LIC IPO by the Third Week of January

Top LIC executives said in one of their engagements with overseas shareholders in the run-up to its biggest IPO that the firm expects to submit its IPO papers with the market regulator by January’s 3rd week. Officials from the finance ministry have been claiming for months that LIC will be listed before the end of fiscal 2022. The IPO is projected to be valued over Rs 1 lakh crore, making it India’s largest ever stock transaction.

LIC executives also informed those investors about the life insurance giant’s growing emphasis on non-participating products like ULIPs, pension, annuity, and health insurance products, according to sources. According to them, this is part of LIC’s attempts to diversify its product mix, enhance sales of current non-participating goods, and introduce new non-participating products.

To keep up with India’s shifting demographic trend, the life insurance giant aims to hire more millennial agents as part of its expansion ambitions. According to some estimates, 67 percent of India’s population is between the ages of 15 and 64, with a median age of approximately nine years.

LIC executives also reminded investors that they are in the process of hooking up with new partners in order to grow their market share in the bancassurance channel. According to reports, the life insurance behemoth is also pushing for more digital usage among its bancassurance partners in order to boost productivity.

Officials also explained how LIC plans to improve upselling and cross-selling to individual clients, as well as enhance the average ticket size of the items it sells and the productivity of its intermediaries. Officials from the LIC had previously explained how the insurance firm plans to use its digital approach to build its business in previous presentations to potential investors in the LIC IPO.

The IPO price of LIC may be lower than those of Reliance and TCS

Life Insurance Corporation (LIC) is expected to be valued by the government at a lower level than some experts had predicted. Some even predicted that it will become India’s most valuable corporation.

While the value will be in the millions of crores, it will be in the single digits, putting it behind firms like RIL and TCS. Even at a modest value, however, the initial public offering (IPO) would be the country’s biggest.

LIC would provide shares at a discount to policyholders to encourage them to participate in the IPO. Because there will be a change in the allocation of surplus in the future, the company is focused on policyholder involvement. Currently, the firm pays just 5% of its surplus to shareholders, rather than the maximum of 10% authorized, with the remainder going to policyholders. Retail investors would feel more secure with conservative pricing.

Milliman, an actuarial company, has filed a study on the embedded value of LIC, which will be used to determine the price. LIC’s assets under management (AUM) would be disproportionately valued if compared to those of private players, according to insurance industry sources. This is because guaranteed return plans, group insurance funds, and employer superannuation funds account for a significant portion of the corporation’s assets. These enterprises have exceedingly slim profit margins.

SBI Life Insurance, which is owned by the State Bank of India, has a market capitalization of Rs 1.2 lakh crore and assets under management of Rs 2.4 lakh crore. The AUM of LIC is over 15 times greater. According to actuaries, many people assigned a value of over Rs 15 lakh crore as a result of this, which turned out to be too optimistic. The embedded value report is anticipated to be included in the corporation’s draft red herring prospectus, which will include first-half results.

LIC had to step in and assist the problem in the past when the government set aggressive prices for public sector entities like General Insurance Corporation and New India Assurance. This time, the issue’s success will be determined only by market demand.

Source: The Times of India

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