LIC DRHP filing today
Govt may dilute 5% stake; Size of LIC IPO likely to be Rs50,000 cr
image for illustrative purpose
Key things to know
• LIC is the 3rd largest life insurance company globally
• It offers highest RoE (82%) compared to global peers
• With a gross written premium of $56.405 bn, LIC's mkt share is unparalleled globally
• LIC is the largest asset manager in India with managed assets worth Rs 36.8 trn
Mumbai: The much-awaited draft red herring prospectus (DRHP) of Life Insurance Corporation of India (LIC) is likely to be filed with the capital markets regulator, Sebi by DIPAM on February 10.
Though, nothing has been declared officially by DIPAM about the size of the OFS, it is speculated that the government may dilute five per cent of its stake in the insurance behemoth. If it happened so, then in that case the size of the LIC IPO is likely to be Rs 50,000 crore.
The IPO-bound national insurer Life Insurance Corporation (LIC) is not only the world's largest when it comes to home-market share with over 64.1 per cent of the total gross written premium as of 2020 but also the one that offers the highest return on equity at 82 per cent, apart from being the third largest in terms of life insurance premium, says a Crisil report. LIC is the market leader in this metric as well generating Rs 1.2 trillion of net cash as of FY21, which is more than 4 times the net cash added by the second-best player in this metric- SBI Life generating Rs 283 billion in the same fiscal.
While for LIC the market share has been steadily declining - down from 100 per cent in the pre-2000 era to 71.8 per cent in 2016 and further down to 64.1 per cent in 2020, for SBI Life, which is the second largest in the country, the same was only 5 per cent in 2016 and 8 per cent in 2020, Crisil said in a report prepared in November 2021.
At 64.1 per cent or with a gross written premium (GWP) of $56.405 billion, LIC's market share is unparalleled globally, with no other life insurer anywhere else enjoying such a high market share, says the report.
It attributed this to the Corporation's enormous agent network of 1.35 million individual agents as of March 2021 accounting for 55 per cent of the total agent network in the country and was 7.2 times the numbers of agents of the second largest life insurer SBI Life has, strong track record, immense trust in the LIC brand and its over 65 years of lineage.
Market share elsewhere, the Chinese market is dominated by Ping An Insurance and China Life Insurance, with 21 per cent (GWP at $74.13 billion) and 20 per cent $69.65 billion). The largest Japanese player Nippon Life's market share is only 16.2 per cent ($39.84 billion).
