LIC's equity investment rises 60% to Rs 53K crore

Written by George Mathew | Mumbai | Updated: Aug 2 2014, 13:58pm hrs
LICLife Insurance Corporation, India?s largest financial institution, has increased its presence in the equity market.
Life Insurance Corporation, Indias largest financial institution, has increased its presence in the equity market with a 60 per cent rise in its investments in equities in FY14.

The corporation bought stocks worth Rs 53,373 crore during 2013-14 as against Rs 33,205 crore in fiscal 2012-13, making it the largest domestic investor in Indian markets, said an official. It has booked a profit Rs 21,257 crore from the capital market in the year ended March 2014 in spite of a challenging environment.

This is the second year in succession that LIC made bumper profits from the market as the corporation had realised a profit of Rs 21,000 crore in the previous fiscal.

However, LIC was unable to take on the combined might of foreign institutional investors in terms of inflows. During FY14, FIIs pumped in a net amount of Rs 79,709 crore in the equity market, according to data available with Securities and Exchange Board of India. Further, anticipating a slew of reforms, FIIs have made net investments of Rs 1,53,000 crore in calendar 2014. Out of total investment by LIC, Rs 2,24,967.02 crore was invested in Central/ state government securities, bonds and debentures and other investments, said an official. The corporations total investment (including govt securities and equity) increased by 41 per cent to Rs 2,78,340 crore (provisional) as against Rs 1,96,828.35 crore in FY13.

The corporation has realised a profit of Rs 21,257.10 crore (provisional) by sale of equities and Rs 364.75 crore by sale of securities (including G-secs and bonds). It has earned a yield of 9.42 per cent (provisional) during FY14 on the total investments, said an official.

The Sensex had showed only a 1,000 point rise from April 2013 till January 2014 with the market gathering momentum from March 2014 onwards. The Sensex has jumped nearly 6,000 points since February this year, betting on the reforms agenda of the ruling NDA government.

Despite outflows and redemption from its ULIP (unit linked products ), the corporation has managed to post a surplus fund transfer of Rs 26,384 crore for FY14 from life and ULIP business as against Rs 22,539.99 crore in the previous year, showing a 17.05 per cent increase.

LIC does not have a concept of profit in its business and its profits are known as Surplus Fund Transfer which is distributed among unit holders (95 per cent) and the government (5 per cent). The surplus fund transfer of Rs 26,384 crore makes LIC the largest profit earner among financial institutions and banks in India. Among all companies and entities in the country, it comes close to ONGC which reported a profit of Rs 26,507 crore in FY14. There was a drop of Rs 13,663 crore from ULIP funds to Rs 11,7878.07 crore although ULIP faced a net redemption of Rs 33,000 crore during the reporting financial year.