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LIC's 1998-99 capital market investments put at Rs 80 bn; suspense over stake in ITC

Life Insurance Corporation of India has targeted an investment of Rs 80 billion in stock markets across the country during the current fiscal, LIC chairman G Krishnamurthy said in New Delhi.

This would be Rs 20 billion more than the previous year's Rs 60 billion.

''We are long-term investors and we invest to take advantage later during the boom period.''

LIC's total investments are poised to cross Rs 1.22 trillion by March 31, 1999 and total income would be over Rs 300 billion.

Krishnamurthy said LIC was restructuring its operations to gear up for competition from private players. ''To start with, we are trying to improve our product line-up and introduce better and more attractive insurance products for our customers.''

However, he refused to give details. Besides, substantial investments are being made for upgrading technology. The privatisation exercise is being undertaken within LIC to make the workforce more professional.

LIC, he said, has computerised all policies and is now moving towards on-line services and computerisation of all front-end operations.

Towards this end, LIC today set into motion a Metro Area Network and Interactive Voice Response system for Delhi. A similar system is already operational in Bombay, Madras and Bangalore and four more cities -- Calcutta, Ahmedabad, Pune and Hyderabad -- and would be covered during fiscal 1999-2000.

MAN in Delhi, he said, will use leased lines from MTNL and network 62 branches in the city enabling access to 3.5 million customers. The corporation has paid MTNL Rs 9 million for its services.

The network will enable a policy-holder in Delhi to render premium payments for the policy at any of the 62 branches. Besides the networking, the IVRs will enable a policy-holder in the capital to know his policy details such as premium position and status of policy over telephone.

As a next step, LIC would be linking all the centres, starting with the metros.

Finance Minister Yashwant Sinha said the government does not intend to harm state-owned insurers -- LIC and General Insurance Corporation -- with the opening up of the sector.

Sinha, however, stated that with private players entering the fray, the state-owned firms would become stronger and provide better services.

''When we (government) talked of opening up the sector, it was not our intention to harm LIC and GIC in any way. In fact, we feel that this increase in competition would help LIC and GIC. And even if a lot many companies come in, LIC will remain the leader.''

However, he stated that the corporation should step up efforts on innovation and introduce new services for retaining its leadership position.

Krishnamurthy handed over cheques worth Rs 2.35 billion to Sinha towards the government's share of total surplus generated by the corporation in 1997-98. This valuation saw an amount of Rs 46.74 billion being generated as surplus on both Indian and foreign life business as also capital redemption and annuity certain business.

Non-committal on stake in ITC:

LIC today remained non-committal over the issue of selling off its holding in tobacco major ITC Limited to British American Tobacco PLC.

Krishnamurthy said LIC has not decided on the option on whether to retain its holding in ITC or to sell it off to BAT.

''It is purely a business deal and we will have to look at it when the appropriate time comes.''

On whether the company would be willing to sell off the stake if a good price was offered for its holding, Krishnamurthy said, ''It is hypothetical...We will think about it when the time comes.''

UTI and GIC too hold stake in ITC. While GIC has expressed willingness to offload its shareholding, UTI had said there was no purchase offer from BAT pending with it.

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