With stock markets turning increasingly volatile, India’s largest capital market player Life Insurance Corporation (LIC) with an investment portfolio of Rs 11 lakh crore is attempting to install global best risk management practices for its day-to-day operations. The corporation recently roped in global consultant Deloitte Touche Tohmatsu to devise best risk management for its swelling investment portfolio. Thomas Mathew, managing director, LIC, confirmed the development to FE.
“We intend to have the best risk management practices in the world to safeguard our investments and maximise our returns,” said Mathew, adding LIC has made a profit of Rs 9,000 crore from churning its equity portfolio in 2009-10.
In the first phase, an in-depth diagnostic study of LIC’s existing systems and practices in the whole gamut of its investment operations has been conducted for three months in the areas of risk governance, risk measurement, risk management and risk reporting. A gap analysis report has already been submitted with a recommendation which is being considered for preparing an implementation road map.
In the future, the focus will be on risk-related activities and further initiatives will be taken to develop a risk vision document where performance measurement will play a key role, explained Mathew.
LIC’s gross investments in various asset classes for 2009-10 stood at Rs 1,91,736.93 crore, showing a positive variation of 15.72%. Active secondary market and a strong pipeline of initial public offerings (IPOs) helped the corporation increase its exposure to equities. LIC’s gross investment in equities for 2009-10 stood at Rs 61,463.05 crore showing a positive growth rate of 51.91%.
The standard assets of the corporation are consistently maintained above 99% and gross non-performing assets (NPA) have fallen from 2.40% to 1.21% in 2009-10. LIC’s investment income has grown by 28.06% to Rs 70,672 crore in 2009-10. The corporation’s unit-linked insurance plan fund size has crossed Rs 1,80,500 crore in 2009-10.