Insurance firms plan to invest $5 bn by FY08

It's the right time to beard the bear in its den. Even as the stock market is limping back to normalcy after last week's carnage, the insurance industry is all set to invest in the stock markets in a big way over the next three months ending March 31.

According to insurance industry sources, investment flow into the markets over the last three months of fiscal 2008 may fall between $4 billion and $5 billion. Total investment flows in 2007-2008 are likely to touch $13 billion, the official said.

A senior executive with Life Insurance Corporation of India (LIC) said the corporation will invest around Rs 15,000 crore in the January-March quarter. LIC's total investment for the last nine months of the current fiscal are valued at around Rs 100,000 crore as compared to the entire last fiscal's total investment of Rs 105,000 crore, the official said.

Puneet Nanda, executive vice-president and chief investment officer, ICICI-Prudential Life Insurance, India's largest private insurance company, told the Business Standard that his company has so far invested Rs 800 crore"�Rs 900 crore between January 14 and 18.

"Our economy is going strong, and the recent bearish sentiments will not last long," he said, adding that valuations, especially in the infrastructure sector, were looking attractive.

"Whenever the market goes through such corrections insurers are the top gainers since it creates opportunities for them to become big buyers," LIC official said.

In the last quarter of any fiscal, the industry is usually flooded with huge inflows of new business premium income. This comes in from individuals scrambling to sign up for life insurance policies to avail of tax benefits towards the fag end of the fiscal.

Another reason why the industry plans to invest massively in the last quarter of any fiscal is because insurers' investments always flowed into markets with attractive products.

But presently, the value of even some of the blue chip stocks has declined, leading to the insurance industry being all the more keen on investing in such stocks in a highly volatile market with strong bearish sentiments.