State-owned Life Insurance Corporation (LIC) has realised a profit of Rs 25,646.62 crore by way of sale of equity in the stock market during the fiscal ended March 2018. This is a rise of over 32 per cent from Rs 19,302 crore in the previous financial year.
Stock markets had performed well during the year 2017-18, enabling the corporation, which is normally a contrarian investor, to book the profit.
LIC also generated a total valuation surplus – considered as the net profit of the corporation — of Rs 48,444.82 crore during the FY 2017-18, registering a growth of 10.1 per cent over the previous year. It had also made an investible surplus of Rs 3,68,660 crore, according to LIC Annual Report.
After distributing 95 per cent of the surplus to policyholders as bonuses, the balance of 5 per cent amounting to Rs 2,430.19 crore is the share of the Government.
Going by the LIC Act 1956, the corporation doesn’t have a concept of profit and its ‘valuation surplus’ is distributed between the central government and policy holders in the ratio of 5:95.
The life insurance behemoth had an annual income of Rs 5.23 lakh crore and achieved the highest ever first year premium income of Rs 1,34,551.68 crore in the year 2017-2018.
The corporation now manages assets worth more than Rs 28.45 lakh crore, making it the largest financial institution in the country. LIC had ended FY 2017-18 with a total premium, including renewals, close to Rs 3,17,000 crore. The total investment income of the corporation stands at Rs 1,97,000 crore, the Annual Report said.
During 2017-18, the corporation has invested Rs 2.62 lakh crore in Central and State Government Securities with an average annualised yield of 7.63 per cent.
An investment of Rs 37,824 crore was made in corporate bonds at a yield of 7.80 per cent and an investment of Rs 88,980 crore was made in equities.
While the investment department continues to strive to deliver better returns on the portfolio with safety first objective, one area of concern for the corporation is that while the total benefits paid out grew by nearly 18 per cent to about Rs 1,97,600 crore, the total income at nearly Rs 5,14,000 crore grew only at six per cent.
During the year 2017-18, the corporation settled claims of over 2.66 crore claimants for an amount of Rs 1.11 lakh crore. LIC, which has completed 62 years since its incorporation, had a market share of 75.67 per cent in number of policies as of March 2018.
“LIC has achieved a cult status as far as life insurance is concerned. Now I dream of a day when LIC will acquire a similar status as a global conglomerate.
“This is my ultimate vision for LIC at 75 — a place where all kinds of people, with all kind of needs and in all kinds of places… are served under just one roof. And they need not go anywhere else,’’ said LIC chairman VK Sharma at a recent brain-storming session of senior officials of the Life Insurance Corporation.