LIC’s investment portfolio touches Rs 29.3 lakh crore in FY19, yield at 8-year low

The investment portfolio of Life Insurance Corporation of India (LIC) touched Rs 29.3 lakh crore in FY19 from Rs 16 lakh crore in FY14, a compound annual growth rate (CAGR) of 12.8 percent, the Business Standard reported.

The corporation’s income from investment touched Rs 2.22 lakh crore in FY19 from Rs 1.43 lakh crore in FY14, a CAGR of 9.3 percent. However, the corporation has managed a 7.59 percent yield on its investment portfolio during FY19, an eight-year low. The said percentage is down 12 basis points (bps) on a year-on-year (YoY) basis.

LIC’s yield over the 10-year government bond, which was 31 bps in FY18, shrank to 24 bps in FY19 -- a five-year low, the publication added. Moneycontrol could not independently verify the report.

The reasons behind the poor numbers are downward pressure on bond yields and interest rates and poor industrial growth, the report stated. LIC data suggest that slower growth in net income from investment against the growth in the insurer’s investment portfolio has played a major role in the decline in its yield.

“It is a challenge for large investors like LIC to find liquid stocks for large investments in equity. Market depth is very limited if one goes beyond the top 100 companies," the article quotes Deven Choksey, Managing Director - KRChoksey Investment Managers, as saying.

Source: Money Control