Life insurance industry cut fresh exposure to equities by 57% in fiscal 2016-17

Vastavam web: The life insurance industry, led by state-run LIC, drastically cut down its fresh exposure in equities by 57 per cent during the fiscal 2016-17 to Rs 16,793 crore from Rs 39,535 crore a year ago, data collated by the Life Insurance Council said.This reduction was despite the fact that key market indices went up remarkably during the year with the BSE Sensex alone rising to 29,620 on March 31 this year from 25,342 a year ago.Accordingly, the market value of equity portfolios held by the life insurers ballooned from Rs 5.95 trillion in FY16 to Rs 7.56 trillion in FY17.
In contrast, the life insurers’ investment in fixed income, where government securities are major components, grew 15 per cent to Rs 21,67,143 crore from Rs 18,81,361 crore a year ago.Similarly, the sector’s investment in core segment projects increased from Rs 30,649.5 crore to Rs 34,407.5 crore, a growth of 12 per cent.Again, out of the increment in market value of equity of Rs 1.61 trillion during the year, Rs 1.28 trillion was contributed by government-owned LIC alone, he said.
According to Manickam, assets under management of the industry increased by Rs 4.5 trillion to Rs 29.81 trillion from Rs 25.29 trillion in the previous fiscal.However, as per the Council data, the industry is still under pressure on expenses management front.