Mumbai: State-run Life Insurance Corp. of India or LIC, the country’s largest institutional investor, nearly doubled its profit from sale of equity investments in 2016-17 on the back of rising stock markets. According to two people familiar with LIC’s investment strategies, the life insurer booked profits to the tune of Rs21,000 crore in fiscal 2017 compared to around Rs11,000 crore the previous year.

In 2016-17, India’s equity benchmark, the Sensex, gained 16.9%. In the March quarter, the gauge rose 11.24%.

One of the two people said on condition of anonymity that since the stock market was gaining in most trading sessions during 2016-17, LIC got more opportunities to book profits rather than taking fresh positions in listed companies, which in turn led to higher profit booking.

“LIC is a contrarian investor,” said Santosh Singh, head of research at Haitong Securities. “It follows a counter-cyclical strategy. When the market is expensive, LIC books profits in equities. Following this strategy LIC may be able to generate some alpha over markets and outperform in the long run.”

In 2016-17, Indian equities logged more daily gains than losses. The Sensex gained in 132 trading sessions and was down in 115 sessions.

That LIC has sold a lot is supported by the fact that all domestic institutional investors together bought only a net Rs27,900 crore of equities in fiscal 2016-17.

Replying to an email from Mint, an LIC spokesperson said the insurers accounts were yet “to be finalized”.

“LIC may have sold around Rs50,000 crore in equities during the past financial year. Its focus is still more on pension and annuity plans,” said the first person.

While LIC’s overall equity investments in 2016-17 could not be ascertained, during April-December, the state-run insurer bought a total of around Rs39,000 crore in stocks. In 2015-16, LIC invested around Rs64,000 crore in equities. LIC’s focus on fixed income products is evident as it invested around Rs1.98 trillion in fixed income papers, with around Rs1.83 trillion in government securities and state development bonds in the same period.

The insurer is also going slow on equity purchases currently as its focus is on increasing annuity and pension business rather than equity-linked insurance products. Annuity and pension products are long term in nature, wherein a minimum return is guaranteed by the insurer to the policyholders. That’s why the premium collected from such policies typically gets allocated to long-term fixed income products rather than equities.

According to Singh of Haitong, LIC’s profit booking can help investors only if the value of the fund or the policy (under which profit booking was done) increases over a period of time and the profits are accordingly accrued regularly to the policyholders’ accounts till the maturity of the policies.

“To be able to maximize the returns for policyholders in a meaningful way, LIC should be given more freedom to invest,” said Singh. “Since the size of most of LIC’s funds are large and since the insurer already holds very large stakes in listed companies, the headroom to switch from one stock to another is somewhat constrained for LIC and that’s why it may be difficult for LIC to draw a strategy for offering better returns to its policyholders. For this, the government is responsible.”

LIC, with at least 250 million policyholders, around 300 million policies in force and total assets worth at least Rs24.5 trillion, is the largest among 24 life insurers in the country. During April-December, LIC posted a 12.43% growth in total premium income at Rs1.45 trillion compared to Rs1.29 trillion a year ago