LIC equity: LIC makes Rs 42,000 crore equity gains in FY22

Life Insurance Corp of India (), the largest local investor in the stock market made Rs 42,000 crore of gains in the fiscal ended March 2022 up from Rs 36,000 crore in the previous year riding on a sharp rise in the local equities market.

The gains translate to a 17% rise over the fiscal ended March 2021 just below the 19% year on year growth recorded by the Nifty50 index during the period.

managing director Raj Kumar said that the government controlled life insurer will match the profitability of its private sector counterparts in the next five years.

Results released on Monday, the first for the company since its listing earlier in May, showed LIC reported a 18% drop in standalone net profit for the fiscal fourth quarter, weighed by an increase in paid claims even as net premium income after adjusting for reinsurance costs rose.

Kumar said the numbers are stictly not comparable year on year because there are some calculations like value of new business or embedded value which are yet to be calculated at the end of March and since this is the first time the company is announcing quarterly results.

“Before this we have always announced only the yearly numbers so the last year’s quarterly numbers may not be strictly comparable which is why the drop in profit year on year has to be seen in a context. For the fiscal year ended March 2022 we have recorded a growth,” Kumar said.

For the fiscal year ended March 31, net profit increased by 39% to Rs 4,043 crore from Rs 2,901 crore the year before, helped by a Rs 1,299 crore provision write-back. The company also announced a 15% dividend for the fiscal year, the first in its history.

Kumar however acknowledged that profits were impacted due to elevated claims payments during the year.

Total claims paid during the quarter increased 19% year on year to Rs 1.21 lakh crore. Kumar said the higher claims were a residual impact of the Covid pandemic and also due to the maturity of four high value products for which paynents were made during the quarter.

LIC has a Rs 7400 crore reserve fund to take care of Covid claims but Kumar said he believes the worst of the pandemic is behind us.

“There was some residual impact of Covid and covid related claims. Overall Covid impacted the company last fiscal and one hopes that we do not see any more waves. Four of our products with claims of Rs 5 lakhs and above also matured which is why the claims paid is high,” he said.

Kumar said going forward increased use of technology and larger partnerships will help LIC maintain its numero uno status.

“We are already present in 60,000 outlets across the country and we have 17 tie ups with banks. We will continue to invest in technology which will help us bring down costs. As interest rates rise we expect people to move towards guaranteed returns and we are well placed to take advantage of this shift,” Kumar said.

The public sector life insurer dominates the Indian market with more than a 70% market share.

Income from first year premium, a key matrix for a life insurance company, increased 33% to Rs 14,614 crore in the quarter ended March 2022 from Rs 10,958 crore a year ago. Income from renewal premium rose 5% to Rs 71,158 crore from Rs 67,456 crore a year earlier.

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