC invested around Rs 1.98 lakh crore in debt instruments, including Rs 1.83 lakh crore in government services and state development loans.
The corporation has investible surplus but its equity investments are subdued because of the current market conditions. LIC had unsuccessfully bid for a sizable stake in BEL. “This shows that the market is deepening and more players are interested in buying public sector companies.”
“We visualised that interest rate will fall and so we gave push to pension plan,” said Sharma. It has posted a growth of 12.43% in total premium income at Rs 1,45,031 crore during the nine months ended December 2016. In the same period last year, it had done total premium of Rs 1,29,001 crore.
New business income grew 40.11% in the nine-month ended December 31, 2016, boosted by fund flow into formal system during demonetisation. “We met our yearly target of Rs 31,000 crore new business income a month before the year end,” said Sharma.
LIC operates through 40,000 collection points, where collection dipped in the first 15 days after the ban on high currency notes of Rs 500 and Rs 1,000 on November 8. However, it improved over the next few days and now 75% of the collection happens through digital payment mode. For the insurer 6.5 crore transactions are happening through digital. It is in the process of integrating its system to BHIM and UPI.