The Hindu Business Line : LIC to focus on equities, may scale up exposure

LIFE Insurance Corporation of India is readying itself for a bout of exposure to the equity market, marking a fresh regime of investing in securities that are not merely fixed-income in nature.

LIC, which has around 8 or 9 per cent of its investible funds in equities, will aim at maintaining its allocation to the stock market at the current level, even while actively weighing the possibility of scaling it up this fiscal.

"We plan to focus more on equities this year, subject to the overall limits on our investments set by the regulator," said Mr R.N. Bhardwaj, Chairman, LIC. The idea was to increase exposure to stocks depending on market conditions and the opportunities that may arise in the months ahead.

LIC, which is looking at a considerable increase in premium income this year, feels returns generated by the fixed-income market (which receives the bulk of its investments) may well be under pressure for some more time. LIC, faced with falling interest rates, has already found it necessary to keep a strict vigil on guaranteed-return products so as to ensure that its commitments are met. The corporation, which has strategic investments in a few well-known organisations, is yet to take a view on its holdings in UTI, the country's largest asset management company, in which it has a critical stake (along with other institutional players), Mr Bhardwaj said, replying to a question.

New gen products: The corporation, the LIC chief told newspersons, has proposed to introduce a clutch of new products, some of which will be aimed at special groups, women and children, in particular.

Half a dozen products are expected to be launched this year. "There is much scope for pension plans in the Indian market. On another front, unit-linked insurance policies (ULIPs) have already displayed significant potential. Given the trends that have been witnessed recently, ULIPs will continue to do well," Mr Bhardwaj stated.

While pension and group insurance products have generally started offering fresh opportunities for insurers, the vast NRI market is also showing signs of resilience. This, LIC feels, cannot be overlooked by any insurance company. Similarly, the rural and unorganised sectors are areas that have been tapped only partially.

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