LIC earnings on equity investments improve 16.6%

Life Insurance Corporation (LIC) made gains of Rs 42,000 crore from investments in the stock market during the financial year ended March 31, 2022. This is 16.6% more compared to the gains of Rs 36,000 crore realized in FY21, chief executive Raj Kumar told reporters a day after the insurer announced its first quarterly results after listing. Of its total assets under management (AUM), 25% remains in equities, while the rest is allocated to bonds and other instruments. “Our investment strategy is based on prescribed regulations and we are mandated to invest 50% in government securities,” Kumar said on Tuesday.

Management further stated that LIC will focus on non-participating products going forward to drive growth. In FY22, 29% of new business, in terms of premiums, came from non-participating products, while the sale of insurance policies contributed 7% of new business. Going forward, LIC plans to focus on ULIPs (unit-linked insurance products), health insurance and group protection products. LIC claims paid in FY22 were Rs. at maturity of several products.

However, the company has created a Covid-19 reserve worth Rs 7,400 crore for pandemic-related claims. “Some residual impacts of Covid-19 and payments made for the due date of four high value products, with claims over Rs 5 lakh, led to high claims paid,” Kumar said. He further added that the worst of the pandemic is now over.

LIC’s investment return fell to 8.55% in FY22 from 8.69% in FY21. “While investing policyholders’ money, the main concern of any life insurer is the protection of the money invested, rather than the return. A return of 8.55% in a depressed market is very good. We invest in corporate bonds, which offer us a slightly higher yield. At the same time, we also invest very aggressively in stock markets,” Kumar said.

The insurer’s senior management, however, said the fourth quarter figures announced on Monday were not comparable to figures for the same period last year, as the company only started including quarterly figures from of September 2021. Much to the disappointment of the street, the insurer also failed to disclose its intrinsic value when disclosing its results.

While the quarterly figures disappointed, for the full financial year 2021-22, LIC’s after-tax profit increased by 39% to Rs 4,043.12 crore from Rs 2,900.57 crore a year ago. one year old. Kumar said the company is in the process of finalizing the figures for the integrated value. “As soon as the exercise is complete, LIC will make the required public disclosures,” he said. According to offering documents filed by LIC prior to its listing, its intrinsic value stood at Rs 5.4 trillion. Embedded value is one of the key indicators of an insurer’s enterprise value.

LIC’s share price fell by 3.05% to close at Rs 811.50 on BSE.

Kumar said that as the company’s business expands, it will require higher capital, which will benefit shareholders as profits increase.