The Hindu Business Line : LIC raises stock market exposure

"In 2006-07, we invested Rs 16,000 crore through unit-linked insurance plans (ULIPs) and Rs 8,000 crore under other traditional products," said Mr D.K. Mehrotra, Managing Director.

"ULIPs have been the flavour of the market. Around 70 per cent of our premium came from them this year," he added.

Premium growth

Buoyed by the sale of ULIPs, LIC clocked 118 per cent growth in new business premium to Rs 55,934 crore in 2006-07.

Under ULIPs, a substantial part of the premium is invested in equity depending on the customer's choice of fund.

In the case of traditional products, however, LIC can invest only 8-10 per cent of the policyholder's fund in the stock markets.

In 2005-06, LIC saw only 42 per cent of its premium coming from ULIPs.

Large-caps

"Last fiscal, we invested in the pharmaceutical, banking, auto and FMCG stocks. Most of the investment was in large-cap stocks as it is easier to identify their track record and valuations," said Mr Mehrotra.

Total investment up

LIC's total investment amounted to Rs 1,05,000 crore in the recently concluded fiscal, up from Rs 93,000 crore in the previous year.

These include equity, debt, corporate bonds, social sector and infrastructure investments.

Its investment in corporate debt saw a sharp hike to Rs 13,000 crore during the year under review, from Rs 3,000 crore in the year before.

"Most of LIC's investment under corporate debt was in the upper Tier II capital of banks," Mr Mehrotra said.

"High-yielding Government securities in our portfolio, with a return of 14-15 per cent, have been maturing and we do not see such yields any more," he added.

Mr Mehrotra pegged the total investment in 2007-08 at Rs 1,15,000 crore.

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