Life Insurance Corporation of India to invest Rs 2,40,000 cr in FY13, 15% of it in equities

Life Insurance Corporation of India (LIC) has invested up to Rs 8,000 crore in equities in the last six months. The public sector behemoth has an investment target of Rs 2.4 lakh crore for the present year, of which 10-15 per cent will be invested in equities.

Speaking to the media on the sidelines of a Ficci seminar on capital markets, DK Mehrotra, CMD, LIC said, “Our investment target is Rs 2,40,000 crore for FY13, of which 10-15 per cent will be in the equity market. We have so far made investments of around Rs 75,000 crore, of which Rs 7,000-8,000 crore is in equities.”

He said that he expects LIC’s corpus to grow from the present Rs 12,00,000 crore to Rs 32,00,000 crore by 2020.

“Today, our mark-to-market value (MTM) of our equity investments is more than Rs 3,00,000 crore. When the markets our bearish, we find this as an opportunity to buy. We have a robust research team which is scanning around 2,000 companies all the time,” said Mehrotra.

On a question on LIC asking the insurance regulator to relax the investment limit of investing up to 10 per cent in the shares of a single company, Mehrotra said, “The present cap of 10 per cent restricts participation in the equity market. Presently, there is a lack of headroom in good investable companies due to this cap. We have presented our case to the regulator and would be happy if the cap is increased to even 15 per cent to 20 per cent.”

On a question on whether LIC will go for an IPO, Mehrotra said, “We have sovereign guarantee, government support and do not require capital, therefore IPO is not necessary for us.”

The state-run life insurer on Friday said it has not been approached by the government to pick up stakes in Axis Bank, L&T and ITC, currently held by the Special Undertaking of Unit Trust of India (SUUTI), but added if it is so asked, it will definitely look at it. SUUTI, created in 2002 after the then UTI was wound up, owns strategic stakes in three listed blue-chip entities: ITC (11.54 per cent), Axis Bank (23.58 per cent) and L&T (8.27 per cent).