FY10 annual report reveals a sound, but patchy, growth story

The long time gap was due to the provisions of the central government legislation, Life Insurance Corporation Act, 1956, under which LIC is governed along with regulations of the Insurance Regulatory Development Authority (Irda). Under the LIC Act, LIC has to file its annual report with both houses of the parliament. LIC had apparently done this for the latest annual report earlier this month and then made it public on its website.

An FCRB analysis of LIC's financial year 200910 annual report reveals a sharp year-on-year (y-o-y) recovery by LIC on major financial parameters over the y-o-y growth rates in the previous financial year.

As far as premiums received by LIC, the total collection of Rs 185,985 crore in financial year 2009-10 was 18.32 per cent more than it was in the previous financial year. In financial year 2008-09, the total premium collection of Rs 157,186 crore was more by just five per cent as compared with that in financial year 2007-08.

In absolute amount, the largest growth was seen in unit-linked insurance plans (Ulips) that saw Rs 12,560 crore more premium collected in financial year 2009-10 than it did in financial year 2008-09.

It was followed by a Rs 9,190 crore growth in group insurance policies and a rise of Rs 7,799 crore in renewed non-Ulip policies for individuals. On the flip

In percentage terms, the largest growth was seen in group insurance policies at 92 per cent followed by 37.3 per cent in new multiple-year non-Ulip policies for individuals and 36.2 per cent in Ulip policies.

However, LIC was saved from another lukewarm financial year, in terms of inflows, from the returns it realised from interest on investments in government securities and other debt securities, dividends from equity shares held in listed and unlisted companies and net profit (adjusting for loss) from the sale of equities and other securities.

Its realised income from investments, net of booked losses, was Rs 112,395 crore in financial year 2009-10, up by a very large amount of Rs 69,620 crore or 1.62 times, from Rs 42,775 crore in financial year 2008-09.

On the outflow front, in financial year 2009-10, LIC paid Rs 22,408 crore towards payments due to policies surrendered, which was Rs 12,676 crore or 1.3 times more than it had paid for the same in the previous financial year. Maturity claims worth Rs 46,921 crore was paid out by LIC and this was Rs 12,177 crore or 35 per cent more than what was paid out towards maturity claims in the previous financial year.

Commission paid by LIC to its army of agents rose by 20.7 per cent in financial year 2009-10, compared with a small y-o-y rise of 4.86 per cent registered in the previous financial year.

But, as a proportion to total outflow, commissions paid fell from 12.88 per cent in financial year 2008

Assuming that the difference between its inflows and outflows would have been largely invested by LIC in government securities, other debt securities and equities, the investible amount of LIC grew to about Rs 190,000 crore during financial year 200910 compared with Rs 122,429 crore in the previous financial year.

According to LIC's recent filings with Irda, the total value of its investments from policyholders funds, as at June 30 this year, stood at Rs 867,935 crore as against Rs 717,002 crore on June 30, 2009. Of this, the value of its investments in equity shares was Rs 183,233 crore as at June 30 this year, as against Rs 121,707 crore as at June 30, 2009.
source :- mydigitalfc