| Issue Size – 221,374,920 shares | Issue Open/Close – May 04/May 09, 2022 |
| Price Band (Rs.) 902-949 | Issue Size- Rs 195.17- 205.57 bn |
| Face Value (Rs.) 10 | Lot Size (shares) 15 |
| Discount Detail: Retail Category Rs.45/ per share. LIC Employees Rs.45/ per share. LIC Policyholders Rs.60/- per share. |
LIC is the largest insurance provider company in India. It has a market share of above 66.2% in new business premium. The company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products.
The Corporation is the largest asset manager in India as of December 31, 2021, with an AUM (comprising policyholders’ investment, shareholders’ investment, and assets held to cover linked liabilities) of Rs. 40.1 trillion on a standalone basis. LIC operates through 2048 branches, 113 divisional offices, and 1,554 Satellite Offices.
It operates globally in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.
It has a broad, diversified product portfolio, which is covering various segments across individual products and group products.
Individual products comprise:
(i) participating insurance products
(ii) non-participating products, which include – (a) savings insurance products; (b) term insurance products; (c) health insurance products; (d) annuity and pension products; (e) unit-linked insurance products. individual products include specially designed products for specific segments, such as special products for women and children and Micro Insurance products.
Corporation’s individual product portfolio in India comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual riders.
Table Of Content:
Key Highlights of LIC
- Fifth largest life insurer globally by GWP:
LIC is ranked 5th globally in terms of life insurance Gross Written Premium (GWP) (comparing LIC’s life insurance premium for Fiscal 2021 to its global peers’ life insurance premium for 2020), and 10th globally in terms of total assets (comparing LIC’s assets as at March 31, 2021, with assets of other life insurers as at December 31, 2020).
LIC is the largest life insurer in India in terms of GWP, NBP, number of individual policies issued, and number of group policies issued for Fiscal 2021 and the 9 months ended December 31, 2021. - Trusted brand and a customer-centric business model:
The brand ‘LIC’ was recognized as the third strongest and 10th most valuable global insurance brand in 2021, as per the “Insurance 100 2021” report released by Brand Finance.
The trust in the brand ‘LIC’ is evidenced by the 279.11 million in-force policies under individual businesses being serviced in India as of December 31, 2021. - Cross-cyclical product mix:
The Corporation has a broad, diversified product portfolio covering various segments across individual products and group products. The Corporation’s individual product portfolio in India comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits.
The Corporation is well placed to serve customers across age brackets with a comprehensive product portfolio while maintaining a strong connection across age groups. - Largest asset manager in India:
The Corporation is the largest asset manager in India as of December 31, 2021, with an AUM (comprising policyholders’ investment, shareholders’ investment, and assets held to cover linked liabilities) of Rs.40.1 trillion on a standalone basis, which was (i) more than 3.2 times the total AUM of all private life insurers in India, (ii) approximately 15.6x more than the AUM of the second-largest player in the Indian life insurance industry in terms of AUM, (iii) more than 1.1x the entire Indian mutual fund industry’s AUM and (iv) 17.0 pct of India’s estimated GDP for FY22.
As per the CRISIL Report, as of December 31, 2021, the Corporation’s investments in listed equity represented around 4 pct of the total market capitalization of NSE.
As of December 31, 2021, on a standalone basis, LIC’s Investment portfolio included 38.09 pct central government securities, 24.56 pct equity securities, 24.25 pct state government securities, and 8.35 pct corporate bonds.
As of December 31, 2021, 95.90 pct of LIC’s debt AUM on a standalone basis was invested in sovereign and AAA-rated securities. - Insurance sector outlook: The share of financial assets as the proportion of net household savings to increase from Fiscal 2020 to Fiscal 2025, thereby boosting investments in assets such as insurance and mutual funds.
Also Read: New Age IPO Post Market Correction
Key Risks Of LIC
- LIC has trusted brand for decades. Any loss of reputation in a brand can affect business.
- LIC has poor new policy growth as they continue losing market share to private insurance players, especially in urban areas.
- The margin in insurance and investment products is low.
