LIC blocks L&T's foray into life insurance

Thursday, 21 January 2010, 21:50 IST   |    2 Comments
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LIC blocks L&T's foray into life insurance
Mumbai: Due to fears that the competition between Life Insurance Corporation and Larsen and Toubro may result in the largest life insurer losing its ground, LIC has reportedly blocked L&T's plan to venture into the life insurance business. According to a source close to the matter, LIC is of the opinion that L&T, in which it owns 18 percent stake, should not compete with the parent company, which may lead to LIC losing out on its resources, reports Economic Times. L&T and its subsidiary L&T Finance have made detailed plans to get into every vertical of financial services including life and general insurance sectors. While its general insurance foray was approved by the institutional shareholders, its plans to get into life insurance business were not accepted by LIC. "Since then the proposal has been put in the deep freezer, the company's management does not want any friction with its owners," the source said to ET. The source further said its plans to enter the general insurance sector are on track with the company agreeing to share its re-insurance business with its institutional investor, General Insurance Corporation of India. The LIC officials are mainly worried because of the constant decrease in its market shares as new private players enter the market. Statistics for the month of October 2009 shows that LIC's market share has shrunk to 42 percent while private players have cornered a market share of 58 percent. In addition to this issue, LIC has also lost several key people in the organization to these private entrants.

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