After a disappointing stock market debut, India plans to appoint a private sector professional as the first CEO of the Life Insurance Corporation of India, according to two government officials.
A private sector appointment to lead India’s largest insurer, which manages assets worth 41 trillion rupees ($500.69 billion), would be a first in the company’s 66-year history.
“The government intends to broaden the eligibility criteria for appointment of LIC CEO so that private sector candidates can apply,” said one government official who declined to be identified because the discussions are private.
The Ministry of Finance, which is in charge of the LIC, did not respond to emails.
The insurer currently has a chairman, but that position will be eliminated when the current incumbent’s term expires in March, according to officials.
Following that, the government will appoint a CEO from the private sector, they said. Last year, changes were made to the law that governs the LIC to allow for this.
“The move will give shareholders more options and send positive signals,” said the other government official, who also declined to be identified.
The officials did not say where the appointee would come from.
The insurer’s share price has plummeted since its initial public offering in May of last year, and it now trades 30% below the price at which the shares were issued, wiping out nearly 2 trillion rupees ($24.31 billion) in investor wealth.
Former Finance Secretary Subhash Chandra Garg agreed that the pool of professionals eligible to lead the insurer should be expanded beyond sister, state-run firms.
“There is no harm, this is a perfectly reasonable move,” Garg said.
While a decision to hire from the private sector had been made in principle, the government was considering whether additional changes to the law were needed and whether the government could offer pay comparable to the private sector, according to the first official.
Private companies typically pay more than the public sector.
In the past, the government appointed people from the private sector to positions in state-owned enterprises such as banks.
