Reduced annuity returns after rate cuts: LIC chief

MUMBAI: R Doraiswamy, MD & CEO, Life Insurance Corporation from July 14 wants the corporation to retain its position as the largest insurer and to be the insurers of choice for Indians and not so much focus on market share. An LIC veteran for 27 years, Doraiswamy a Graduate in Mathematics from Madurai Kamaraj University, Fellow Member of Insurance Institute of India and a student member of Institute of Actuaries of India. In an interview with Mayur Shetty he speaks about the corporation strategy.With both markets and interest rates down, how will you increase returns? Have you repriced any products because of the fall in rates?We are a long-term investor. We look at all market cycles and invest whenever there’s an opportunity for value creation. If equities aren’t attractive, we invest in other instruments like money market products and wait for the right moment. Short- or medium-term market movements don’t affect us because we focus on the long term. We will look for value opportunities in equity IPOs as well. Until then, we park funds in short-term investments and shift when we see value. We recently repriced our annuities—both Jeevan Akshay and Jeevan Shanti—towards the end of last month in line with market conditions.We believe LIC deserves a better valuation. Govt is closely watching the market and certainly will take a call on a price only when there is enough scope in the market to go for further dilution. They aim to reduce their holding to 90% by 2027 and are working toward that. Dividend distribution will depend on capital and solvency needs. We currently have a solvency ratio above 2, while the requirement as a systemically important insurer is 1.75. The solvency ratio will drop by a few basis points once the regulator implements risk-based capital requirements and IFRS (accounting norms). We’ve engaged Deloitte as consultants and are preparing for compliance.We’ve shifted towards non-par products to match market demand, especially from younger customers seeking guaranteed and short-term plans. Our non-par share in premiums has risen from 7% in 2022 to 30% now. We will now balance focus between par and non-par products. The decline in policies was because a new master circular in Oct 2024 required us to modify all products, increase the minimum sum assured, and change commission structures. This reduced policy numbers, especially in popular low-ticket plans. We saw a significant degrowth in the number of policies sold during Q3FY25, which continued in Q4 as well as Q1FY26. We’re working to recover growth in the second half.We never named any company. We’re exploring taking a strategic stake in a standalone health insurer for learning purposes. But as we progressed, we found that we needed to do much more due diligence and expand the options available, examining them in greater depth. So we decided not to make a quick move. We will also wait for changes in insurance laws and other regulatory changes expected in the near future. We have been a pure life insurer since 1972. We’ll examine the composite option if laws change, but we have no such plan now.Our vision is to be a transnationally competitive financial conglomerate. We acquired up to 51% of IDBI Bank because their recapitalization need provided us an opportunity. We are now at 49.24%. The govt and LIC will jointly offload part of our stake during privatization, but we will retain a significant holding post-sale and continue the relationship.Our programme DIVE (Digital Innovation and Value Enhancement) is about fully digitalizing customer and intermediary services. The Jeevan Samarth initiative focuses on agency transformation—training and equipping agents with technology for higher productivity and retention. We are looking at strengthening our agency, which is our major strength, equipping them with technology and training so they can perform at a higher level. We’ll maintain both full- and part-time agents, training them to evolve into wealth advisors.The focus of the government is to allow 100% foreign direct investment so that there are new players. When the market has more players, market share may reduce. We are not looking at market share as a prime focus. We are focusing on continuing to grow sustainably and profitably while expanding the market.