Not hoping the good news to flow at this time
for equities, such bad was either not expected. In a shock to the already wary
investors, country’s biggest insurance company, by all terms, Life Insurance
Corporation of India (LIC) has slashed down equity investment targets by
one-third this fiscal to Rs 40,000 crore.
The company, ruling over 75 per cent of the life insurance market, was supposed to invest Rs 60,000 crore, but the reality of the ground forced the decision to change. The economic outlook has also deteriorated during the time, where GDP targets as well as fiscal deficit targets have been missed out the most.
The country’s biggest institutional investor, LIC has reportedly invested Rs 20,000 crore so far in equities, while the rest is supposed to come within next four months.
Moreover, uncertain economic environment has also led to decline in sale of companies’ insurance policies, as new business premium - the measure of growth for insurance companies - fell 20 per cent to Rs 55,738 crore in April-October 2011, from Rs 69,708 crore a year earlier, according to a data from the industry regulator.
While during the April-June period, LIC's premium collection dropped 29 per cent to Rs 13,342 crore from Rs 18,740.4 crore in the corresponding period a year ago.
The gradual decline in equity investments can also be attributed to the fact that investors have shifted from non unit-linked insurance plans (ULIPs), owing to rising interest rates and deteriorating economic outlook, globally as well as domestically. In unit-linked insurance plans, 90 to 95 per cent of the funds are deployed in equity.
The company, ruling over 75 per cent of the life insurance market, was supposed to invest Rs 60,000 crore, but the reality of the ground forced the decision to change. The economic outlook has also deteriorated during the time, where GDP targets as well as fiscal deficit targets have been missed out the most.
The country’s biggest institutional investor, LIC has reportedly invested Rs 20,000 crore so far in equities, while the rest is supposed to come within next four months.
Moreover, uncertain economic environment has also led to decline in sale of companies’ insurance policies, as new business premium - the measure of growth for insurance companies - fell 20 per cent to Rs 55,738 crore in April-October 2011, from Rs 69,708 crore a year earlier, according to a data from the industry regulator.
While during the April-June period, LIC's premium collection dropped 29 per cent to Rs 13,342 crore from Rs 18,740.4 crore in the corresponding period a year ago.
The gradual decline in equity investments can also be attributed to the fact that investors have shifted from non unit-linked insurance plans (ULIPs), owing to rising interest rates and deteriorating economic outlook, globally as well as domestically. In unit-linked insurance plans, 90 to 95 per cent of the funds are deployed in equity.
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