The decision by the Life Insurance Corporation of India to release its quarterly financials in a press conference for the first time in six decades, is a welcome development. As India’s leading life insurer and its biggest custodian of household savings, the results of LIC’s operations are certainly of great interest to the investing public. Greater transparency is also desirable at a time when the Government has hinted at plans to list this insurance behemoth on the bourses some time in the future.

With a 12.4 per cent growth in its premium income to ₹1.45 lakh crore in the first nine months of FY17, LIC claims to have already met its business targets for the year. It is heartening to note that the corporation turned cautious in a rising market by sharply pruning its equity purchases to ₹39,705 crore (₹64,000 crore last year), even while booking more profits from its existing investments. But then, details such as LIC’s premium income, expenses, investment transactions and much more are already available on its website as a part of the quarterly public disclosures mandated for all life insurers. While these are designed to help policyholders assess the health of an insurer, LIC needs to set a far higher bar on its disclosures by virtue of its systemic importance to the capital markets. LIC’s investment portfolio of ₹22 lakh crore (policyholders’ funds) is bigger than that of the entire mutual fund industry, with 40-odd fund houses. Therefore, any misjudgments by LIC on its investments or risk controls can have marketwide implications. Its equity portfolio of over ₹4.2 lakh crore also makes LIC the largest domestic equity investor, giving it considerable clout over both market movements and corporate actions. Investors at large and policymakers would, therefore, benefit from more granular details of LIC’s market operations. For starters, disclosures of the mark-to-market value of LIC’s equity portfolio and its exposure to sectors and corporate groups can help gauge concentration risks. Further, details of LIC’s related party deals with its owner — the Government — are essential to reassure investors that its heavy participation in the capital-raising plans of PSUs, public sector banks and the railways, are prudent and on an arm’s-length basis. Three, LIC’s voting policy on corporate actions can help assess its corporate governance role. In fact, such voting policy disclosures (now mandatory for mutual funds) should apply not just to LIC but also to private sector insurers.

Even as it has managed to successfully fend off private sector competition and retain over 75 per cent share of the market, the one parameter on which LIC’s financials stand on a weak footing is its solvency margin. In end-December 2016, LIC’s solvency margin at 151 per cent barely met the statutory requirement of 150 per cent, and lagged the 200 to 300 per cent margins of leading private insurers. Thus, it is also critical for the Centre to disclose its own roadmap for shoring up the capital base of this insurance giant.