LIC plans to invest another Rs 2 lakh cr in stks, bonds | Economic Times

MUMBAI: Life Insurance Corporation of India (LIC) will likely invest an estimated Rs 2 lakh crore in bonds and equities through the rest of FY21 as it expects demand for protection and coverage to increase in the aftermath of the pandemic, thus raising premium collections.The largest domestic institutional investor has already invested a similar quantum since April 1. This is marginally higher than the investments in the corresponding period last year, reflecting no slowdown in the insurance industry.The corporation has booked profits of Rs 14,000 crore from equity investments, about a fifth higher than the corresponding period last year, said one of the top officials at LIC, citing latest data.“We find more investing opportunities under the current circumstances,” said Mukesh Gupta, managing director at LIC of India. "With premium collections normalizing, we expect to make new investments to fetch higher long-term returns.”“While over one-fifth of the estimated investments may go into equities, the rest of the money would likely flow into central/state governments and top corporate bonds with long term maturity,” he told ET.The total estimated corpus of Rs 4 lakh crore for the full financial year would be one or two percent higher than 2019-2020.Between April and July, LIC has collected Rs 1.10 lakh crore including new and renewal premium, compared with Rs 1.17 lakh crore last year. By September, total collections are estimated to have reached last financial year’s level.“For the month of September, we have seen almost 70 percent month-on-month growth in the individual new business premium,” said Gupta.At a time when interest rates are at record low, it could well pose a challenge for LIC to generate higher returns for its policy holders.“We are sector agnostic and see only long-term growth potential as far as our investments are concerned,” said the managing director.For sovereign bonds, the insurer is now more inclined to invest in papers with even 50-year maturities.“The pandemic has made people realize that an insurance cover is not optional but quintessential,” said Gupta.The country’s largest insure, with nearly three-fourth market share, has a total corpus of Rs 31.96 lakh crore.New Delhi is currently working for a mega initial public offer (IPO) from LIC.The department of investment and public asset management (DIPAM) has finalised Deloitte and SBI Caps as transaction advisers. It is now working on necessary legal amendments to facilitate the proposed share sale.The LIC of India has reportedly invested Rs 25 lakh crore as of March 2020 in the public sector.According to the latest data from the Reserve Bank of India (RBI), the insurance behemoth’s share of investments in state-owned entities jumped to 84.6 percent from about 73.8 percent a decade ago.