Life Insurance Corporation Seeks Enhanced Returns from Real Estate Investments, Considers Establishment of Dedicated Subsidiary

LIC Aims to Improve Returns from Real Estate Holdings

The Life Insurance Corporation of India (LIC) is looking to enhance returns from its vast real estate properties, which are conservatively estimated at over Rs 60,000 crore. The insurer plans to explore the option of a separate subsidiary to achieve greater efficiency in managing its assets.

LIC has a substantial real estate portfolio, comprising properties inherited and purchased over the period of 70 years. These properties are used for both company use and as investments that generate returns for the insurer. R Doraiswamy, CEO and MD of LIC, stated that the company views each piece of real estate as an investment that should contribute towards returns for policyholders and shareholders.

In recent times, LIC has initiated a comprehensive review of its real estate portfolio to assess returns and yields, and to identify opportunities for further optimisation and improvement. This analysis aims to enhance returns for policyholders while strengthening the organisation's overall profitability. The review is focused on improving the ambience and overall environment of company-owned buildings and branches, as well as evaluating leased properties to ensure they generate appropriate revenue returns.

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LIC is also considering setting up a separate subsidiary for managing its real estate portfolio more efficiently. All options are on the table, and the company will examine them before taking a decision. At present, immoveable properties are managed by the estates department, while an engineering wing takes care of maintenance, building, and constructions.

Regarding the potential dilution of stake by the Centre, R Doraiswamy stated that LIC has been prepared for such actions since the initial public offering (IPO) in 2022. The government raised about Rs 21,000 crore by diluting just 3.5 per cent stake in the insurance behemoth. Prior to 2022, LIC was wholly owned by the Government of India.

The government has been focusing on complying with listing requirements, which include a public float of 10 per cent or 15 per cent at different schedules and times. However, due to current market volatility, it is waiting for the right time to launch the next public offering.

Post-IPO, LIC has taken several steps to reward shareholders. In the last quarter, the company announced a 1:1 bonus and followed up with a good dividend, which is 67 per cent more than the previous year. The board of LIC recommended a final dividend of Rs 10 per equity share of Rs 10 each (equivalent to Rs 20 per equity share pre-bonus issue basis) subject to approval of shareholders.

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In its latest financial results, LIC posted a 23 per cent increase in net profit to Rs 23,420 crore in the March quarter, the highest by any financial services firm in the country.

Note: The table only includes the mentioned financial data.