Life Insurance Corporation of India (LIC) has revealed details about its equity investment strategy for policyholders' funds to the Lok Sabha. According to reports from ET Now, Minister of State for Finance Pankaj Chaudhary shared these details in a written reply to queries raised by Lok Sabha Member of Parliament Rajeev Rai on Monday, 3 August. The disclosure comes amid ongoing debate surrounding LIC's Offer for Sale (OFS) and addresses questions from policyholders about how their premiums are invested in listed companies.
As reported by ET Now, Chaudhary explained that LIC's exposure to listed companies changes based on investment assessments, internal frameworks, and future company outlook. "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 stated. LIC evaluates companies based on multiple parameters including fundamentals, financial performance, business prospects, equity investment criteria, due diligence, and prescribed norms and Standard Operating Procedure (SOP). The minister further clarified that "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."
According to the Finance Ministry's disclosure, 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. As reported by ET Now, the ministry highlighted LIC's comprehensive audit and monitoring mechanisms, with concurrent auditors independently verifying investment transaction checks and controls, while statutory auditors, system auditors, IFC auditors and information systems auditors review 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.
The Finance Ministry 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," the minister stated. This policy reflects the insurer's approach to maintaining commercial confidentiality while managing policyholders' funds in equity markets.
According to the disclosure, LIC has implemented a stop-loss mechanism to monitor significant declines in stock values. As reported by ET Now, this risk management tool is part of the insurer's comprehensive approach to protecting policyholders' investments. The ministry emphasized that LIC's investment decisions are made after considering various factors and following prescribed norms and Standard Operating Procedure in equity investments.
