Life Insurance Corporation of India (LIC) is in discussions with the Reserve Bank of India (RBI) regarding the introduction of long-term bonds with durations of 50 and 100 years. This move is part of the insurer’s strategy to ensure it can honor its long-term contractual obligations, as explained by LIC’s CEO and Managing Director, Siddhartha Mohanty.
Speaking at the 25th Global Conference of Actuaries in Mumbai, Mohanty shared that while RBI has typically issued bonds with durations of 20 to 30 years, there have been instances of 40-year bonds being offered. He expressed optimism that the RBI may soon introduce bonds with even longer durations, including 50-year and potentially 100-year bonds, to accommodate the needs of insurers like LIC.
The proposal for longer-term bonds is particularly significant for LIC, which has a large portfolio of long-duration policies and liabilities. By securing bonds with extended maturities, LIC aims to bolster its ability to meet future claims and obligations while maintaining financial stability.
These long-term bonds will play a crucial role in LIC’s ongoing efforts to align its investment strategy with its long-term financial commitments. The discussions with RBI highlight LIC’s proactive approach to managing its investment portfolio and ensuring the security of policyholders’ interests.
LIC’s initiative also reflects a broader trend in the financial sector, where institutions are exploring innovative solutions to manage long-term liabilities. The introduction of 50-year and 100-year bonds would be a significant step in enhancing the stability of India’s financial markets while providing LIC with the tools necessary to continue meeting its obligations over an extended period.
The outcome of these discussions is expected to have a substantial impact on the bond market in India, with potential benefits for both investors and institutions looking for stable, long-term investment options.
