The country’s largest insurer, the Life Insurance Corporation of India (LIC), saw Rs 3.76 lakh crore addition in its equity holding value in FY21.
Data compiled by Moneycontrol showed that LIC's equity holding value rose to Rs 7.69 lakh crore in FY21 as against Rs 3.93 lakh crore a year ago.
This represents a whopping 96 percent year-on-year (Y-o-Y) growth.
This data comprises all companies where LIC has a more than one percent stake. Equity holdings below one percent are not reflected in the stock exchange data. LIC had ended FY19 with an equity holding value of Rs 6.13 lakh crore.
Since LIC is heading for an initial public offering (IPO) in FY22, its investments are under special focus. It is also among the country's largest institutional investors in the equity markets.
It is likely that the insurer's IPO will be out in Q3FY22. Its valuation process will include a qualitative and quantitative assessment of its equity books.
While investing in the equity markets, LIC follows a ‘contrarian’ investment strategy, which is 'sell' when the sentiment is bullish and 'buy' when the mood is bearish.
LIC did not respond to a query sent by Moneycontrol.
"We took advantage of the rally in the stock markets in the financial year (FY) 21. Since we are a long-term investor, the idea is to maintain value and provide quality returns to our policyholders," said an LIC official.
Moneycontrol had reported earlier that LIC will be crossing an all-time high of Rs 5 lakh crore in equity and debt. Here, the insurer invested Rs 94,000 crore in equities and made close to Rs 37,000 crore as equity profits.
The BSE Sensex moved from 29,468.49 as on March 31, 2020 to 49,509.15 on March 31, 2021.
Right now, ahead of LIC’s proposed IPO, its equity investments are under close scrutiny. The future investment strategy will also be under close watch, including sectoral investments, financial position of the investee firms as well as equity profit booking.
In FY20, LIC's equity investments were impacted due to the lockdown announced in March 2020.
Life insurance companies saw a 32.2 percent year-on-year decrease in new premium collection to Rs 25,409.30 crore in March 2020. Here, LIC saw a 31.1 percent decline in first year premiums to Rs 17,066.57 crore.
Policy premiums contribute to equity book
The policyholder funds of LIC are invested into both equity and debt instruments. This includes funds from the unit-linked insurance (ULIP) portfolio.
In FY21, LIC collected all-time high new premiums of Rs 1.84 lakh crore. This is despite the Coronavirus outbreak, when there was a nationwide lockdown imposed during Q1FY21.
Data by Ritesh Presswala
In ULIP, LIC had launched SIIP and Nivesh Plus. The insurer said that it sold more than 90,000 policies under this category collecting premiums in excess of Rs 800 crore.
LIC's market share was 81.04 percent in a number of policies for the month of March 2021 and 74.58 percent for the year.
On the basis of new premiums, LIC's market share is 64.74 percent for March and 66.18 percent for the whole year.