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LIC invests 34k cr in equity during Q1

This was significant because in the absence of LIC's share purchases India's already-bearish equity market would have fallen more. (Photo: Reuters)Premium
This was significant because in the absence of LIC's share purchases India's already-bearish equity market would have fallen more. (Photo: Reuters)

  • LIC is known for its capability to lend the strongest support to Indian equity markets, bought shares worth at least Rs. 46,444 Crore during the April-June period on a gross basis, while selling equities worth over Rs. 12,000 Crore during the quarter, said an LIC executive during the conference

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MUMBAI : Life Insurance Corp. of India (LIC) made net purchases of shares worth more than 34,000 crore from the equities market in the fiscal first quarter, the country’s largest insurer said on Friday, as it announced a sharply higher net profit of 602.78 crore for the June quarter.

The state-owned insurer made gross purchases of shares worth 46,444 crore, while selling shares worth over 12,000 crore in the three months ended June, said a company executive at a news conference to announce the quarterly results.

LIC managed to sharply boost its net profit from 24.36 crore in the June quarter last year by expanding its new business, changing the product mix and focusing more on non-participating products.

“We continue to focus on non-participating policies (policies in which profits from investments are not shared with policyholders). Our VNB (value of new business or the exact value of business from sales of fresh policies) margin from non-participating products has increased. Growth in new business is expected to be good going ahead," said M. R. Kumar, chairman, LIC.

LIC’s profit would have been better had the insurer not made a provisioning of 3,015.38 crore against diminution in value of investments during the quarter.

For the June quarter, the insurer saw a 20.35% increase in total premium income to 98,352 crore from 81,721 crore a year earlier.

Expenses of management (commission paid to agents and other expenses) rose to 14,428.23 crore from 13,026.31 crore during the period under review.

Total premium income jumped 20.35% to 98,352 crore from 81,721 crore during the period.

“The marketing activity picked up pace, overall business momentum was strong for LIC...On an annualised premium equivalent (APE) basis the total premium was Rs.10,270 crore for the quarter ended 30 June 2022. Of this 62.8%(Rs. 6,450 crore) was accounted for by the individual business and 37.2% (Rs. 3,819 crore) by the group business. Within the individual business the share of par products on APE basis was 92.25% and balance 7.75% was due to non par products," said LIC in a release.

LIC sold 3.68 million policies in the individual segment during the quarter ended, registering an increase of 59.56% over the similar quarter last year when 2.31 millon policies were sold.

For the quarter ended 30 June, 2022, the persistency ratios on premium basis for the 13th month, and 61st month were 75.75%, and 58.99% respectively. The comparable persistency ratios for the corresponding quarter ended 30 June, 2021 were 72.49%, 56%, respectively.

LIC’ asset under management increased by 7.57% to 41.02 trillion as on 30 June 2022 as compared to Rs. 38.13 trillion on 30 June 2021.

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