Nithyananda on IPOs and Stock Market | India | Tamil | Kae Kae | Kokula Krishna Hari | LIC | BSE NSE

LIC is the largest insurance provider company in India. It has a market share of above 66.2% in new business premium. The company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products.

As of 30 Sep 2021, it has a total AUM of Rs. 39 lakh crore. LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices. It operates globally in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.

Key positive factors
LIC is a part insurance and part investment products company. Their plans are a combination of insurance and investment with a guaranteed return.
LIC has over 13.5 lakh agents who play bringing most of the new business. LIC plans offer ‘fixed returns’ along with life insurance coverage. This makes it easy to sell by agents and brings peace of mind to the insurers.
LIC has high trust in the public for both life insurance as well as investment done with them. LIC is synonymous with insurance in India.
LIC manage asset of Rs 39 lakh crores. That is more money than the entire mutual fund industry combined. They invest these funds across stocks and bonds. They own 4% of all listed stocks in India and more government bonds than the RBI.
Leading insurance provider company in India and fifth largest global insurer by GWP.
A range of life insurance products to meet the varied insurance needs of individuals.

Key challenges
LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.
The margin in insurance + investment products is low.
It’s very difficult to value LIC as the business model is unlike any other company. LIC collects money upfront and then promises to compensate policyholders at a later stage. The premiums they collect (part insurance and part investment) cannot be recognized as revenue.

Shares in the Indian state-run insurance giant Life Insurance Corporation (LIC) went on sale this week in a $2.75bn (£2.18bn) initial public offering, witnessing strong demand from investors.

The government is offering a 3.5% stake in what will be India’s largest share sale, despite both the size and valuation of the issue being slashed significantly to reflect current market conditions.

The issue was fully subscribed, a day after it opened for sale to retail investors, employees and policyholders. It was loss of Rs. 30 and made the 2nd largest loss for LIC in the world.

The date for share listing is 17 May, the government’s Department of Investment and Public Asset Management said.

Bids for anchor investors opened on 2 May but share sales for the public opened on 4 May and would close on 9 May.

General investors can buy equity shares at a price band set at $11.75-12.36 (£9.38-9.87) per share.

The company’s policyholders, employees as well as small mom and pop investors will be entitled to an additional discount of up to 60 rupees, according to papers filed by the company with India’s securities watchdog. Broking firm Zerodha expects at least 8-12 million additional online trading accounts to be opened by investors keen to apply for the IPO, a 10-15% bump up from the 80 million accounts currently in operation.

LIC is nearly as old as independent India. Formed by nationalising and merging 245 private insurance companies, it started issuing policies in 1956, holding a monopoly on India’s insurance sector until the turn of the millennium.

More than two decades after the private competition was allowed, LIC continues to hold a leadership position, with a 66% market share as of 2021.

Its sheer size makes the insurance behemoth a systemically important company for India.

At over $500bn, its asset base is bigger than the GDP of several countries. And with nearly 280 million policies in force, it manages four times more policies than the entire population of the UK.

It is also India’s largest asset manager, with massive investments in state and central securities as well as the stock market.

According to the rating agency CRISIL, LIC’s equity investments in listed companies represented 4% of the total market capitalisation of the National Stock Exchange. It has also been the default financier of the government in trying times, bailing out flailing state-run companies.

LIC also owns a sprawling portfolio of real estate across India.

#KokulaKrishnaHariK – ASDF International Secretary – Computer Science Specialist. Visit www.kokulakrishnaharik.in for more information.

#LIC #IPO

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