Lic Puts Up Robust Show Ahead Of Ipo



Life Insurance Corp. of India’s (LIC) first-year premium collection, a key metric, rose 7.9% to 1.98 trillion for the year ended 31 March, data reviewed by Mint showed, boosting the prospects of the state-run insurer as the government gets ready to brave choppy markets to take the company public.

India’s largest insurer ended last fiscal with a market share of 63.25%, lower than the previous year. However, in March, the company’s premium collections grew 51% to 42,319.22 crore from a year earlier, garnering a market share of 71%, the data showed.

Operating metrics

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Operating metrics

The robust premium collections, particularly in March, will be a shot in the arm for the government as it prepares to sell shares of the insurance behemoth to the public for the first time.

A high-level committee is expected to meet this week to finalize the timing and the size of the initial share sale, a government official said, requesting anonymity. While the government can sell as much as 7.5% of LIC, it may decide to sell between 5.5% and 6.5%, depending on investor interest, another official had said earlier.

The country’s largest insurance provider sold 21.7 million insurance policies in the year ended 31 March, 3.54% more than the previous fiscal, according to the data, boosting its market share to 74.6% in terms of policies sold. The data showed that about 4.9 million policies were issued in March alone, an increase of 4.88% from a year earlier and a market share of 81.2%.

The life insurance industry, on the whole, sold 29.15 million policies in FY22, of which 7.4 million were in March, with the lion’s share going to LIC. While LIC’s individual single premium collections increased by 61% to 4,018.33 crore in March, group single premiums increased by 48.1% to 30,052.86 crore, according to the data.

LIC did not respond to queries from Mint on the data related to the company’s performance as of Wednesday.

The success of LIC’s IPO is crucial for the government to meet its asset sales goal, which has been cut to a modest 65,000 crore target for the current fiscal, lower than the revised 78,000 crore for the previous fiscal. The government could meet less than 17% of the revised asset sales target for FY22 as the Russian invasion of Ukraine, and the ensuing volatility in stock markets forced it to postpone the LIC share sale to this fiscal year.

However, delaying the IPO beyond 12 May will mean that the government will have to include LIC’s December quarter financials and refile the prospectus, which will delay the IPO by two to three months, which it wants to avoid.

Tuhin Kanta Pandey, the secretary for the department of investment and public asset management (Dipam), said last month at the Mint India Investment Summit 2022 that there is strong investor interest in the state-run company’s offer, but the Centre will proceed with the IPO only when it is confident of successfully listing the insurer.

The mega IPO has drawn significant interest from at least 12 large foreign and domestic fund management firms, Mint reported last week. At least five of India’s top asset management companies, three large foreign sovereign funds, two global pension fund management companies and two global hedge funds have committed to invest 18,000 crore to bankers managing the LIC IPO, the report said.

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