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All about the LIC IPO

Introduction

Life Insurance Corporation, fully owned by the government through the President of India at present, is expected to hit the market to offload close to 31.62 crore shares. LIC is a household name and most of us may have taken a life insurance policy from them. Looking to invest in the LIC IPO? Here’s a look at what makes Life Insurance Corporation the behemoth that it is.

Life Insurance Corporation of India Background

LIC has been providing life insurance in India for more than 65 years and was formed by merging and nationalizing 245 private life insurance companies in India on September 1, 1956. The initial capital was 5 crore rupees. It has a 64.1 percent market share in terms of premiums (i.e. GWP) and 66.2 percent market share in terms of new business premiums. LIC is also the largest asset manager in India with total assets under management of close to 40 lakh crore rupees on a standalone basis.

In terms of global rankings, Life Insurance Corporation is ranked fifth in gross written premiums and is the 10th largest in terms of total assets. LIC has 32 individual products and 7 individual riders.

Financials and Market share

Source: Company DRHP

In terms of total premium, the market share of LIC alone is 64.10%, while that of all the private players combined is 35.90%. The closest private player, in terms of market share in total premium, is SBI Life with 8%. In the New Business Premium, LIC tops with a market share of 66.20%, while SBI Life with a share of 7.40% is second.

 

Source: Company DRHP

To Invest in IPO with ICICI Direct: Open Demat Account Online

Key Takeaways & Risks

The Corporation has the largest individual agent network among life insurance entities in India, comprising approximately 1.35 million individual agents as at March 31, 2021, which was 7.2 times the number of individual agents of the second largest life insurer.

It distributes its policies in all 36 states and union territories of India and has more than 2000 branch offices and over 1500 satellite offices covering 91 percent of districts in India.

Additional Read: Frequently Asked Questions about LIC IPO

In terms of financial performance, LIC’s profit after tax on a consolidated basis increased from 2627 crore rupees in FY19 to 2974 crore rupees in FY21. As on September 30th 2021, it had an Indian embedded value of 5.4 lakh crore rupees.

In terms of risks involved in the offer, any adverse variation in persistency metrics could have an impact on LIC’s financials and interest rate fluctuations could dampen its profitability. Besides, the technical complexity involved in embedded value calculations and the estimates derived could change if key assumptions are changed.

Additional Read: What is IPO & What are the Advantages of IPO?

Disclaimer

ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730) and BSE Ltd (Member Code :103) and having SEBI single registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

The information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities Limited. The contents of this mail are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. While due care has been taken in preparing this mail, I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any inaccurate, delayed or incomplete information nor for any actions taken in reliance thereon. This mail is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject I-Sec and affiliates to any registration or licensing requirement within such jurisdiction. Products and Features are enabled for NRI Customers based on select countries as per local laws & jurisdiction.

ICICI Securities Limited has been appointed as Book Running Lead Managers to the initial public offer of Life Insurance Corporation of India. The article is prepared based on publicly available information.

This mailer is for information purposes only and does not constitute, nor should be regarded as, an offer, invitation, inducement, solicitation or advertisement with respect to the purchase or sale of any security of the Corporation, and should not be construed as such, in India, the United States of America ('United States') or any other jurisdiction. This mail may not be taken, published, transmitted or distributed in or into the United States directly or indirectly. No Shares may be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933 (the 'Securities Act'), as amended. Receipt of this mail constitutes an express agreement to be bound by such confidentiality and the other terms set out herein. Any failure to comply with this restriction may constitute a violation of applicable securities laws. Neither the Corporation nor any seller of securities intends to register any portion of any offering in the United States or to conduct a public offering of securities in the United States.

The Corporation, is proposing, subject to receipt of requisite approvals, market conditions and other considerations, to make an initial public offer of its equity shares and has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India and the Registrar of Companies, Maharashtra. The DRHP is available on the website of the Securities and Exchange Board of India and on website of respective Book Running Lead Managers.

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