A top official of the GIC said that the investment decisions which are crucial to insurance business have become more and more complex.

``The institution's fund as well as its role as a financial institution in the market is growing for which sound managment must be developed,'' he said.

Ideally, the long term or short term nature of investments must be decided on the basis of projected cash flow requirements of the business.

The policy holders' funds must be managed with `safety first' approach, making the investments in predominantly liquid assets which can be easily realised without any financialloss, he added.

Recently GIC had roped in former investment director of the Life Insurance Corporation BR Gupta to train its officials for conducting the investment related activities.

Considering the present market scenario in the seconady market, investment in Government securities are being stepped up by the institution.

Though GIC's non-performing assets (NPA) is the lowest among the financial institutions including Industrial Developmenmt Bank of India, ICICI, Industrial Finance Corporation of India and Life Insurance Corporation of India the institution is making all-out effort to bring down NPA lvel from the existing level of 4.08 per cent. The NPA level of the industry had virtually doubled from 2.30 per cent to 4.08 per cent during the last three years.

As a prudent measure the institution has already stopped giving any unsecured short term loans.

The GIC Act of 1973 provides that the institution can invest 55 per cent of its total investment portfolio in market sector including thestock market while 45 per cent has to be invested in social sector including the governmnet securities.

The total investments of the general insurance industry has expanded from Rs 354.73 crore to around Rs 17,000 crore during 1997-98 registering an average growth of 18 per cent.

Similarly, the investment income had steadily expanded from Rs 20.50 crore to Rs 2057.57 crore during 1997-98, recording an average income of 21 per cent.

The compounded annual growth of accretion of the industry is pegged at 17 per cent.

The equity portfolio of the industry has appreciated by almost Rs 10,000 crore till date. The total financial assistance to core sector including infrastructure sector stood at over Rs 1100 crore representing almost 13 per cent of the market sector investments. GIC derives its income from obligatory cessions from four subsidiaries, inward reinsurance acceptance, commission on outward reinsurance placements, investment income and dividend from subsidiaries. Trying to maximise returns intoday's uncertain market condition has left even the most sophistcated fund manager totally confused. The investment in equity stocks tend to yield low current cash inflow but provide high potential for capital appreciation over a period. In contrast, the debt instrument carry compratively less market risks and the returns thereon can also be predicted with certainty.

While it is true that both policyholders and shareholders desire overall financial well being of the insurer, their resprctive aspiration and expectations could be different. The policy holdres are primarily concerned with the paying capacity of the insurer in the event occurrence of the insured perils. On the other hand the expectations of the shareholders will range from optimization of returns and progressive increase in the networth of the company.