Where India’s Largest Insurer LIC Invested Money In The June Quarter
Life Insurance Corporation of India, a public sector behemoth that the Narendra Modi administration wants to take public, invested more than Rs 2.8 lakh crore worth of policyholders’ money in the three months ended June. That’s over three times the Rs 82,267 crore in the preceding quarter. LIC invested Rs 3.98 lakh crore in the year ended March 2020.
Just over 70% of the Rs 2.8 lakh crore was invested in government securities, central and state. Insurance companies are mandated by law to invest up to 30% in central and state government debt.
Of the rest, the life insurer invested the most in equities—over Rs 28,000 crore. The infrastructure sector saw close to Rs 22,000 crore in investments via equity and debt instruments.
The insurer generated Rs 57,314 crore in income on all its investments, equity, and debt, in the quarter ended June 2020, according to data on its website.
It had a total Rs 32 lakh crore worth of assets as of June, of which Rs 30 lakh crore has been invested.
LIC has increased disclosures on its operations as it prepares to list on the stock exchanges, as was announced in the Union Budget 2020-21 in February. The government is looking to hire Deloitte Touche Tohmatsu India Ltd. and SBI Capital Markets Ltd. to help LIC prepare for an initial share sale, billed to be the largest Indian initial public offering, Bloomberg reported citing people with knowledge of the matter. The advisers will help evaluate the capital structure of India’s biggest insurer as well as help the company in reworking its financial statement, as per a tender document issued in June. India looks to raise over $10 billion from the LIC IPO as it looks to generate resources amid revenue shortfall worsened by the pandemic.
Blue Chip Equity Holdings
While LIC has not disclosed the details of its equity purchases, Bloomberg data showed that the insurer holds stakes in the range of 5-16% in some of India’s largest listed companies. These include Reliance Industries Ltd., Tata Consultancy Services Ltd., Infosys Ltd., ITC Ltd., and Larsen & Toubro Ltd. It has equity investments in 420 companies valued at Rs 5.6 lakh crore at current market value.
Equity investments aside, over the last two years LIC has lost a substantial amount invested in corporate debt. Rating agencies have downgraded Rs 27,139 crore worth of its investments to default as of June. These include debt instruments of companies such as Dewan Housing Finance Corp. Ltd., Anil Ambani’s Reliance Group, Yes Bank Ltd., IL&FS Group and Jaypee Infratech Ltd.
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Still, these comprise hardly 1% of its invested portfolio.