LIC’s Big Loss in 2025 Crash

MUMBAI — In scarcely two months of 2025, Life Insurance Corporation of India (LIC), the country's largest institutional investor, has marked to market a loss of Rs 1.45 lakh crore on its stock portfolio. The crash struck in the months between December 2024 and February 2025 in Mumbai, where LIC is based. The massive drop was a direct result of a brutal market downturn that was initially sparked by global unrest and heavy selling.

A Steep Fall for LIC

LIC’s equity holdings were hit hard. The portfolio declined from Rs 14.9 lakh crore in December 2024 to Rs 13.4 lakh crore as of Feb. 28, 2025. That is a decline of Rs 1.45 lakh crore. The insurer has investments in 310 companies. Small-cap and mid-cap stocks were hit most severely — but even big names like ITC and SBI fell. This is one of the worst mark-to-market losses for LIC ever.

It was early 2025 when the market crash began. In two months, the NIFTY 50 index fell by close to 7%. (Foreign funds withdrew more than Rupees 3 lakh crore from Indian equities.) A 16% stake in ITC was one of LIC’s big bets and showed heavy bleeding. ITC, by itself, lost 18%, shedding Rs 17,000 crore off LIC’s market capitalization. Tech behemoths TCS and Infosys also sank, losing Rs 10,509 crore and Rs 7,640 crore, respectively.

What Went Wrong?

The trouble started with international fears. Global markets shuddered as trade wars and climbing interest rates took hold. Small-cap and mid-cap stocks fell the most in India. They’ve endured their worst rout since the COVID crash of 2020. Even large-cap stocks, often deemed safer, weren’t spared. The market value of LIC’s stake in SBI and ICICI Bank decreased by ₹ 8,568 crore and ₹ 3,179 crore, respectively.

Jio Financial Services was among the biggest losers. It fell by 30.5%, knocking off Rs 3,546 crore from LIC’s portfolio. “This crash signifies that no stock is safe currently,” said Amit Sharma, a market analyst at Kotak Institutional Equities. Large names like L&T and HCL Tech also bore double-digit losses. The broad LIC universe of 310 stocks provided little defense.

This background explains the pain. LIC is the largest insurer in India with assets worth ₹52 trillion as of March 2024. It’s also a big player in the stock market. Its equity bets often serve as a balancer for the market during declines. But this time the scale of the sell-off proved too much even for LIC. The insurer’s losses reflect the broader market’s 16% decline from its peak.

A Tough Road Ahead?

LIC is not the only one to be on the receiving end of the heat. Mutual funds and retail investors were also caught up in the market’s tumble. But LIC’s size makes its losses more conspicuous. The insurer’s emphasis on large-cap stocks may limit more pain, analysts say. That said, weakness in small-caps could persist. “The return of foreign investors determines the recovery,” Sharma said.

Some stocks bucked the trend. For LIC, the value contribution from Bajaj Finance and Maruti Suzuki was between Rs 1,000 crore and Rs 3,000 crore. But those increases were modest relative to the losses. NIFTY is expected to reach 26,000 by December 2025: Citi Research That’s a 13% rise from now. That forecast might produce a rebound for LIC — if it proves true.

The insurer has endured rough patches before. It survived the market upheavals of the 2008 financial crisis. That long-term focus proved helpful as well. There is still Rs 13.4 lakh crore with LIC, so it is a behemoth. But this crash will test its strength. Policyholders and those who invest in them are watching closely.

Conclusion: Will LIC make a re-bound?

LIC schools of thought argue that the Rs 1.5 lakh crore loss is a bitter pill to swallow. It is testament to how quickly markets can turn. The insurer’s next moves are consequential. Will it stay strong or get sold off further? A market rebound would alleviate the hurt. If FIIs return, LIC’s portfolio may recover. For now, it’s a waiting game. It leaves LIC battered but not shattered.

LIC’s Big Loss in 2025 Crash

A Steep Fall for LIC

What Went Wrong?

A Tough Road Ahead?

Conclusion: Will LIC make a re-bound?

References