LIC is a behemoth like no other. India’s biggest upcoming LIC IPO is here!
| Open Date | 4th May 2022 |
| Close Date | 9th May 2022 |
| Minimum Investment | Rs. 13,530 |
| Lot Size | 15 |
| Price Range | Rs. 902 – Rs. 949 |
| Issue Size | Rs. 21,000 Crore |
About LIC
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. LIC was formed in 1956 by merging and nationalising around 245 private life insurance companies. It has the largest asset manager in India. LIC has a broadly diversified product portfolio covering various segments across individual products and group products. These include savings insurance products, term insurance products, health insurance products, annuity, and pension products, and unit-linked insurance products.
You can also read about Life Insurance Corporation of India to learn some interesting facts about the history of Insurance, how LIC was created, the growth of LIC right here.
Objectives of the LIC IPO
The aim of the LIC IPO is to achieve the benefits of listing the equity shares on the stock exchange and the government aims to get 21,000 crores by offloading 3.5% of its shares. This will enhance the brand image & provide a public market for the equity shares in India.
Strengths
- LIC offers both insurance and investment products. Their plans are a combination of insurance and investment with a guaranteed return.
- A network of 13 lakh agents backs up LIC’s 65-year history
- LIC manages assets of Rs 39 lakh crores. That is more money than the entire mutual fund industry combined. They invest these funds across stocks and bonds.
- Leading insurance provider company in India and fifth largest global insurer by GWP.
- There are a variety of life insurance products to meet the needs of individuals.
- LIC has a reliable risk management framework
- They own 4% of all listed stocks in India and more government bonds than the RBI.
Risks
- LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.
- Investment & insurance products have a low margin.
- 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.
- LIC has more than 1 lakh employees. Maintaining such a large workforce can become challenging, especially during a financial crisis.
- Changes in RBI’s monetary and fiscal policies can prompt LIC to modify its policies accordingly. Such changes can be counterintuitive to the company’s earnings or scope of operations.
- For a significant portion of its revenue, it relies on the sales of participating products and single premium products.
LIC’s market share compared to its competitors
| Company | Market Share |
| LIC | 64.1% |
| SBI Life Insurance | 7.9% |
| HDFC Life Insurance | 6.1% |
| ICICI Prudential Life Insurance | 5.6% |
| Max Life Insurance | 3% |
| Bajaj Allianz Life Insurance | 1.91% |
| Other | 11% |
Asset diversification of LIC
| Investments | % Share |
| Central Government Securities | 37.45 |
| Equity | 24.77 |
| State Government Securities | 24.62 |
| Debentures & Bonds | 8.06 |
| Loans | 3.07 |
| Venture Funds, MF & ETFs | 0.78 |
| Other Approved Securities | 0.66 |
| Money Market Instruments | 0.22 |
| Other Investments | 0.37 |
LIC Profit & Loss Statement from last 3 years
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Happy Investing 😇
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.
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