State owned life insurance behemoth Life Insurance Corporation (LIC) might have lost its market share during 2018-19 but has earned a record profit of Rs 23,621 crores from its equity investment during the year. It had a gross equity investment of Rs 68,621 crore during the year.
The volatile stock market indices –Sensex- has moved up 5000 points or 1000 points in Nifty in 2018-19.
The corporation, which is now the largest capital market investor in the country, has began 2019-20 with an investible corpous of Rs3,48.692 crore, that will be invested in capital market instruments like bonds including government securities. corporate bonds and equities.
The market value of LIC’s investment as at end of FY 2018-19 is Rs28.74 trillion as against Rs26.46 trillion in 2017-18, showing a growth of 8.61 percent.
Moreover, the total assets of the corporation has crossed the historic figure of Rs30 trillion, for the first time.
As per provisional results, during the year 2018-19, the corporation has invested more than Rs2 trillion in central and state government securities with an average annualised yield of almost 8.25 per cent.
Currently, about 65 percent of investments in life fund- total investment corpus LIC has accumulated over decades- of LIC are in central and state government long term securities with high interest coupons
An investment of Rs 30,595 crore was made in corporate bonds with an average annualised yield of 9.11percent
As per the provisional accounts for 2018-19, the corporations’s total premium income- new premium along with the renewal premium- was Rs3,37.200crore showing a growth of 6.08 per cent while the total benefits paid amounted to Rs2,50.900 crore growing by as much as 26.62 percent.The corporation had mobilised a total new premium of Rs41,086.31crore in 2018-19.
The total income of the corporation that includes total premium and investment income,is likely to be around 5,00.000 crore in 2018-19.
Such robust income of the corporation augurs we;ll for its policyholders who can continue to expect a descent bonus for 2018-19. THe acturial calculation of the corporation for 2018-19 is still going on and will be completed soon.
At a time when the Indian financial sector is facing a huge crisis rising non-performing assets in banking sector, defaults in debt payments by the India Inc , as a result of regular follow ups, the LIC's growth in the investment income has risen by 5.17 per cent during 2018-19. Over the last four years ,the LIC's investments income has increased from Rs1.53 trillion to Rs2.06 trillion up to 2018-19.
“Over the years, barring one or two, LIC’s expenses have been met with from the income generated from investments by way of interest and dividends,’’ said LIC officials.
“Our investment portfolio remains untouched and continues to grow every year and is likely to cross Rs30 trillion as at the end of the current fiscal, ‘’said officials.
However, with LIC’s declining market share in the domestic e market, the performance of the corporation has remained an area of deep concern for the new top management of the corporation.
According to the performance analysis the LIC's top management headed by the newly appointed chairman MR Kumar, the corporation, except in pension and group scheme(P&GS), has missed its own targets in the most of the parameters during 2018-19
According to the LIC officials, one among the critical areas that glaringly stands out, while LIC still holds 74.71 per cent of the market share in terms of number of policies , its market share in individual non-single premium has fallen to 40.32 percent in 2018-19.
LIC’s share in number of policies(NOP) stands at 74.71 percent and first year premium(FYP) at 66.24 percent -in 2018-19- which is 0.96 per cent less in NOP and3.16 per cent less in FYP over 2017-18.
In the individual business, LIC has a market share of 40.32 per cent in non-single premium in 2018-19 as compared to 41. 70 percent in 2017-18 and its overall market share in FYPI(individual segment)) is 52.22 per cent in FY 2018-19 as compared to 56.18 per cent in 2017-18.
In the individual non linked business, LIC is commanding a market share of 60.24 per cent in new single premium with its overall market share in FYPI(individual ) being 69.25 percent.
However, in individual linked business, private insurer have generated a whopping 99.86 percent market share with a premium of Rs24034 crores.while LIC has collected a mere Rs34.26 crore as FYP in this segment.
“This calls for a very urgent focus on ticket size to ensure relevance and adequacy of insurance cover for our customers,’’ said LIC officials.
“Whatever targets are given his year- 2019-20, are to be achieved and that is not open for debate. Targets are non-negotiable,’’ said Kumar in his hard hitting address at the recent brain storming interaction with the senior officials of the corporation.
“For LIC, it is about survival. We need to up our game and how and time starts now,'' he said,