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| D.K. Mehrotra, chairman, Life Insurance Corporation of India (LIC) |
In an interview to NDTV Profit’s Vijay Iyer, D.K. Mehrotra, chairman, Life Insurance Corporation of India (LIC) talks about LIC's targets for investments in the equity market this coming year and what sectors are looking attractive to the insurance giant.
The company is doing better this year compared to last year, and is likely to perform even better in the following fiscal. The slowdown in the last fiscal was witnessed only in the new business segment. We will invest close to Rs. 45,000 crore in markets this year.
Below is the transcript.
Q: We have completed the first quarter of FY13. Has this been one of the toughest years even for an established player like LIC?
A: If we compare our this year's performance with the last year, I think we are doing better. Last year, the entire industry witnessed a slowdown for various reasons. I would not like to go in the detail but we did witness a slowdown. LIC was not an exception. But we have used that as a learning point for us. Since the first quarter this year, we have been moving ahead. We are doing very well.
Q: Last year the target set to cross was Rs. 2,00,000 crore premium mark. What was the final figure and how do you look at this fiscal now?
A: We only had a slowdown in the new business. Various constraints like market behaviour or lack of product affected our new business performance. So, we have got two products cleared by the Insurance Regulatory Authority of India (IRDA). One was Jeevan Vidhi, which gave us support this year. Another product, which we are still running, is Jeevan Vaibhav. So, we are doing better than the last year.
Q: Any internal targets that you have set up?
A: Yes, this year we are going to do Rs. 45,000 crore as the first premium income and over Rs. 4 crore through new policies. So, we are every hopeful that we will be able to do that.
Q: So, the growth will be in double digits?
A: Definitely. Last year, the performance was not good. We are trying to evaluate ourselves in the year prior to the last year in which we did much better.
We did not have many ULIP products. Secondly, the market was very choppy and volatile last year. Even today, the market is very rangebound. We don't see any upside in the market in the short term. So, on a very conservative basis, we believe that we will get enough opportunity to pump in same amount of money as we did in the last year.
Q: It is the premium collection which decides how much you are planning to investment options like debt, equity, etc. Last year, you pumped around Rs. 45,000 crore in the equity. How are you looking at your investments this year?
A: Actually, we don't go by the numbers. We go by a simple thumb rule out of that the total investible fund for the year; about 10-15 per cent goes into the equity market. Leaving that aside, whatever we get through the Unit-linked insurance plan (ULIP), in which case, the customer gives the mandate. We are planning to invest more than Rs. 2, 00,000 crore in the market. So I think we will be very close to the figure we have reached last year.
Q: So, the equity market investment will remain in that Rs. 45,000 crore range?
A: Absolutely.
Q: Since the investment has come down in the last couple of years from Rs. 60,000 crore to Rs. 45,000 crore, is this because of the investment cap you have got as per the IRDA guidelines? Is that a hindrance?
A: See, that may be one of the reasons but not the main reason. The main reason is that last year, we did not have many ULIP products. Secondly, the market was very choppy and volatile last year. Even today, the market is very rangebound. We don't see any upside in the market in the short term. So, on a very conservative basis, we believe that we will get enough opportunity to pump in same amount of money as we did in the last year. We are planning to come up with some ULIP products in the market as well. We are working on that. Once it gets cleared by the IRDA, we will launch it.
The company is doing better this year compared to last year, and is likely to perform even better in the following fiscal. The slowdown in the last fiscal was witnessed only in the new business segment. We will invest close to Rs. 45,000 crore in markets this year.
Below is the transcript.
Q: We have completed the first quarter of FY13. Has this been one of the toughest years even for an established player like LIC?
A: If we compare our this year's performance with the last year, I think we are doing better. Last year, the entire industry witnessed a slowdown for various reasons. I would not like to go in the detail but we did witness a slowdown. LIC was not an exception. But we have used that as a learning point for us. Since the first quarter this year, we have been moving ahead. We are doing very well.
Q: Last year the target set to cross was Rs. 2,00,000 crore premium mark. What was the final figure and how do you look at this fiscal now?
A: We only had a slowdown in the new business. Various constraints like market behaviour or lack of product affected our new business performance. So, we have got two products cleared by the Insurance Regulatory Authority of India (IRDA). One was Jeevan Vidhi, which gave us support this year. Another product, which we are still running, is Jeevan Vaibhav. So, we are doing better than the last year.
Q: Any internal targets that you have set up?
A: Yes, this year we are going to do Rs. 45,000 crore as the first premium income and over Rs. 4 crore through new policies. So, we are every hopeful that we will be able to do that.
Q: So, the growth will be in double digits?
A: Definitely. Last year, the performance was not good. We are trying to evaluate ourselves in the year prior to the last year in which we did much better.
We did not have many ULIP products. Secondly, the market was very choppy and volatile last year. Even today, the market is very rangebound. We don't see any upside in the market in the short term. So, on a very conservative basis, we believe that we will get enough opportunity to pump in same amount of money as we did in the last year.
Q: It is the premium collection which decides how much you are planning to investment options like debt, equity, etc. Last year, you pumped around Rs. 45,000 crore in the equity. How are you looking at your investments this year?
A: Actually, we don't go by the numbers. We go by a simple thumb rule out of that the total investible fund for the year; about 10-15 per cent goes into the equity market. Leaving that aside, whatever we get through the Unit-linked insurance plan (ULIP), in which case, the customer gives the mandate. We are planning to invest more than Rs. 2, 00,000 crore in the market. So I think we will be very close to the figure we have reached last year.
Q: So, the equity market investment will remain in that Rs. 45,000 crore range?
A: Absolutely.
Q: Since the investment has come down in the last couple of years from Rs. 60,000 crore to Rs. 45,000 crore, is this because of the investment cap you have got as per the IRDA guidelines? Is that a hindrance?
A: See, that may be one of the reasons but not the main reason. The main reason is that last year, we did not have many ULIP products. Secondly, the market was very choppy and volatile last year. Even today, the market is very rangebound. We don't see any upside in the market in the short term. So, on a very conservative basis, we believe that we will get enough opportunity to pump in same amount of money as we did in the last year. We are planning to come up with some ULIP products in the market as well. We are working on that. Once it gets cleared by the IRDA, we will launch it.
