With Rs 53,000 crore investment, LIC cherrypicks in down market

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The fall in stock markets and the resultant low valuations of equity stocks have helped the state-owned Life Insurance Corporation (LIC) turn a big buyer.

The insurance behemoth has invested Rs 53,000 crore into the equity markets so far in the financial year 2015-16.

SK Roy, chairman, LIC, said in a media interaction that the dull performance of the equity markets turned out to be an advantage for LIC. “We were able to invest into the equities in a big way and we have also made substantial investments into the debt. We were net buyers during the year investing about Rs 53,000 crore.”

The new sectors that LIC is investing into include information technology (IT), pharma and FMCG. “First premium collection was under strain but we hope to get to double digits by the end of the financial year,” Roy said. The first premium collections of the corporation during the year were Rs 31,000 crore.

He was speaking at a conference to announce the launch of LIC’s e-services whereby policies can be bought online. The e-services was inaugurated by T S Vijayan, chairman of Insurance Regulatory and Development Authority of India (Irdai). The LIC e-service programme was enabled by digitization of 40 million documents and could bring down the cost of insurance products as the cost of intermediation will be down.

Basic services as mandated by Irdai such as policy status, bonus status, loan status, claims status, etc will be available to the customers registered on LIC’s e-services. Premier services such as premium due calendar, online premium payment facilitation, premium history, claim history, etc will also be available to the registered customers.

According to the LIC data, the total investment by the insurance major both in debt and equity has grown from Rs 11,02,005 crore in March 2010 to Rs 19,46,249 crore in March 2015. These investments were in central government securities, state government securities, social and infrastructure and corporate sectors. Investment in bonds and debentures was Rs 36,255 crore at the end of March 2015.

LIC appoints nominee director on the board of companies where LIC has a substantial exposure by way of debt or equity. In a report submitted to the standing committee on finance in November 2, 2015, LIC said it has 52 directors on the boards of 67 companies, including five PSU banks and one public sector company.

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