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Pre IPO Advisors appointed for LIC IPO, recent development:
Edelweiss, Deloitte selected as pre-IPO advisors for largest-ever LIC IPO.
The government has picked Edelweiss Financial Services Ltd and Deloitte as the two pre-IPO transaction advisors for the listing of the country’s biggest insurer – Life Insurance Corporation of India (LIC), whose public offer is expected to be the largest ever in the history of the domestic capital markets.
The scope of the mandate includes advising the Centre on the modalities of the IPO and the timing, arriving at an optimal capital structure, preparing restated consolidated financial statements for the past three years for LIC and its subsidiaries, structuring the transaction amongst other aspects.
On June 19, 2020, the Department of Investment and Public Asset Management (Dipam) under the Finance Ministry has issued a request for proposal (RFP), seeking to engage pre-transaction advisors for partial disinvestment of the government’s equity shareholding in LIC through an IPO.
LIC, which is gearing up for a primary offer towards the end of the next fiscal year, has delivered strong performances during April to January 2020
For the first 10 months of FY20 , LIC’s first-year premium has grown 43 per cent YoY, while private players put together have seen first-year premium grow by about 20 per cent during this period.
In January, the insurer had posted a strong 44.8 per cent growth in individual first-year premium, while private players have grown by a lower 11.5 per cent. The insurer now commands 70 per cent market share, up from 66 per cent last year.
Both volatility in equity markets and fall in interest rates resulted in higher demand for traditional plans, which has aided the performance of LIC — a chunk of whose products are endowment and pension plans.
LIC also withdrew several of its flagship products, such as Jeevan Umang, Jeevan Labh and Jeevan Anand, owing to changes in product regulations. In the run up to this, sales zoomed, as people made a beeline for these products.
“A massive recruitment of 5,000 development officers has also spurred growth,” says MR Kumar, Chairman, LIC. Also 60 per cent of LIC’s agents are millennials.
Investments & NPAs
Clearing the doubts about LIC’s investment book and NPAs, the Chairman said: “While gross NPAs are 6 per cent of our debt portfolio, on the entire Rs. 31-lakh crore of investments it is just about 1 per cent. The net NPAs after provisions are only 0.04 per cent. This is the right figure to look at because unlike banks, who are in the business of lending, we mostly have investments, of which over 60 per cent are in government bonds.’’ LIC is the largest financial institution in the country with over Rs 18 trillion in assets
India’s largest insurer LIC has registered a massive 52.7 per cent growth in first-year premium collection in January as against 40 per cent by its 23 private sector rivals.
The company has expressed the hope it would be able to arrest the minor fall in the overall market share in the ongoing quarter.
Its first-year premium collection grew 52.66 per cent, well above the growth rate of 40.13 per cent shown by private players, and the industry’s 48.09 per cent combined growth. Now LIC is expecting to garner substantial new business in the final quarter, which is traditionally the highest business generating quarter for the life industry.
The corporation has drawn an action plan for the last quarter and shall be focusing on mass activisation of its intermediaries, aggressive marketing of its products etc.
In terms of the number of policies, LIC has sees it soaring by a whopping 168.91 per cent, while the industry which has 23 private players grew only 93.52 percent, as many private players saw de-growth in the new policy collections in January.
“LIC continues to be the market leader in life insurance industry.Every day the Gaint wakes up to the fact that more than 250 million lives are part of its family. The corporation is humbled by the magnitude of the responsibility it carries and realises the lives that are associated with it are very valuable indeed. Though this journey started over six decades ago, the corporation still conscious of the fact that, while insurance may be a business for it, being part of millions of lives every day for the past 61 years has been a process called TRUST.
Promising a strong support to the Centre in making the LIC IPO a grand success, the Association of National Exchanges Members of India (ANMI) on Saturday said that it would help mobilise 1 crore investors for the LIC IPO that is expected to hit the market this fiscal.
Some of the valuable subsidiaries
LIC housing finance ltd
IDBI Bank ltd
LIC Cards Services ltd
LIC Lanka ltd
LIC Nepal ltd
LIC Nomura Mutual fund
LIC Singapore ltd
LIC Pension fund ltd
Yogakshema Building, Jeevan Bima Marg,
P.O. Box No – 19953,
Mumbai – 400 021
IRDAI Reg No- 512