Business

LIC now has a cash problem

By Vijay Ganeshan Iyer


Life Insurance Corporation, which is often seen as a knight in the government’s armour, is facing a cash squeeze for the first time in many years, an ETNow report said.

According to sources, the government’s ‘golden goose’ is feeling the pinch due to short-term obligations and a toughening business environment.

The premier insurer has to shell out Rs 12,600 crore as it gets ready for acquisition of 51 per cent stake in IDBI Bank, the sources said further. It’s also being propped up to finance the cash-strapped IL&FS in coming months.

That’s not all. A bearish stock market means LIC is expecting low profit from its portfolio churn. It invests Rs 35,000-45,000 crore annually in equities.

Assured returns of government senior citizen scheme like Pradhan Mantri Vaya Vandana Yojana (PMVVY) are putting additional pressure on the insurer. Its single premium redemptions have gone up this fiscal, leading to more payout.

At the time of filing this report, an ETNow mail seeking LIC’s response went unanswered.

LIC’s new business premium collections stood at Rs 1,34,551 crore in 2017-18 while the target has been set at Rs 44,500 crore for 2018-19. It’s looking at a group insurance premium target of around Rs 60,000 crore this financial year.




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