MUMBAI, February 15: Life Insurance Corporation's (LIC) total investible fund has crossed the Rs 1,00,000-crore mark.The corpus zoomed to Rs 1,07,000 crore in April-January 1997-98, up from Rs 91,448.4 crore in March 1997.The increase in LIC's investible fund is set to give a shot in the arm of the sagging capital market as under the new investment norms, the public sector insurance jaggarnaut can invest more than 25 per cent of the fund in private sector which includes its capital market investments. With the bulging corpus of the investible fund, LIC's capital market exposure, which is pegged around Rs 16,000 crore during the current fiscal, will go up substatially next year, industry analysts said.
Under the new investment norms -- put in place in November 1997 -- the institution is allowed to invest an additional Rs 3,500 crore in capital market. However, the depressed market conditions have prevented LIC from taking the plunge.By the end of 1997-98, LIC's total investible fund is expected to bearound Rs 1,12,000 crore, registering the highest growth since its inception in 1956.
Life insurance business accounts for almost the entire corpus. LIC's equity base is a meagure Rs 5 crore.Prior to the change in investment norms, the institution was required to invest 75 per cent of the fund in central and state goverment securities including government-guaranteed marketable securities. LIC's investment limit in government securities has been reduced to 40 per cent from 65 per cent.
The institution has also now allowed to trade in government securities. This will help LIC maximise the yield on investments which was pegged at 12.39 per cent in 1996-97.The government has also liberalised the investment pattern of LIC's group insurance scheme which has a fund size of Rs 62,691.88 crore during 1996-97. Although the government has permitted the institution to appoint its own fund manager and investment advisors both in India and abroad, LIC is yet to take a view on this. It has not firm up its investmentplan in infrastructure sector.
With the addition of 1.3 crore policy holders during the year, the institution's client base has crossed eight crore, sources said. In the current fiscal, LIC has targetted 15 per cent expansion in the sum assured which is pegged around Rs 65,220,00 crore and a 20 per cent growth in the first premium at Rs 2,180.00 crore.``We are moving close to the targets,'' said a top official of the institution.During 1996-97, LIC earned a total income of Rs 25,821 crore which included income from investments of Rs 7683 crore (29.8 per cent ) and interest on loans Rs 1713 crore (6.6 per cent ).
LIC had a surplus of income over outgo of Rs 15,150 crore during 1996-97 which was higher by 18.4 per cent over the previous year. The institution distributes its surplus income in the form of bonus to its policy holders.
Advertising blitz planned LIC has decided to advertise on major private channels across the country. It will kick off the campaign next week. So far, the state-run Doordarshanwas the only vehicle to carry ads of the insurance major.LIC spends 27 per cent of its publicity budget on electronics media advertisements.
The corpus of its publicity budget is pegged at around Rs 26-27 crore -- one per cent of the total income.The decision to splash LIC on the private channels is prompted by the increasing viewership of the private medium. While both the DD1 and DD2 together enjoy 50 per cent of the viewership, ZEE accout for 15 per cent, followed by Sony seven per cent, Star Plus three per cent and local cables 11 per cent of viewership, said an LIC estimate.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
