Ahead of its public offering, LIC sees huge decline in growth – CNBCTV18

The Life Insurance Corporation (LIC) of India has seen a significant drop in its growth leading up to its initial public offering (IPO). The Insurance Regulatory and Development Authority of India (IRDAI) recently released numbers that show LIC had one of its worst years ever.

According to the data, the new business premium for LIC increased by only 0.24 percent in the first 11 months of fiscal 2021-22. During this time, the company generated a new business premium of a meagre Rs 1.56 lakh-crore.

In comparison, private life insurers grew by 24.7 percent in the same period, with their premium reaching Rs 98,213 crore.

SBI Life, ICICI Prudential Life, Max Life Insurance, and HDFC Life Insurance are the other top private life insurance firms. SBI Life Insurance increased its new business premium by 25 percent to Rs 22,613.4 crore this fiscal.

ICICI Prudential Life Insurance increased it by 18 percent to Rs 12,844.8 crore. Max Life Insurance increased it by 16 percent to Rs 6,510.75 crore, and HDFC Life Insurance increased it by 22.52 percent to Rs 21,136.7 crore.

On February 13, 2022, LIC had submitted draft documents with capital market regulator SEBI for the sale of a 5 percent stake in the government for an estimated Rs 63,000 crore, thus paving the way for India’s largest-ever IPO. The public offering was supposed to be launched in March.

According to a Reuters report, it now appears like it will be postponed until mid-April, as the stock markets are currently extremely volatile due to Russia’s invasion of Ukraine.

LIC’s business growth slowed dramatically in the March quarter of this fiscal. During January-February, the company’s new business premium was Rs 30,425 crore.

For the December quarter, the new business premium was Rs 40,902 crore. It was Rs 49,512 crore in the September quarter. This value was Rs 35,601 crore in the June quarter.

Even though the March figures have not yet been released, this is an unusual pattern for LIC, as life insurers normally record higher sales in the March quarter, with many clients purchasing insurance plans to avoid paying taxes.

LIC’s stronghold in the retail life segment, particularly in the high-ticket space may continue to erode as its business model remains unaltered over decades.

With the bank channel becoming increasingly important for savings product distribution and digital channels becoming important for retail protection, LIC may face challenges due to its reliance on the agency-led distribution system, a lack of bancassurance business, and a failure to transform itself to adapt to the rapid digitalisation of consumer-centric processes.

(Edited by : Jomy Jos Pullokaran)