Life Insurance Corporation (LIC), which is expected to debut on the bourses by the end of the current fiscal year (FY22), booked profit to the tune of Rs 23,246.5 crore from sale of investments from April-September, the draft red-herring prospectus (DRHP) of LIC revealed. In FY21, it had booked profits of Rs 39,809.63 crore from the sale of investments and Rs 19,387.48 crore in FY20.
In the first six months of FY22, LIC’s income from investments, which includes gross income from interest and dividends, rent, net profit on sale/redemption of investments, and fair value gain totalled Rs 1.49 trillion. In FY21, it stood at Rs 2.85 trillion, Rs 2.42 trillion in FY20, and Rs 2.25 trillion in FY19.
LIC is one of the largest institutional investors in the country, and its portfolio includes central/state government securities, corporate bonds, securitised debts, equities and preference shares, mutual funds, alternate investments and money market instruments.
As of September 2021, LIC’s investment from policyholder’s fund totalled Rs 39.495 trillion on a standalone basis, including investments of more than Rs 9.78 trillion in equities, representing 24.78 per cent of investments. Further, LIC’s policyholder’s investment portfolio includes 37.5 per cent central government securities, 24.61 per cent state government securities, and 8.07 per cent corporate bonds.
Of the total debt asset under management (AUM), over 95 per cent, on a standalone basis, was invested in sovereign and AAA-rated securities. Over 90 per cent of policyholders’ equity investments, on a standalone basis, are invested in stocks that are part of the Nifty 200 and BSE 200 indices as of September 30, 2021. LIC takes a “safety first” investment approach, hence a large part of their investment is in sovereign bonds, high-rated corporate bonds and equities.
Interestingly, LIC’s write-offs increased substantially in H1FY22, as the insurance behemoth wrote off Rs 3,860 crore worth of investments during this period, all of which were losses from default of debt portfolio. In FY19, it had written off Rs 350 crore, Rs 597 crore in FY20, and Rs 769. 43 crore in FY21.
Further, LIC holds 49.24 per cent of outstanding shares in IDBI Bank, a private sector bank, as well as 45.24 per cent of shares in LIC Housing Finance. Although IDBI Bank and LIC Housing Finance are currently associates of LIC, as the investments in IDBI Bank and LIC Housing Finance were made using policyholders’ funds, these investments form part of the investments in the policyholders’ account.
 "IPO-bound LIC saw Rs 23,246-crore profit from investment sale in H1FY22")
