LIC’s treasure trove of art and real estate

MUMBAI: Life Insurance Corporation of India evokes a sense of security in millions of investors. For some, its recent investment decisions will help it generate sufficient returns to pay for their retirement, or ensure a decent lifestyle after their death. There is some consolation, at least for now.


Beyond its bonds and stocks — the state-run insurer is sitting on a treasure — its collection of paintings, antique pieces and real estate — estimated internally at more than Rs 70,000 crore.

So much is the value of its non-financial holdings’ gains that the insurer has formed a committee to evaluate the value of its antique pieces and paintings.

In fact, the late MF Hussain, known as the Pablo Picasso of India, whose paintings welcome visitors at the insurer’s headquarters, wanted to buyback the painting. Probably, that was the time that LIC realised what it was sitting on. Other than Hussain, it also possesses works of KK Hebbar, a celebrated artist who produced works with India as the theme for most of his works.

“An institution like LIC holds properties for long term and it has been a good strategy, as real estate as an asset class is a long-term investment,” said Neeraj Bansal, partner — real estate & construction, KPMG. “LIC, in accordance with its internal investment guidelines, needs to regularly monitor its investments, periodically re-look at its investment strategies and re-evaluate its individual investments. They need to monetise their property at an appropriate time to meet the requirements.”

None in LIC wanted to speak on record about the paintings and antique pieces because they are just not sure about the worth. An informal assessment from outside experts makes them believe their value could vary from Rs 100 crore to Rs 1,000 crore.

“These paintings were made in 1963 and were bought by LIC for a few lakhs,” said an executive, who did not want to be identified. But on the value of real estate, where the valuation exercise was done a few years ago, an official from its estate department is confident that it is about Rs 70,000 crore. But he did not want to be identified.

LIC, which manages assets worth Rs 13 lakh crore, has properties in hundreds of cities and towns. In fact, the probability of a building one walks into in Mumbai’s Fort area belonging to LIC is quite high. The hundreds of offices from which it operates, thousands of apartments and the rental yield from office space could probably make it one of the richest real estate investment trust, if converted into one.

Aproof of the gold mine it is sitting on is reflected from the rentals it collected in 2011-12 – Rs 218 crore, six times more than the net profit of rival insurance company PNB MetLife.

Real assets may not be a fanciful investment for a financial services firm, that too for a state-run one when the government is borrowing heavily. But as many, including Hindustan Unilever, are finding out now, real estate investments could bring in huge gains. Sale of real estate properties and residential apartments alone earned the soaps and shampoos maker over .`672 crore in profits in the past four quarters. That’s almost double the profit of one of its key business segments, beverages and foods, which houses brands such as Knorr soups, Lipton tea and Bru coffee.

Keeping in mind the above, real estate investments may not be all that bad.