Open to opportunities of paring stake in IDBI Bank: LIC's Vipin Anand

An increase in economic activity since the unlock process started in June has resulted in an uptick in the business performance of LIC, says LIC MD Vipin Anand

After recovering from the lows in the initial months of the pandemic, life insurance sector’s growth has dipped again. Vipin Anand, managing director, Life Insurance Corporation (LIC), in an interview with Subrata Panda, says he is optimistic about achieving a double digit-growth by the end of this fiscal year. He also spoke about the record profits LIC made in its equity investment portfolio. Edited excerpts:

LIC has reiterated that it will come back to double-digit growth by the end of FY 21. What is the road map?

An increase in economic activity since the unlock process started in June has resulted in an uptick in the business performance of LIC. As of December 31, in the individual life insurance business, we have collected a total first-year premium of Rs 40,501.81 crore as compared to Rs 38,253.23 crore last year, achieving a growth rate of 5.88 per cent. The last three months of the current fiscal are vital for life insurers, keeping in mind the expected further widening of the unlock process and availability of multiple Covid vaccines in the near term.

Do you see the current trend in annuities sustaining?

With the increasing life expectancy and rapidly declining interest rates, it is very difficult for an individual to manage his or her retirement funds optimally.  In India, a huge majority of our population work in the unorganised sector where there is no pension provision. All these factors lead to a huge demand for annuity products which resulted in annuities being a big chunk of our individual premium portfolio. The recent fall in bank interest rates has only made it more attractive.

How much profit has LIC booked from its equity investment so far? What is the strategy in equity investments since markets are touching a new high every month?

As of December 31, 2020, we have booked a profit of Rs 31,992.24 crore against Rs 18,553.07 crore for the same period last year, thereby showing a growth of 72.44 per cent. This has been possible by taking full advantage of the prevailing market conditions with our contrarian approach. Our strategy in equity is unique as we are a long-term investor with deep pockets. 

What is your assessment of the banking sector as far as non-performing assets (NPAs) are concerned? Are you bullish on banking stocks?

It is possible that the NPAs may marginally go up in the banking sector in the near term but we feel that they are priced in the valuations. In the given environment where the government and Reserve Bank of India have taken measures to support businesses and industries, we believe the NPAs will not be a problem in the longer time frame.  

Is there any stress building in LIC’s debt portfolio because of Covid? If so, has LIC done adequate provisioning for that?

 We have not seen any stress in our debt portfolio due to Covid and we have done provisioning wherever there is risk. We expect that the NPA as of March, 2021 will be less than what it was for March, 2020.

With yields falling for government securities, will LIC look more towards equity markets to make up for the loss?

We are a contrarian investor and our incremental investment is a very small part of our total investment portfolio. Any short-term move­ments in debt or equity make an insignificant impact on our earnings.

In a recent interview, the finance secretary said the government is looking to disinvest in IDBI Bank and the Centre asked LIC to also consider divesting in the bank. Is LIC looking to exit IDBI Bank completely? If so, by when?

While it is evident that LIC would be paring its stake in IDBI Bank eventually, the exact timelines and quantum would be decided by the board at an opportune time, adhering to the regulatory framework. However, we are open to opportunities which may arise for an earlier stake reduction.

Will the IPO happen this fiscal year? Or will it be delayed?

The IPO process is being handled by Department of Investment and Public Asset Management and the ministry of finance. We are provi­ding all required inputs within set time frames.  

Is LIC looking to add more agents? Or, will the focus shift to the online medium and Banca channels?

The induction of more agents is a crucial step towards developing the life insurance industry. As of December 31, we have made a net addition of 116,864 agents for the current year. We are committed to raising our tied agents. We are also taking care of our online platform and new bancassurance partners.