LIC books ~200 bn in profits on equity investments

Taking the benefit of the buoyant capital markets, Life Insurance Corporation of India (LIC) booked a profit of ~200 billion on its equity investments in the current financial year. Its total assets, covering equity and debt investments, grew by 16.75 per cent to ~28.5 trillion by December end.

Net investments up to December 31 stood at ~3.05 trillion, of which, equity investments account for ~700 billion and government securities and state development loans account for ~2.07 trillion.

LIC Chairman V K Sharma said, “For us, equity investments are a long-term play. If you look at where we invest, maybe other players in the market do not invest the same.”

Investment income for the company grew 11 per cent to ~133 million at the end of Q3FY18, against ~119 million in the year-ago period.

Sharma said general insurance companies, such as New India Assurance and General Insurance Corporation Re — where LIC has significant stakes, were in the same line of business. And therefore, the life insurer would invest more in health insurance and general insurance companies, given the potential for higher growth and coverage.

Elaborating on the business performance, Sharma said new business for the nine-months ended December grew 19.47 per cent to ~997.83 billion, allowing LIC India to achieve its single premium target for FY18 by December 31.

Total premium income grew 11.47 per cent to ~2.23 trillion for the nine-months ended December 31, compared to ~2 trillion collected during the same period in the previous year. Gross total income grew 12.19 per cent to ~3.78 trillion for the period ended December 31, against ~3.37 trillion in the year-ago period.

Non-performing assets (NPAs) rose to ~231.27 billion at the end of December 2017, from ~199.9 billion at the end of December 2016 because of exposure to large stressed accounts facing insolvency proceedings at the National Company Law Tribunal. Net NPAs reduced from 2.58 per cent at the end of Q3FY17 to 1.67 per cent at the end of Q3FY18.

Sharma said that LIC's NPA levels rose mainly because of exposure to accounts such as Bhushan Steel at ~11 billion; Jai Prakash Associates at ~16 billion; and Videocon Enterprises at ~7.8 billion, amongst other large (default) corporate accounts.

Policy claim payouts amounted to ~1.22 trillion by the end of December, compared to ~1.12 trillion in the corresponding period of the previous year, a growth of 8.73 per cent.