LIC Asks RBI For 100-Year Bonds, Eyes Health Insurance Stake Amid Industry Slowdown

India's largest life insurer, Life Insurance Corp., is calling for the Reserve Bank of India to introduce ultra-long-term government bonds, including 100-year securities, to support its investment strategy, said Chief Executive Officer Siddhartha Mohanty on Tuesday.

Mohanty explained that the company, which sells whole life policies, requires long-term investment instruments to match its liabilities. While the RBI currently permits bonds with maturities of 20 to 40 years, Mohanty believes it's time for India to join global markets where 100-year bonds are not uncommon.

"Many countries issue 100-year bonds in the global market, but India has yet to introduce such bonds due to limited demand and low activity in the secondary market," Mohanty noted at the GCA25 event in Mumbai.

LIC, already present in government securities, is also a major player in bond markets, subscribing to over a fifth of the issuances. If 100-year bonds become a reality, the insurer is expected to be a key buyer.

Alongside its bond market push, LIC is also in the final stages of acquiring a stake in a health insurance company, with a deal expected before March 31.

"It is a natural choice for LIC to be in health insurance. Discussion is going on at the final stage," Mohanty said, without revealing the target company.

LIC is not looking for a controlling stake (51% or more), with the final investment dependent on board decisions and valuations. Reports suggest that LIC is eyeing a stake in ManipalCigna in a deal estimated at Rs 4,000 crore.

Currently, life insurers cannot provide full-fledged health coverage, including hospitalisation benefits. While there was talk of introducing a composite insurance licence, the recent Union Budget did not announce any such reform.

The life insurance sector is facing headwinds, acknowledged Mohanty, indicating a slowdown in industry growth, particularly in insurance penetration.

"There has been a focus on enhancing the principles of insurance facilitation and moving towards a principle-based regulatory framework. This 'dual reality' calls for a 'comprehensive review' of LIC's approach," he said.

Actuaries, he emphasised, will play a crucial role in navigating these challenges by offering data-driven insights, managing emerging risks, and ensuring financial stability.

The slowdown is reflected in LIC's earnings in the third quarter of this fiscal, where net premium income declined 9% to Rs 1.06 lakh crore, even though standalone net profit rose 17% to Rs 11,056 crore.

Meanwhile, Department of Financial Services Secretary M Nagaraju stressed the importance of actuaries in making insurance more affordable.

"Actuaries will help reduce the premiums paid by the general public by using the most scientific ways of assessing risks," he said, highlighting that India’s insurance penetration at 3.7% remains far below the global average of 7%.

(With inputs from PTI).