State-owned Life Insurance Corporation of India (LIC) is in discussions with key financial regulators, including the Reserve Bank of India and SEBI, to enhance the availability of long-term investment instruments, as inflows into its annuity products continue to rise, according to CEO and MD R. Doraiswamy.
An annuity product converts a lump-sum retirement corpus into a guaranteed stream of income for life. In simple terms, it ensures that investors receive regular pension-like payouts for as long as they live, helping them avoid the risk of outliving their savings.
Doraiswamy said LIC has been actively engaging with the insurance regulator, Insurance Regulatory and Development Authority of India, as well as other bodies like SEBI and the RBI, to ensure that the company’s long-term investment needs are adequately addressed in line with its growing annuity business.
He noted that as annuity products gain popularity and more policyholders invest in them, LIC must align its investment strategy with long-duration liabilities. “We have been in touch with the regulator and other authorities, and our requirements are being communicated to them,” he said in an interview.
Doraiswamy added that IRDAI has been taking proactive steps to ensure the evolving needs of the insurance sector are met. He said the broader regulatory environment is gradually aligning with the requirements of insurers, creating what he described as a mutually beneficial framework where long-term insurance funds can also support infrastructure financing and nation-building.
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LIC manages a large annuity portfolio with liabilities extending 30 to 50 years, meaning its investment decisions are closely tied to long-term obligations. On profitability metrics such as the Value of New Business (VNB) margin, Doraiswamy said LIC aims to sustain or improve its current performance levels. He explained that VNB margins depend on multiple factors, some within the company’s control and others outside it, but the overall focus remains on strengthening profitability while prioritising policyholder interests.
He said LIC’s strategy is to design products that offer strong value to customers, thereby increasing adoption. The company also aims to improve margins by increasing ticket sizes, expanding volumes, and enhancing operational efficiency.
Doraiswamy further revealed that LIC is exploring the creation of a fintech arm, either through strategic investment or organic development, to support its digital transformation and innovation goals. He said the insurer is actively collaborating with fintech and insurtech players to adopt new technologies and solutions.
At the same time, he noted that LIC, as a large institutional investor, continues to evaluate strategic investments in specialised firms to improve returns on policyholders’ funds. On the possibility of further government stake dilution, Doraiswamy said LIC has been prepared since its initial public offering in 2022. He added that any decision on timing and quantum rests with the government, and LIC will work closely with authorities whenever such plans are finalised.
The company’s IPO, the largest in India at the time, raised around Rs 21,000 crore through a 3.5 per cent stake sale, before which LIC was fully government-owned. Doraiswamy said the government remains committed to meeting listing requirements regarding public shareholding norms, but is likely to wait for favourable market conditions before proceeding with further disinvestment.
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