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LIC cashes in on stock rally

Mumbai/Calcutta, Sept. 1: Life Insurance Corporation of India (LIC) has waded into the market surge to make a profit of Rs 1200 crore from the sale of shares, some of which included illiquid and infrequently traded stocks.

“We were a major purchaser in the capital market when sensex was hovering around 2,900-3000 and now we did what prudent investors would do — sell these stocks for a profit, without disturbing market sentiment,” LIC managing director R. B. Bharadwaj told reporters at a function to launch Jeevan Shree-1 policy in Mumbai.

Much of the money has been unlocked by selling illiquid and infrequently traded shares, not by dumping what it calls ‘frontline stocks’. The market value of LIC’s equity jumped to Rs 31,000 crore on July 31, 2003, from Rs 21,000 crore in March 2003, sources said.

Total exposure to companies and public sector undertakings was Rs 35,000 crore, including investments in corporate bonds and equity, Bharadwaj said.

Fresh investments in government bonds till July 2003 was over Rs 20,000 crore, in state government securities Rs 4,817 crore and in corporate bonds Rs 2,000 crore.

The corporation offered government securities (G-Sec) of Rs 2,200 crore in the Centre’s buyback auction for high-cost, illiquid gilts, LIC chairman S. B. Mathur said.

LIC aims at a 20 per cent growth in new individual insurance business in 2003-04. It sold 51.11 lakh policies till August 15, earning fresh premium income of Rs 1,166 crore, Mathur said.

Asked about plans of a voluntary retirement scheme, Mathur said: “We sell over two crore policies. That needs employee support. There are no plans for VRS.”

IRDA’s norm requiring LIC to raise solvency margins 50 per cent above current levels was ‘unfair and unwarranted’, Mathur said. “We already provided for 100 per cent of solvency margins under IRDA rules, setting aside Rs 10,000 crore. The expectation of a 50 per cent increase in provisions is unfair and unjustified.”

“We have communicated our stand to the government, which owns the corporation and hope that IRDA would take our views into account,” Mathur added.

Card on hold

LIC has shelved its credit plan, which would have been executed in a possible alliance with the US-based Capital One.

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