The country’s largest insurer, Life Insurance Corporation of India (LIC), is likely to invest Rs 40,000 crore in equities during the current fiscal.
LIC, which is also the country’s largest financial institution, said it invested a similar sum in the stock markets last year too. “If the going is good, we will invest as much this year in equities too,” LIC chairman TS Vijayan said.
LIC's investment in stock markets every year is around 8-9 per cent of its total premium collection.
The current volatility in the stock markets would not affect its decision, said Vijayan, adding that April-June has been a good period for LIC so far as premium income is concerned.
As per industry data till May this year, LIC mopped up total premium of Rs 5,354.92 crore with a marketshare of 61.9 per cent — 28.4 per cent up from last year. SBI Life was a distant second with a nine per cent market share during the period.
For 2009-10, LIC is eyeing a 20 per cent rise in total premium collection. Its total premium collection was Rs 1,55,000 crore in 2008-09. For first premium income, the company has set a target of 25 per cent increase over the Rs 52,000 crore it earned last year.
However, solvency margin remains a gray area for the company. LIC has a solvency margin (the excess of assets over liabilities) of 152 per cent as of now, against the stipulated 150 per cent.
According to Vijayan, the company would needs additional funds in the future but is comfortable now with the insurance regulator deciding to be less rigid for the time being. Meeting solvency margin assures that a insurer can always pay claims.