LIC plans to invest Rs50,000 crore in equities in 2009-10

India's largest insurer Life Insurance Corporation of India (LIC) today said said it would increase its investment in the equity market this fiscal. "We expect to invest nearly Rs50,000 crore ($10.27 billion) in equities this year against Rs 40,800 crore last year," LIC managing director Thomas Mathew told reporters in New Delhi.

So far in this fiscal, the largest life insurer has invested about Rs8,000 crore in equities. As per exposure norms, LIC is also investing in government papers and corporate debt.

According to LIC chairman T S Vijayan ''Last year, we infused Rs40,000 crore in equities. As per exposure norms, LIC also invests in government and corporate securities, and bought about Rs40,000 crore worth corporate debt last year."

At a time when private insurance companies are struggling to recover from the financial turmoil, the state-owned company envisages a premium growth of 20 per cent in the current year to Rs186,000 crore from Rs155,000 crore last year.

"Our total premium collection stood at Rs1,55,000 crore during the financial year 2008-09. This fiscal we are targetting premium collections of Rs1,80,000 crore,"  Vijayan said in Kolkata while speaking at a seminar organised by industrial chamber FICCI.

LIC expects a 25-per cent growth in new premium in 2009-10 to Rs65,000 crore compared to Rs52,000 crore in 2008-09 when the new premium dropped by 10 per cent. Around Rs12,000 crore of the new premium is expected to come from group insurance products.

Vijayan said, "The life insurance industry, which was doing very well till 2008, suffered a setback during the last fiscal due to slowdown in the market. And our new premium collections also came down though overall premium collections were good." But since the beginning of this fiscal, there are some signs of recovery in the market and our premium collections during the first three months of this fiscal have gone up significantly compared to the previous fiscal.

The chairman said, last year the growth in first premium was hit by the economic slowdown and now, as the economy is showing signs of revival and the market is stabilising, the company is expected to perform well, adding that the business during the current financial year has been good so far with premium income rising at 25-30 per cent. Improvement in GDP has typically fueled demand for insurance in developing economies, he said.

For the current fiscal year, the company plans to have an equal mix of both Unit-Linked Insurance Policies (ULIP) and traditional products.

The chairman further said that the company is going ahead with its plans to launch a domestic private equity fund on real estate, along with a partner.