As market soars, biggest investor LIC stays away

Life Insurance Corporation (LIC), the biggest equity investor in India, is staying away from the stock markets at a time when the markets are almost hitting life-time high.

The insurer, a dominant player in the market, pruned its investments 38% to Rs 39,705 crore for the nine month period ended December 31, 2016, against Rs 64,000 crore last year. It sold Rs 38,000 crore worth of equities during the period.

V K Sharma, chairman and managing director, LIC said, “We have deliberately taken this decision because of the way the markets are moving, LIC is a contrarian player in the market.”

He said equity usually forms 12% of the total investible assets.

LIC said its equity market investments will remain subdued but may hit a level of Rs 50,000 crore by the end of the financial year.

During this period the corporation also invested about Rs 1.98 lakh crore into the debt market, bulk of which — Rs1.83 lakh crore – was into the government bonds

The state-owned insurer reported a 78% rise in its net profit at Rs 16,000 for the nine-month period ended December 31, 2016, over the same period last year.

LIC said its core business of individual premiums is robust and not impacted by demonetization by prudent sale of insurance products by focusing on annuity and pension products. The sale of its Jeevan Akshay policy also helped pump up the profits.

It reported a 40% rise in new business premium for the nine-month period to touch Rs 31,000 crore, expecting to touch Rs 35,000 crore by the end of March 2017. During the period, the total assets of the corporation rose 12.81% to Rs 24,41,946 crore.

With 50% of the individual collections being in cash, demonetization-led to sharp fall in collections in the first few days and then it picked with 75% of the payments being in electronic form.

“Immediately after demonetization was announced on November 8, we shut all our 40,000 collections centres, saw to it that all the money was deposited in the banks before opening it for fresh collections. ‘This way we ensured there were no disruptions and the operations ran smoothly,” Sharma said.

During the period, LIC reported a rise in non-performing assets to 6.29% to Rs 18,220 crore, higher than the Rs 16,000 crore, or the 5.60% that the corporation reported during the same period last year.

LIC, which is a major shareholder in Infosys and also Tata group companies, said that it will not interfere in the internal matter of companies and has not voiced any concerns on the on-going board room battle of the respective boards of the companies.

Asked about the falling standards of corporate governance in some of India’s top companies LIC chairman said its first quarterly result press conference, “We will not interfere in the internal matters of companies unless it impacts the interests of our investors. We have no business to run the companies.”

According to stock market data, LIC to pared its stakes in various Tata companies 6.4% between October and December. However, in Infosys, LIC has a shareholding of 7.02%, which it increased 2% over a two-year period.