Life Insurance Corporation of India (LIC) said on Monday it has substantial market value (MTM) gains despite shares in the Adani group company taking a hit even as it closely scrutinizes the group’s rebuttal to the allegations. from Hindenburg Research.
Raj Kumar, Managing Director, LIC, said Line of business that despite Adani group company shares reaching the lower circuit, the main insurer has substantial profits from MTM. Therefore, there is no impact on the insured.
“Our solvency margin, which is around ₹2 lakh crore, is at book value. The MTM gain is not taken into account for any of our calculations except the implied value, which will be reported on March 31.
“For policyholders, the impact is zero as of now because, as of 27th January, we still have a substantial MTM gain of ₹25,000 crore on Adani Group company shares even though its shares they were beaten. This gain is no small thing,” he said.
The Corporation, in a statement, said that its purchases over the past few years totaled ₹30,127 crore with a current market value of ₹56,142 crore as of January 27.
The statement from the state-owned life insurance giant comes after shares in Adani Group took a hit after US-based short seller Hindenburg Research released a report on January 25, alleging manipulation in these actions, failures in corporate governance and poor financial management. in the group.
Raj Kumar noted that the LIC policy liabilities are backed by assets at book value and not MTM.
“If the market price falls below the acquisition cost, there will only be an impact. We also have exposure to other group companies (Adani), but we have substantial gains from MTM,” he said.
The LIC MD said that the Corporation is one of the main investors in the Additional Public Offering (FPO) of Adani Enterprise Ltd.
“We have already put up approximately ₹300 crore, which is about 1 per cent of our existing equity exposure to the Adani Group. Now, the FPO sails or fails.
“…If the FPO doesn’t pass, we get ₹300 crore back. If it sails, then the market has accepted that there is value in the stock. In both scenarios, there is no harm to us,” he said.
If LIC gets an anchor assignment, there will be a 90-day lock-in period. Therefore, you will not be able to trade AEL shares for 90 days.
Referring to the Adani Group which issued a 413-page statement on the Hindenburg Research report, Raj Kumar said: “We are looking into that. We will definitely contact the Group’s management to understand their point of view on the clarifications they gave on the report.”
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