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Life Insurance Corporation of India (LIC) is reassessing its large real estate portfolio to improve rental income and overall returns. The insurer's properties, recently revalued at over INR 45,000 crore against a book value of around INR 16,000 crore, continue to generate modest yields of 3-4%. Instead of selling assets, LIC is focusing on better utilisation, including possible REIT-like structures. The strategy aligns with the insurer's stronger financial performance and its decision to defer entry into the health insurance segment for now.
Life Insurance Corporation of India (LIC) has begun reviewing its extensive real estate portfolio with the objective of increasing income yields and improving overall investment returns. The insurer holds properties across major cities, and following a recent revaluation exercise, the market value of these assets has crossed INR 45,000 crore, significantly higher than their recorded book value of about INR 16,000 crore. Despite this valuation gap, rental yields from these assets have remained relatively low, typically in the range of 3-4%. Advertisement
Senior management has indicated that the focus is now on enhancing income generation rather than monetising assets through outright sales. LIC plans to examine its properties in detail to identify opportunities for better leasing, redevelopment, or restructuring where feasible. Options such as adopting formats similar to Real Estate Investment Trusts are under evaluation, although no final decision has been taken. The approach reflects a preference for steady income over short-term gains.
LIC has historically been one of the largest institutional owners of real estate in the country, with many properties located in prime commercial areas. However, several of these assets have been underutilised or locked into long-term leases at lower rentals. Improving yields from such properties is expected to support the insurer's long-term liabilities while maintaining asset ownership.
Alongside this strategy, LIC has slowed its plans to enter the health insurance business as a strategic investor. The management has clarified that participation in the segment is not urgent and will be considered only when suitable opportunities arise. This cautious stance mirrors the insurer's broader focus on strengthening existing operations.
In its latest quarterly performance, LIC reported a strong rise in net profit and premium income, supported by improved business growth. The healthier financial position provides the insurer with flexibility to pursue gradual reforms in its real estate strategy without immediate pressure to divest assets.
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