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LIC: Market Maven

India’s largest insurer showed it is nimble on markets too

Coming off a grand success after notching up gains of over Rs 2,600 crore after selling-off some stock holdings in Indian companies in the previous fiscal, the Life Insurance Corporation of India (LIC), India's largest insurer, is getting set to embark on another grand adventure saying that it is likely to invest Rs 1.05 lakh crore in equity and debt  this fiscal.

The Rs 2,600 crore success should be seen in the light of comparison -- LIC booked profits when almost all mutual funds and insurance companies were deep in the red due to their investments turning turtle, indicating the behemoth was still nimble enough to farm the opportunities in a much better manner than its competitors across segments and sectors.

However, that times were tough was underscored by the fact that during the fiscal before that (2007-08), LIC had profited to the  extent of Rs 10,000 crore, but that was when the bull run was continuing on a global scale. The meltdown came later and quite suddenly at that.

Coming back to the present, the insurer is slating an investment of Rs 50,000 crore for equities, while the rest will go to debt.
Whether that is a positive call on equities can be gauged by readers themselves from the fact that in the previous fiscal LIC had invested in equity to the extent of Rs 40,300 crore. The sum invested in debt was Rs 48,000 crore.

The lesson to be learnt from LIC is that while size matters, what matters more is the ability to make critical decisions on time, every time, and for that you need in place a managerial team that knows how to marshall its resources.

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