LIC Seeks More Long-Term Investment Avenues, Rising Annuity Demand Prompts Talks With RBI & Sebi On New Instruments

New Delhi: State-owned insurance major Life Insurance Corporation of India (LIC) is holding discussions with regulators, including the Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi), to increase the availability of long-term investment instruments.

The move comes as more customers are opting for annuity products, which provide a guaranteed pension income for life after retirement.

Growing Need for Long-Term Investments

LIC CEO and Managing Director R Doraiswamy said annuity products create liabilities that can last for 30, 40 or even 50 years.

As a result, LIC needs long-term investment options that match these long-duration commitments to policyholders.

He said the company is regularly communicating its requirements to regulators, while the insurance regulator is also taking proactive steps to support the sector's changing needs.

Supporting Infrastructure and Nation Building

According to Doraiswamy, insurance companies generate large pools of long-term funds that can be used to finance infrastructure projects and other development activities.

He added that regulatory changes are increasingly being aligned with the needs of insurance companies, creating benefits for both the industry and the economy.

Focus on Maintaining Profitability

LIC reported a Value of New Business (VNB) margin of over 20 per cent and aims to maintain or improve this level in FY27.

The company plans to achieve this by increasing policy volumes, improving ticket sizes and enhancing operational efficiency.

Doraiswamy stressed that customer value will remain LIC's primary focus, with profitability improvements coming alongside stronger customer adoption of its products.

Fintech Arm Under Consideration

LIC is also evaluating the possibility of creating a fintech arm, either through strategic investments or by building one internally.

The company is already working closely with fintech and insurtech firms to introduce innovation and strengthen its digital capabilities.

Ready for Future Stake Dilution

On the possibility of further government stake sales, LIC said it remains fully prepared.

The insurer raised around Rs 21,000 crore through its 2022 IPO by diluting 3.5 per cent stake. The government is working toward meeting public shareholding norms but is waiting for favourable market conditions before considering the next offering.