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Life Insurance coverage Company (LIC) has made positive factors of Rs 42,000 crore from investments within the fairness market within the monetary yr ended March 31, 2022. That is 16.6% extra in contrast with the Rs 36,000-crore positive factors made in FY21, managing director Raj Kumar advised reporters a day after the insurer introduced its first quarterly outcomes after itemizing. Of its whole property underneath administration (AUM), 25% stays in equities, whereas the remaining is allotted to bonds and different devices. “Our funding technique is predicated on the laws prescribed and we’re mandated to take a position 50% in authorities securities,” Kumar mentioned on Tuesday.
The administration additional mentioned that LIC would deal with non-participating merchandise sooner or later to spice up progress. In FY22, 29% of the brand new enterprise, by way of premium, got here from non-participatory merchandise, whereas the sale of insurance coverage insurance policies contributed 7% to the brand new enterprise. Going ahead, LIC plans to deal with ULIPs (unit-linked insurance coverage merchandise), medical insurance and group safety merchandise. LIC’s claims paid in FY22 stood at Rs 1.2 trillion, a spike of 19% y-o-y, primarily as a result of residual impression of Covid and likewise resulting from funds made towards maturity of a number of merchandise.
Nevertheless, the corporate has created a Covid-19 reserve price Rs 7,400 crore for pandemic-related claims. “Some residual impression of Covid-19 and funds made for maturity of 4 high-value merchandise, with claims of greater than Rs 5 lakh, led to excessive claims paid,” Kumar mentioned. He additional added that the worst of the pandemic is over now.
LIC’s yield on investments dropped to eight.55% in FY22 towards 8.69% in FY21. “Whereas investing the cash of policyholders, the principle concern of any life insurer is the safety of the invested cash, quite than the return. An 8.55% return in a depressed market is excellent. We do spend money on company bonds, which give us a bit greater yield. On the similar time, we’re additionally very aggressively investing within the fairness markets,” Kumar mentioned.
The insurer’s senior administration, nonetheless, mentioned that the numbers for the fourth quarter introduced on Monday weren’t comparable with the numbers throughout the identical interval final yr, as the corporate had began together with quarterly numbers solely from September 2021. A lot to the Avenue’s disappointment, the insurer has additionally not disclosed its embedded worth whereas disclosing its outcomes.
Whereas the quarterly numbers dissatisfied, for the total monetary yr 2021-22, LIC’s revenue after tax rose 39% to Rs 4,043.12 crore from Rs 2,900.57 crore reported a yr in the past. Kumar mentioned that the corporate was within the strategy of finalising the embedded worth numbers. “As quickly because the train is accomplished, LIC shall make the required public disclosures of the identical,” he mentioned. In response to the provide paperwork filed by LIC forward of its itemizing, its embedded worth stood at Rs 5.4 trillion. Embedded worth is without doubt one of the key indicators of an insurer’s company worth.
LIC’s share worth fell 3.05% to shut at Rs 811.50 on the BSE.
Kumar mentioned that as the corporate’s enterprise grows additional, it’ll require greater capital, which in flip will profit the shareholders because the income enhance.
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