LIC to double equity investments in FY-15 to Rs 60,000 crore

Says may go higher if Sensex crosses 28,000 mark

This financial year, Life Insurance Corporation of India (LIC), India’s largest insurer, will put 20 per cent of its total investment corpus of Rs 3 lakh crore in equity markets. This is a rise of about 50 per cent compared to the equity investment of Rs 40,000 crore last financial year.

Officials said in case the Sensex crossed the 28,000-mark, the investment might exceed 20 per cent. Sources said the company’s board of directors had recently approved the investment plan.

During 2013-14, the government-owned insurer had booked profits of about Rs 21,000 crore in the stock market.

Officials said while the company invested heavily in government securities, as its product portfolio is largely traditional, with the Sensex showing an upside, the company would go to the market in a major way. As of August 6, 2013, the Sensex stood at 18,733.04; as of Wednesday’s close, it stood at 25,665.27.

According to Insurance Regulatory and Development Authority (Irda) regulations, life insurers have to invest at least 25 per cent in central government securities.

Various insurers, including LIC, have invested heavily in the disinvestment exchange-traded fund (ETF). Of about Rs 800 crore raised by the CPSE ETF, most has come from large insurers such as LIC. Apart from its regular investments, LIC also participated in the government’s divestment of its stake in Bharat Heavy Electricals Ltd and Specified Undertaking of UTI’s stake sale in Axis Bank.

On disinvestment, LIC officials said the company would invest if opportunities for long-term investors were good. They, however, clarified the insurer wasn’t setting aside any corpus for this.

According to the department of disinvestment, ministry of finance, coming disinvestments include that in Hindustan Copper and Steel Authority of India Ltd. Divestment of government stake in NHPC (formerly National Hydroelectric Power Corporation) has begun. The government plans to divest 11.36 per cent of its 85.96 per cent stake in NHPC’s share capital through an offer for sale, through stock exchanges.

Market participants said LIC was expected to play a significant role in these issues, especially as it had booked good profits from its equity portfolio.

In FY14, LIC invested about Rs 2.25 lakh crore, of which 15 per cent was in the equity segment. The company has been a long-term investor in the stock market, investing for at least eight years.

During the past 12 months, the company made several changes to its stake in large companies. In the June quarter, it raised its stake in Infosys to 3.82 per cent, purchasing shares worth about Rs 1,100 crore. This was around the time Vishal Sikka was appointed as Infosys’ chief executive.

The company plans to raise its total corpus to Rs 32 lakh crore by 2020. According to public disclosures by the insurer, it posted a net profit of Rs 1,656.68 crore for FY14, compared with Rs 1,437.59 crore for FY13. As of March 31, total investments (under the policyholder segment) stood at Rs 13.89 lakh crore, compared with Rs 11.87 lakh crore a year earlier.