LIC’s profits from share market swell over 72% to Rs19,000 cr in FY17

State-owned insurance major Life Insurance Corporation of India (LIC) saw returns from its security market investments rise over 72 per cent to Rs19,000 crore in the financial year ended March 2017, as the market continued to rally.

LIC, whose profit from the market stood at Rs11,000 crore in the 2015-16 financial year, added Rs8,000 crore to market returns in the 2016-17 fiscal, including a Rs3,000-crore gain in the January-March quarter.

The recent market rally alone has helped LIC book 19 per cent more profit in the March quarter.

LIC, the nation's largest financial sector investor, has invested a whopping Rs2,300,000 crore, including a Rs1,800,000 crore investment in government bonds, in the market so far. Its equity investments stood at around Rs5,11,000 crore as of March 2017.

Chairman V K Sharma said the numbers are provisional, as it is yet to be approved by Parliament.

Sharma also defended the corporation's assured returns product, saying that LIC nets 7.5 per cent return on its investments in government bonds alone. He was replying to query on how the corporation can assure 8 per cent annual return on its new product Jeevan Umang that was launched on Tuesday in a falling interest-rate regime.

LIC's equity investments, however, have fallen steadily from Rs65,000 crore in FY15 to Rs50,000 crore in FY16 and further to Rs40,000 crore in FY17, Sharma noted.

Sharma said, on an average, LIC invests 20 per cent of its investible corpus into equities.

''Our stated objective is to secure the money of the policyholder and also his life and not just make profits. We do invest a portion of our investible corpus in the market and most of which is in the sovereign debt,'' Sharma said.

Almost 80 per cent of its Rs2,300,000 crore investment is in government bonds, while around 19 per cent in equities and the rest in realty and other areas.

Both the Sensex and the Nifty rallied nearly 0.80 per cent to scale new closing peaks at 30,580 plus and over 9500, respectively, today.

Meanwhile, LIC reported a 27.22 per cent jump in first-year premiums in FY17 to Rs1,24,396.27 crore on the back of a surge in single-premium policy sale and falling interest rates. This was Rs97,777.47 crore in FY16.

The state-run insurance giant saw its market share increase to 71.07 per cent from 70.61 per cent in the previous year.

In terms of number of policies, LIC's market share in FY17 stood at 76.09 per cent, up from 74.72 per cent in the previous year. This is despite a slowing of policy sales to 20.1 million in FY17 from 20.5 million in FY16, Sharma noted.

 ''We had between 80 and 100 products till the regulator IRDAI cancelled them. Now we have 26-27 products with just one ULIP. We hope to get back to the pre-ban levels over the next few years,'' Sharma said.

LIC's total assets grew 12.81 per cent to Rs2,442,000 crore as of end-December 2016 from Rs2,165,000 crore in the year-ago period. It's gross total income grew 15.76 per cent to Rs337,000 crore till December from Rs291,000 crore aided by a 40.11 per cent surge in new business premium.

When asked about LIC's view on the Essar Oil-Rosnet deal, he said the Corporation fully supports the deal, provided the Ruias rework deal structure that meets LIC's investment terms or repay the around Rs 2,300 crore loan.

Sharma also defended LIC's over 16 per cent investment in tobacco major ITC, saying it is a purely commercial decision.

''If we exit this highly productive investment, somebody will snap it up. So it is not a war between smokers and non-smokers or health versus disease. It is a commercial decision and so far this has made immense commercial sense. Also, ITC has diversified and today only 45 per cent of its revenue comes from tobaccos, which some years back was 90 per cent or more,'' he said.