In an interview to CNBC-TV18, SK Roy Chairman of LIC says insurance company plans a total investment of approximately Rs 2,25,000 crore, out of which Rs 40,000 crore would be in equity.
According to him, the 6.4 percent fall in premium collections last year was on account of the absence of a product in the pension and group schemes platform, despite there being a market for the products. He says this year LIC has a growth target of 13 percent in premium collection.
Roy is confident and optimistic about the banking sector. He is also confident about some very attractive scrips in the FMCG, metals, gas and petroleum sectors.
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Below is the verbatim transcript of SK Roy's interview on CNBC-TV18
Q: What exactly would your investments for FY14 look like given the slowdown that we have seen in the markets and the depreciation in rupee and will you still stick by your investment target of around Rs 2,25,000 crore?
A: Our total investment this year will be approximately Rs 2,25,000 crore, out of which we would be looking at around Rs 40,000 crore on equity.
Q: The other point being LIC saw a 6.4 percent fall in its premium collections last year, what exactly are you changing in your portfolio mix to ensure you do not have such slippages this year?
A: The shortfall of 6.4 percent or so last year was primarily on account of the absence of a product in the pension and group schemes platform. We did not have a product, although there was a market for that product. That led to that shortfall in premium last year. The regulator has given us time up to July 31 to get all these products on the pension and group schemes platform. We are fully in line to ensure that our full bouquet of products for the pension and group schemes will be in place this month. I am sure that our products will do well in the market.
Q: Can you give us some numbers, how much do you expect in terms of premiums for LIC in this year, what are your growth targets for the current fiscal?
A: Current year, we have taken a target for growth of 13 percent in our premium collection compared to last year. The sense that we are getting from the field, I am very confident that we will not only achieve those targets but also surpass them.
Q: The worry or the argument in the market is that sector-wise there doesn’t seem to be any heavyweight that can assume leadership if there is any revival, what are the sectors that are looking attractive to you now as an investor?
A: We are very confident and optimistic about the banking sector. We have good exposure there. We are very confident about some very attractive scrips in the fast moving consumer goods (FMCG) segment, metals interests us, gas and petroleum sector interests us, these are sectors we are looking at with a great deal of interest.
Q: The most important allegation which LIC has been faced with or rather one of the most talked about things is that it often steps in to bail out the government in terms of disinvestment offers, what is your view on that and will you even be participating in more government offerings like possibly Hindustan Copper?
A: I see it as a criticism. I see it as an observation made by people who study this subject. I still believe that LIC as a very large investor would be governed only by the principles of good and safe returns over the long-term. I can assure you that is what prompts our investment decisions.
Having said that, I do wish to quote the example of the offer-for-sale (OFS) of Hindustan Copper, which got subscribed 118 percent. If that be the case that LIC is propping up disinvestments or OFSs then something like 118 percent subscription would not happen.
Q: What has been the trend in retail demand for your products and the sentiment in general?
A: As far as the retail segment is concerned - I am servicing approximately 30 crore people in this country. These people have a firm belief that their investments are safe with LIC. Once I am conscious of this fact that such a large number of people are remaining invested with me because of their sense of safety with me, I have an additional responsibility towards them to ensure that their faith never gets questioned.
On the question of customer behaviour, we find trends change. There are moments when single premium products become very popular. It would also have a lot to do with the product offering itself. There have been times when people have chosen to purchase non-single premium policies in large numbers. This is a reflection of the dynamic market in which we live in. We come across different types of consumer behaviour depending upon the market conditions.