LIC investment in G-secs rises to Rs 2.81L crore in 10 months

Life Insurance Corporation (LIC), which is gearing up for its initial public offering (IPO), on Friday said investments made by the corporation in government securities rose to Rs 2.81 lakh crore in the period between April-January 2020, much higher than the target of Rs 2.55 lakh crore.

India’s largest insurance company with assets of over Rs 32 lakh crore had invested Rs 1.91 lakh crore in government securities in the last financial year. The corporation purchased Rs 46,850 crore in equities till January this financial year as compared to Rs 59,115 crore seen in the last financial year.

According to LIC Chairman M R Kumar, individual new business performance of the corporation as of January 2020 has shown a growth of 17.48 per cent in its first year premium and 29.42 per cent in number of policies by posting a figure of Rs 45,199 crore and 195,85,635 policies respectively. The composite market share in the number of policies and first year premium as of January 2020 was 77.61 per cent and 70.02 per cent respectively which has increased from 73.54 per cent in policies and 66.26 per cent in first year premium as of January 2019.

Its total income grew to Rs 297,017.28 crore for the period ended Q2 of FY20 from Rs 252,149.60 crore in the last corresponding period, a growth of over 17.79 per cent. LIC Chairman said it would be talking to their employees and assured them that the proposed IPO will not lead to privatisation of the insurer.

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“I would say that, there are talks of privatisation and Economic Secretary has already clarified that this has nothing to do with privatisation and the government will divest part of their holding in LIC. There are many PSU banks, and even New India Assurance and GIC Re are listed, but they continue to be government entities,” Kumar said.

He also said that there is no problem for staff or the employees they will continue to be with the LIC, which is more or less wholly controlled by the government. Around one lakh employees had recently staged a walk-out across country the against the proposed stake sale announced by the Finance Minister in the Budget.

Speaking to media, Kumar said there are a lot of figures floating around the market capitalization and size of IPO. “We have not done the maths. Unless we do our internal discussion and maths, I don’t think we would be able to answer that today. Valuation has to be reasonably, scientifically (done) and a lot of work has to be done,” he said. The IPO is likely to hit the market in the second half of the current fiscal. Kumar said that there lies no room of doubt for policyholders and the employees of LIC as the sovereign guarantee will continue for LIC even after divestment of government stake in LIC. However, he said the Corporation will focus on the issue of transparency and valuation. The government is likely to offload 10 per cent of its stake through the IPO. There will be some legislative changes in the LIC Act before it gets listed. As on January 31, the Corporation has booked profits to the tune of Rs 23,273 crore from its investment in equities. LIC will be focusing on non-single premium and hence it has brought down the premium price of term insurance plan remarkably, he said.