Life Insurance Corporation of India, the country’s largest insurer, is likely to pare down its holding in unlisted firms to bring it in line with the 10% investment ceiling, a government official said.
The official said data available with the government shows that the insurer has exceeded the investment limit in about 78 companies, of which only 27 are listed.Â
“It was pointed out to us that LIC has exceeded the investment norm only in state-run banks and public sector companies under government pressure,” the official said. “But this is not the case. So, if investments have to be pared down, it would have to begin with unlisted companies.”
Some of the companies where LIC has exposure in excess of 10% include L&T, ITC, JSW Steel, MTNL and Wockhardt.
The Insurance Regulatory and Development Authority had in 2008 amended investment norm that prohibit an insurer from having more than 10% stake in a company.
But a senior executive at LIC said investments in some of these 78 companies were done before IRDA amended the investment regulation. He said it would be difficult to bring down the investments immediately.
“We will have to arrive at valuations before reducing our exposure to some of the unlisted companies, which takes time,” he said, adding, “LIC has already made efforts to cut exposure.”
In the past four months, the insurer has brought down its holdings in Central Provinces Railways and Empire Industries.
IRDA has said it would not force LIC to reduce its stake immediately nor would it set a time frame for the exercise.
Dheeraj Tiwari,
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