LIC policyholders may gear up for higher returns on their investment. The Life Insurance Corporation, the largest domestic institutional investor, has seen its portfolio of stocks outperform the two benchmark indices and even the average return generated by large-cap equity funds over the last one year as its investment value has jumped by 45 per cent.
This is despite the government reportedly pushing the insurer to subscribe to overpriced issues of state-owned entities. The government has also, at times, forced it to sell stakes in companies in order to provide stability to the rupee, when foreign investors were pulling out of the markets, leading to the rupee falling against the dollar.
As per nseinfobase.com, developed and compiled by Prime Database, LIC, as on the quarter ended June 2014, owns over 1 per cent stake in 316 listed entities and the market value of all such holdings have risen by 35 per cent in calendar 2014 and by over 45 per cent over the last one year.
While the market value of the portfolio of stocks held by LIC stood at Rs 2,84,199 crore at the end of September 2013 and Rs 3,05,558 crore at the end of December 2013, the value of the stocks jumped to Rs 4,12,165 crore as on September 12.
An LIC official told The Indian Express that since most of the surplus gets distributed among policyholders, rise in investment return will increase their returns.
“The surplus is arrived at after taking into account all the liabilities and receivables and that is passed on to the policyholders. LIC invests on behalf of its policyholders and if the investment income goes up it will result into increased returns for the policyholders,” said a senior LIC official.
While LIC and its policyholders will benefit from the upward market trend, it has been seen that while in some companies LIC has increased its holding over the last one year there are others where it has also reduced its holding.
While the Sensex return and average return generated by large-cap funds have grown by 39.6 per cent and 40.1 per cent, respectively, since September 30, 2013, the LIC portfolio has grown by 45.1 per cent, beating the index as well as a large number of mutual funds in terms of performance.
In the calendar 2014 itself the value of LIC’s portfolio has risen by 35 per cent or Rs 1,06,606 crore.
LIC’s holding across the 316 companies shows a huge variation. While in a company such as ITC the value of its holding stood at Rs 40,806 crore, there are 52 companies where the value of its holding is less than Rs 10 crore and in almost half of the companies (154 companies) its holding is valued at less than Rs 100 crore. In fact, there are 10 companies where the market value of LIC’s holding is Rs 1 crore or less.
The value of LIC’s top 25 holdings adds up to Rs 290,380 crore accounting for over 70 per cent of the total investment value of LIC’s total investment value. The top five holdings of LIC include — ITC, ONGC, SBI, RIL and L&T.