This year also LIC will invest around Rs.60 K Cr. in stocks: LIC Chairman
(Excerpts from LIC Chairman's interview to CNBC-TV18)
Q: How do you map the New Year, especially in terms of collections for LIC? How robust do you think
it’s going to be?
A: Last year was a quite a good year, we collected Rs 182,000 crore premium. This year also we are looking forward for a better collection than last year.
Q: What is LIC’s own observation on the ULIP issue? What has been your recommendation to both parties, Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority (IRDA)?
A: I am too small to recommend to any of the regulators. We are an insurance industry which is controlled by IRDA. Any industry whether it is life insurance industry or any industry would like to report to one regulator rather than multiple regulators. It makes our life easier.
Q: Going back to the point you were making about premium collections business. This year you closed up with more than or close to 71,000 crore. What is LIC’s target for collections in the New Year?
A: Rs 71,000 crore, which you are referring to, is for the new premium. Our total premium collection was much higher, Rs 182,000 crore. This is a figure we would like to improve it to more than Rs 200,000 crore. Not just new premium, but we are looking at the total premium collections.
Q: How much of the new premium has come in from the ULIP kind of product? Just want to get a sense of how much reliance you had on that product at LIC last year?
A: Rs 71,000 crore, you are talking about, is new premium, around Rs 22,000 crore has come from group premium, remaining portion that is individual premium. The ULIP collection was more than Rs 64,000 crore, remaining has come from the non-ULIP platform. The product, which we have launched towards the end of the year, we are closing in the first week of May, we hope it will garner something like Rs 8,000 crore.
Q: Do you think this product will now be tweaked for next year whichever way the outcome happens? It
seems like it had a significant chunk as you said from last year’s subscriptions. If you have to tweak this ULIP product from its current form, do you think it might have some material bearing on how much you can garner this year?
A: This is a close ended product for 90 days and usually we do not repeat a product in the same form in the coming months or maybe we will give a gap before we launch the products. We would like to include some new features, if at all we are going to bring a product.
Q: What kind of features might that include?
A: We are discussing internally. Our marketing and product development departments are having number of ideas. We will bring it out at a due time.
Q: You were fairly active in a lot of the government paper that hit the market whether it was NMDC of REC or NTPC. Sutlaj Jal Vidyut Nigam Ltd opens this week, will LIC be looking to subscribe there?
A: According to our policy, we talk about our investments only after it happens. We can talk about what happened last year, but what is going to happen this year is not out for discussion.
Q: How much do you think you will pump into the equity market in the current financial year, given your estimates of new subscriptions?
A: Last year, it was more than Rs 60,000 crore. Our equity investment largely depends upon whether our collections are coming through ULIP politicise or traditional policies. For e.g. traditional policies, there is a limit we observe ourselves, maximum 10% goes to the equity, whereas from ULIP products it is decided by the choice of the customer. So it is difficult to predict at this moment of time, at the beginning of the year, what will be the product mix we are going to get it and how much we are going to invest in the equity market. Given the current situation, if it is continuing like this, it will be substantially higher than Rs 60,000 crore. But I am not too sure how our product mix will look next year.
Q: It seems very conceivable that next year the product mix is quite different from the traditional to ULIP that you have had in the previous year, in which case your exposure to the equity market might be substantially lower?
A: It could be. If ULIPs do not constitute a bigger chunk of new premium, it could be lower. Last year we collected Rs 182,000 crore of that unit linked premium is hardly Rs 40,000-41,000 crore, rest of it has come from either group products or other products. So even if unit linked is showing a decline or the share of new policies come down, we will be able to more or less maintain it maybe.
Q: Your own expectation is that in the next month or two the whole ULIP issue will be sorted out and you will be able to issue new unit linked products once again?
A: What I said was, I hope within a month or so all the controversy will subside, but we already have a basket of linked products which is quite comprehensive. I do not think we need to bring another product immediately into the market because we have pension product, we have joint life product, life products, and the entire basket is full. I do not think we need to bring anything to introduce in the market immediately, but if opportunity comes we will bring a products.
Q: For now in the past month or so since this controversy came to light, your ULIP schemes have still been attracting investment and new investors?
Otherwise we would not have collected this much premium.
Q: What is your own view of the Indian stock market over the next one year?
A: It should be showing steady growth that’s what all the analysts tell me, there should be very good growth next year also.