Life Insurance Corporation of India (LIC) is undertaking a comprehensive review of its extensive real estate holdings, which have been accumulated over nearly seven decades. The insurer is considering the establishment of a separate subsidiary to manage these assets more efficiently, according to a PTI report.
Portfolio Value and Strategy
LIC's real estate portfolio is conservatively estimated at over Rs 60,000 crore. The properties include both inherited assets and those purchased over the 70-year operational history of the corporation. These properties serve dual purposes: they are used for LIC's own operations and as investments that generate returns.
LIC CEO and MD R Doraiswamy stated in an interview with PTI, "We look at each piece of real estate as an investment. As part of the asset, we expect each property to contribute towards the returns for the policyholders as well as shareholders."
Review and Optimization
Doraiswamy revealed that LIC has initiated a detailed review of its property portfolio to assess the returns and yields generated by these assets. The goal is to identify areas for optimization, aiming to improve returns for policyholders while strengthening LIC's profitability.
When asked about specific targets for FY27, Doraiswamy clarified that the focus is on improving current returns rather than achieving a predetermined number. "No such targets as such...we need to improve from whatever it is currently. That is what we are looking at," he said.
Self-Occupied and Leased Properties
Self-occupied properties also play a crucial role in enhancing LIC's institutional image. The company is focusing on improving the ambience and infrastructure of its branches and owned buildings. Simultaneously, LIC is evaluating its leased properties to ensure they generate appropriate revenue returns.
Subsidiary Consideration
Regarding the possibility of creating a separate subsidiary for managing real estate assets, Doraiswamy said, "All options are open before us...all options will be examined and we will take it forward in the days to come." Currently, LIC's estates department handles immovable properties, while a separate engineering wing manages maintenance and construction work.
Government Stake Dilution Preparedness
Doraiswamy also addressed LIC's readiness for any future dilution of the government's stake in the insurer. "We have been prepared right from day one. When we started preparing for the IPO, we were prepared for this kind of subsequent actions as well. So the call is taken by the government," he stated.
LIC was listed in 2022 through one of India's largest IPOs, with the government raising approximately Rs 21,000 crore by diluting a 3.5 per cent stake. The LIC chief noted that the government remains focused on meeting listing norms requiring a minimum public shareholding threshold, though market conditions will determine the timing of future stake sales.
Shareholder Rewards and Financial Performance
Since listing, LIC has announced shareholder rewards, including a 1:1 bonus issue and a higher dividend payout. Last week, LIC reported a 23 per cent rise in net profit to Rs 23,420 crore in the March quarter, marking the highest quarterly profit posted by any financial services company in India.
