Where does LIC invest your premium? Minister tells Lok Sabha how it picks stocks, why it won’t name companies
The Life Insurance Corporation of India (LIC) policyholders and associated stakeholders often seek details on how their premiums are invested and managed, especially regarding equity market investments in listed businesses.
Amid the ongoing debate surrounding the LIC’s Offer for Sale (OFS), Minister of State for Finance Pankaj Chaudhary, on Monday, 3 August, shared details about how the insurer invested policyholders’ funds in shares of listed private companies over the last five years.
Where were these details shared?
In a written reply to multiple queries raised by Lok Sabha Member of Parliament Rajeev Rai, Chaudhary explained that LIC’s exposure to listed companies changed based on investment assessments, internal frameworks and the future outlook of companies.
He said, “Life Insurance Corporation of India (LIC) has informed that during the last five years, it had different levels of exposure in listed companies. Such increase or decrease in stake in such companies was based on LIC’s independent investment assessment, approved investment framework and taking into consideration the future outlook of the company/ies.”
The minister further clarified that LIC does not disclose a complete list of companies where it has invested, citing business considerations. “Providing a list of companies, in which LIC has invested, may not be commercially prudent and could affect LIC’s financial interests,” he said.
Explaining the approach to equity investments, Chaudhary said LIC evaluates companies based on several parameters before making investment decisions.
“Investment decisions in equities of private companies and PSU companies, are taken after considering factors such as the fundamentals and financial performance of the investee company, business prospects etc., based on the equity investment criteria and due diligence and following the prescribed norms and Standard Operating Procedure (SOP) in this regard,” he added.
He said that LIC’s investments are governed by multiple regulatory frameworks, including the Insurance Act, 1938, LIC Act, 1956, IRDAI investment regulations, SEBI guidelines, RBI regulations and internal investment policies approved by LIC’s Investment Committee and Board.
The Finance Ministry also highlighted LIC’s audit and monitoring mechanisms. Concurrent auditors independently verify checks and controls related to investment transactions, while statutory auditors, system auditors, IFC auditors and information systems auditors review the processes.
LIC periodically reviews its investment portfolio, compares returns with benchmarks such as the NSE 200 and NSE 100 indices, evaluates asset allocation and sector exposure, and undertakes portfolio rebalancing whenever required. A stop-loss mechanism is also in place to monitor significant declines in stock values.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. LIC policyholders and investors should evaluate their financial decisions carefully and consult a qualified financial advisor before making any investment-related decisions.
