Life Insurance Corporation of India Limited

Details on IPO

India's Life Insurance Corporation (LIC) on Tuesday fixed a price band of ₹902-949 a share for its ₹21,000-crore initial public offering (IPO), according to reports.

The LIC IPO price band has been fixed with a ₹60 discount for policyholders and a ₹45 discount for retail investors and employees.

Life Insurance Corporation IPO Effective Price by Category

 

 

 

Life Insurance Corporation of India (LIC) has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1% market share in terms of premiums (or GWP), a 66.2% market share in terms of New Business Premium (or NBP), a 74.6% market share in terms of a number of individual policies issued, an 81.1% market share in terms of a number of group policies issued for Fiscal 2021, as well as by the number of individual agents, which comprised 55% of all individual agents in India as at March 31, 2021. (Source: the CRISIL Report). The Corporation’s brand, LIC, was recognized as the third strongest and 10th most valuable global insurance brand as per the “Insurance 100 2021 report” released by Brand Finance. LIC had the highest gap in market share by life insurance GWP relative to the second-largest life insurer in India as compared to the market leaders in the top seven markets globally (in 2020 for the other players and in Fiscal 2021 for LIC), as per CRISIL Report.

 

According to CRISIL, this is owing to its enormous agent network, strong track record, immense trust in the brand ‘LIC’, and the Corporation’s 65 years of lineage. LIC is the largest asset manager in India as of September 30, 2021, with an AUM (comprising policyholders’ investment, shareholders’ investment, and assets held to cover linked liabilities) of ₹39,558,929.24 million on a standalone basis, which was (i) more than 3.3 times the total AUM of all private life insurers in India. The corporation was formed by merging and nationalizing 245 private life insurance companies in India on September 1, 1956, with an initial capital of ₹50.00 million.

 

Life Insurance Corporation IPO Details

 

 

Life Insurance Corporation IPO Size

The IPO size is expected to be over Rs 2,000 crore, according to a report by news agency PTI. It includes a fresh issue of equity shares aggregating up to Rs 280 crore and an offer sale of up to 2.4 crore equity shares by the selling shareholders.

 

Life Insurance Corporation Key Point 

Strengths:

Brand Name

LIC is one of the oldest and strongest companies in India in terms of brand awareness. The company has won multiple prestigious awards domestically and internationally for its brand image, campaigns, and corporate excellence. LIC has also emerged as the third strongest and the tenth most valuable insurance brand globally.

 

Wide Product Portfolio

LIC has a wide variety of product offerings of life insurance plans, endowment plans, whole life plans, moneyback plans, term insurance plans, and insurance riders, each having multiple schemes and plans for catering to the various age groups and types of investments for the customers.

 

Inorganic Growth

LIC has invested in multiple companies and government bodies which entails them growing inorganically along with providing the companies with capital support. LIC also has 2 subsidiaries and 4 associate companies which look after the pension fund, housing finance, banking, mutual funds, and cards

 

Wide Network of Agents

It has the strongest network of agents in the country. As of March 31, 2021, LIC has 13.53 lakh individual agents scattered across the country and covering rural and urban customers.

 

AUM And Market Share

LIC has the highest market share of around 61% in New Business Premiums and 71% in the number of policies. In FY21 LIC’s AUM doubled to ₹36.7 trillion on a stand-alone basis.

Life Insurance Corporation Weakness

• Government Restrictions:
  The government often intervenes in the business where maximum growth and income are involved, this might affect the decision-making and utilization of its resources. In the past, the company has invested in many loss-making companies due to the policies laid down by the government.
• Advertising:
  While comparing with the private players the LIC do not spend heavily on advertising and this shows in the quality of ads and content they create.
• Technology Advancement:
  The company is one of the largest employers in the country. Due to the responsibility towards giving employment the company restricts itself from investing in technology where lesser human intervention is required.
• Competitive Industry:
  The industry in which LIC operates is highly competitive in terms of gaining market share. Even though LIC has the highest market share, its private counterparts come up with strategies and plan to cater to the customers of LIC in terms of better service and ease.
• Operationally Inefficient:
  The company lacks in giving proper service to their customers due to their traditional way of doing business.

Life Insurance Corporation Opportunities

• Expansion In Product Portfolio:
  The company has the ability to expand its product portfolio and cater to the customers by introducing furthermore products depending on the future needs.
• Expansion of FootPrints:
  The company should look forward to expanding its footprints into new geographies with new products.
• Marketing Initiatives:
  The company should focus on spending heavily on advertising and marketing initiatives in order to increase new product offerings and cater to the new-age customers.
• Technology Advancement:
  The Insurance sector is the one sector where technology has played a big role in the past. Advance technologies such as blockchain and artificial intelligence can help the company in various ways and improve the business of the company on a greater scale.
• Marketing Initiatives:
  The company has a high disposable income which can be used to acquire companies and invest in the new age businesses from which the company can benefit in terms of technology advancement as well make higher returns for them.

 

Life Insurance Corporation IPO Promoter Holding

 

Life Insurance Corporation Financial Summary 

 Life Insurance Corporation IPO Schedule 

 

 

 

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