should be dispersed over different classes of securities, industries and regions. The Corporation‟s policy has been not to acquire more than 30 percent of the outstanding equity shares of company. The Corporation should act purely as an investor and not assume the role of an operator or speculator and try to take advantage of temporary fluctuations in the market prices. The Corporation would underwrite security issues after careful investigation of the project from financial, economic, technical, managerial and social angles. Another notable feature of underwriting of the LIC is that the Corporation‟s participation in underwriting is in the form of „firm‟ underwriting in the sense that it underwrites issue of capital invariably by way of firm commitment. Through underwriting, it purchases a large block of sound securities for its investment portfolio. The approach of the LIC in this regard is that of an investor and one of a catalytic agent to generate public subscriptions.
Furthermore, it is the policy of the Corporation to lay relatively more emphasis on senior securities because fixed return and preferential claims on income and assets fit into the cannons of sound investments for an insurance organization like LIC.
In sum, the approach of the LIC to underwriting is that of an investor and not one of a catalytic agent to generate public subscriptions.
The IRDA Act 1999 has permitted the LIC and other newly formed insurance companies to invest more in…