LIC valuation surplus up 11%

Life Insurance Corporation (LIC) recorded a 10.99 per cent rise in valuation surplus to Rs 23,478 crore in 2009-10 as compared to Rs 21,152 crore in 2008-09. Valuation surplus is the money available with LIC for distribution after paying all expenses and taxes. LIC paid Rs 1,029 crore dividend to the government.

The insurance giant’s first-year premium income rose 33.87 per cent to Rs 70,891 crore from Rs 52,954 crore in 2008-09.

Its total assets under management increased 31.88 per cent to Rs 11,52,057 crore. The premium income rose 18.32 per cent to Rs 1,85,985 crore from Rs 1,57,186 crore in 2008-09 while total income went up to Rs 2,98,721 crore, a 49.15 per cent increase from 2008-09.

Also, first-year premium collections doubled to Rs 18,740 crore. LIC’s market share inched up to 73.43 per cent in the first quarter of 2010-11.

LIC Chairman T S Vijayan said the expense ratio last financial year was 13.10 per cent as compared to 12.92 per cent in the previous year, which was “within prescribed limits” and the lowest in the highly competitive life insurance space.

This financial year, the insurer is targeting premium collection of Rs 2,01,000 crore. In the first quarter of 2010-11, LIC invested Rs 39,000 crore, of which Rs 10,000 crore was in equities.

“We have targeted to invest Rs two lakh crore across asset classes by the end of this financial year,” said Vijayan. This is higher than the Rs 1,92,000 crore invested last year. Vijayan, however, said the investment in equities would depend on the premium collected from unit-linked insurance policies (Ulips).

Last year, the share of Ulips in the total premium pie of Rs 1,85,000 crore was 75 per cent and total equity investments stood at Rs 61,000 crore. “If the markets are good, people invest in ULIPs and if interest rates are good, they turn to non-linked policies,” Vijayan said.

The largest insurer has 15 lakh agents and expects a net addition of 20 per cent this year. LIC is one of the few insurers paying the least commission to its agents. While the average commission on Ulips is 12-15 per cent, LIC pays around seven per cent.