LIC's FY04 group pension premium business up 105%

In the absence of any special deposit schemes, port trusts have shifted their investments to Life Insurance Corporation of India's (LIC) group pension policies.

Premium from LIC's group pension business is estimated at Rs 3,366 crore during 2003-04 as against Rs 1,645 crore during the previous financial year, registering a growth of nearly 105 per cent.

"The investments came to our group pension business since the trustees were looking at safe investment avenues after the government withdrew the special deposit scheme," LIC managing director RK Vashishtha told Business Standard. Besides, LIC offers 8.75 per cent interest on some group pension business, higher than most other instruments.

The final figures for the year are still being collated, but LIC executives expect the corporation's assets under management to reach Rs 3,50,000-crore mark compared to Rs 3,40,000 crore in December 2003.

In the individual pension segment too, LIC has managed a growth of around 60 per cent, garnering a deposits of Rs 439.52 crore in the year ended March 2004.

Vashishtha said that LIC had managed to garner Rs 2,778 crore premium income through the sale of new policies during March 2004, compared to Rs 2,692 crore in March 2003.

He said that it was a credible performance since business had shot up in March last year following the government's decision to withdraw tax benefits on single premium policies.

LIC executives said that despite the withdrawal of the tax benefits, some high networth individuals did opt for single premium policies but overall there was a steep decline in the sale of new policies. Vashishtha was, however, unwilling to disclose details.

However, the public sector insurance behemoth, faced stiff competition from the large private insurers and its marketshare dipped below 90 per cent. Private insurance companies entered the Indian market in 2001.