Valuation of LIC
India’s life insurance industry is expected to grow rapidly, owing to a relatively underpenetrated market and expanding awareness, which presents a multi-year growth potential. LIC is the largest insurance company in India and the 5th largest insurer globally by Gross Written Premium (GWP).
Its brand name, years of experience in risk underwriting and managing a large AUM, and unique business model supported by phygital strategies indicate that it would see a good growth going forward.
It is valued reasonably as compared to its peers. At the upper end of the price of the band of Rs 949, the issue is quoted at 1.1x its embedded value. Its listed life insurers peers namely SBI Life, HDFC Life, and ICICI Prudential embedded value are between 2.4x to 4.05x.
With its investor-friendly move with a discount to its pillars i.e. policyholders as well as retail investors, the issue has now turned more attractive. An investor can opt for the issue from a medium to long-term perspective.
Comparison with Listed Peers FY21 (Consolidated as of 31st March 2021)
| Name of the Company | Total Premium (Rs.bn) | Net Worth (Rs.bn) | Net Profit (Rs.bn) | EPS (Basic) | NAV (Rs.) | RoNW (%) | Market Cap (Rs.bn) | Embedded Value (Rs.bn) | Marketcap to IEV (x) |
| Life Insurance Corporation of India | 4059 | 65 | 30 | 4.7 | 10.3 | 45.65 | 6002* | 5,396 | 1.1 |
| SBI Life Insurance Co. | 503 | 104 | 15 | 14.55 | 103.99 | 14.00 | 1106 | 302 | 3.7 |
| HDFC Life Insurance Co | 386 | 86 | 14 | 6.74 | 42.75 | 15.75 | 1230 | 295.4 | 4.2 |
| ICICI Prudential Life Insurance Co. | 357 | 91 | 10 | 6.66 | 63.51 | 10.48 | 756 | 302 | 2.5 |
How To Apply For LIC IPO?
As there are two different ways to apply for the LIC IPO, that is via Online Banking or UPI, the application process keeps changing with the changing platform.
However, the basic process continues to remain quite similar on all the platforms.
If You Wish To Apply Online, You Must;
– Log in to your net-banking account
– Select the IPO/e-IPO option from the investment section
– Click the LIC IPO
– Select the appropriate category Eg. Policyholder, Employee, Retail, etc.
– Enter the number of shares you wish to buy and the “bid price”.
– Before placing your bid, we recommend you carefully read the “Terms and Conditions”.
– Once confirmed, you need to confirm and place your order by clicking on “Apply Now”.
If you wish to apply through the UPI process, you can apply via the NCPI-approved and BHIM-enabled UPI apps of banks like State Bank Of India, HDFC Bank, Bank Of Baroda, Axis Bank, AU Small Finance Bank, IDBI Bank, IndusPay, DLB and Bandhan Bank.
Above all, you can also apply for LIC IPO using UPI Apps like Google, Paytm and MobiKwik.
LIC IPO For Retail Investors –
The retail investors can participate in approx. 35% of the issue size and can place a maximum bid of Rs. 2 Lakhs. Retail investors are eligible to get a discount of Rs. 45 per share.
LIC IPO For LIC Policyholders –
All the LIC policyholders holding one or more policies are eligible to get a discount of Rs. 60 per share and they can apply for shares under the policyholder reservation portion valuing not more than Rs. 2 Lakhs. Also, the average reservations for eligible policyholders must not exceed 10% of the offered size.
Moreover, in order to submit their application under the policyholder reservation portion, all policyholders are required to get their PAN Cards updated in the company’s policy records and their Demat account should also be linked to the same PAN.
LIC IPO For LIC Employees –
The existing LIC Employees are eligible to get a discount of Rs. 45 per share. All employees can apply for shares reserved for employees, wherein the maximum limit for each employee is Rs. 2 Lakhs. Also, the reservation for eligible employees must not exceed 5% of the total offer.
LIC IPO For HNI Investors –
While the maximum investment limit for other investors is Rs. 2 Lakhs, HNI investors are allowed to invest up to Rs. 5 Lakhs in the LIC IPO.
LIC IPO For NRI Investors –
NRIs and other Indians residing abroad who are willing to apply for the IPO can do so via the Retail Investors Bidder (RIB) route. But this way will limit their bid to just Rs 200,000.
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