LIC books Rs 2000 cr profit in current fiscal

Life Insurance Corporation (LIC) booked trading profit of over Rs 2,000 crore till September 15 this financial year, while it expects to invest a higher portion of investible funds in equities in a booming stock market. The public sector life insurer had booked trading profits of Rs 2,676 crore in the whole of 2004-05.

LIC sources said it intends to invest about 10 per cent of its investible funds (about Rs 1,00,000 crore now) in equities in 2005-06, against 8 to 8.5 per cent invested in 2004-05. LIC has bought equities worth Rs 4,700 crore thus far and would be investing another over Rs 5,000 crore in equities over six months.

LIC sources said the life insurer wants to capitalise on the sustained rise in the stock market and book profits. Of the Rs 2,000-odd crore trading profits, over Rs 1,700 crore came from equities and the balance from government securities.

In 2004-05, LIC's fresh investment was of Rs 86,000 crore. It made an investment profit of Rs 2,676 crore through trading in equity stocks, and an additional Rs 1,205 crore through trading in government securities.

LIC had outperformed the Sensex by posting a 33 per cent appreciation in its equity portfolio in 2004-05 - more than twice the 16.1 per cent rise in the index.

The country's largest domestic institution reaped a profit of Rs 2,600 crore during the year through its trading activity. It made purchases in the secondary market to the tune of Rs 9,304 crore in 2004-05.

LIC's equity exposure stood at over Rs 60,000 crore on March 31, 2005, up from Rs 45,000 crore on March 31, 2004.

LIC was able to mop up a profit of about Rs 2,400 crore in the preceding financial year. In 2003-04, the financial institution purchased stock to the tune of Rs 9,085 crore.

LIC's gross investment in 2004-05 stood at Rs 86,036 crore. LIC has also been taking advantage of open offers in the market.

The corporation proposes to invest about Rs 1,00,000 crore in the current fiscal, which means this would beef up its equity investment to about Rs 10,000 crore in 2005-06, depending on the state of affairs in the stock market.

As per norms laid down by the Insurance Regulatory and Development Authority, insurance companies cannot invest more than 15 per cent in a single company. This is inclusive of debt.