Jeevan saathi LIC to pump in Rs 12K cr in equities

Tuesday 09, December, 2008 MUMBAI: The Life Insurance Corporation of India — the country’s largest investment institution — is set to invest a further Rs 15,000 crore in debt offerings over the next four months. LIC, which leads local institutional players in equity investment, also plans to buy stocks worth Rs 12,000 crore from the secondary market before the end of this fiscal, said a top LIC official. LIC, which has invested Rs 23,190 crore until end of November in debt offerings, plans to hike its exposure to non-convertible debentures (NCDs) aggregating Rs 40,000 crore. LIC chairman TS Vijayan said the corporation has seen a definite increase in the number of corporates approaching it for investment in NCDs and rated papers. Many corporates had approached LIC over the past few months after access to overseas markets was severely restricted and local banks were squeezed for funds. The life insurer is seeking to invest in debt paper, which offers yields in the range of 11-13 %, said executive director (operations) N Mohan Raj. Even mobilisation from its new scheme, Jeevan Aastha, which guarantees benefits on maturity and death, will be invested in debt instruments as returns are guaranteed. Of the Rs 25,000 crore it has targeted from the new scheme, 50% will be invested in government bonds while the balance will be invested in other debt instruments. LIC has invested Rs 1,02,476 crore of its funds until November this year compared with Rs 97,738 crore a year ago. This break-up includes Rs 36,311 crore in government bonds, Rs 23,190 crore in debentures and bonds, Rs 12,372 crore in infrastructure, Rs 1,342 crore as project loans, Rs 164 crore in IPOs and Rs 29,000 crore in equities (secondary market). While it plans to invest around Rs 12,000 crore more in equities, total investment for 2008-09 is pegged at Rs 1,60,000 crore. LIC may invest a total of Rs 40,000 crore in equities during the current fiscal, added Mr Mohan. It is still awaiting a reply from IRDA on its request to hike the cap on investment in an individual company. The insurer has seen a dip in unit-linked policies, given the recent slide in the stock market, while traditional policies such as endowment policies appear to be staging a comeback. LIC’s credit card venture is expected to take off in January, Mr Vijayan added.

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