Life Insurance Corporation of India (LIC), the country’s largest life insurer has been placed under review for possible downgrade by the global rating agency Moody’s. Moody’s has placed the insurance financial strength rating of LIC (Baa2/stable) under review for possible downgrade. LIC’s current rating is Baa2/stable, positioned above India’s sovereign debt rating of Baa3/stable.
This move by Moody’s came less than a week after rival agency Standard and Poor’s (S&P) has cut India’s credit rating outlook from stable to negative. Besides LIC, the global rating agency has also placed three top private sector banks - ICICI, HDFC and Axis for a possible downgrade.
During 2011-12, LIC has invested around Rs 2 lakh crore. Of these, Rs 50,000 crore were in equities and the remaining Rs 1.5 lakh crore in debt instruments. Besides, more than 55% of debt instruments are in government securities, which are the most secured investment papers.
Moody’s has also raised concerns about LIC’s recent exercise to raise holdings in public sector banks through equity investments, and the purchase of shares of Oil and Natural Gas Corporation.
