LIC may hike equity market exposure

The Life Insurance Corporation (LIC) may increase its exposure to the equity market to 10 per cent of its total investible funds compared with 8 per cent at present.

With LIC's current equity exposure at Rs 31,000 crore, the move can result in Rs 6,000-10,000 crore of additional money flowing into the market depending on the size of its total investible fund.

"If opportunity comes, we can go up to 10 per cent," LIC Chairman RN Bhardwaj said on the sidelines of a conference on actuaries here today. He added that LIC's exposure to equities was more than that of mutual funds.

LIC has an investible fund of over Rs 3,80,000 crore, of which over 50 per cent are in central and state government papers.

With about Rs 40,000 crore worth of public issues expected in the coming financial year, LIC will be on the look out for good offers. "Whenever a good issue comes, we will invest," he said.

Indicating that LIC's equity exposure was well below the international norm, Bhardwaj said, "In contrast to 30 per cent equity investment by insurers in developed markets, LIC's investments are quite small. The level of investment also depends on the availability of avenues."

In its core business, LIC's market share declined to 78.43 per cent till December 2004 from 88.21 per cent in December 2003 even though the income on premiums showed a robust growth.

"Our individual assurance business has grown 35 per cent in terms of premium income at about Rs 11,000 crore so far. We still have two months to go," Bhardwaj said.

LIC has been losing market share as private players have been growing at nearly 150 per cent. LIC is set to tweak its offers by adding a unit-linked insurance plan, modifying its single-premium policy Bima Nivesh and launching a flexi-life endowment plan.