LIC is the largest insurance provider company in India
market share of above 66.2% in new business premium.
insurance products and non-participating products
unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity & pension products.
total AUM of Rs. 39 lakh crore
Key positive factors
LIC is a part insurance and part investment products company
13.5 lakh agents, high trust, LIC is synonymous with insurance in India.
AUM-39 lakh crores, more money than the entire mutual fund industry combined, own 4% of all listed stocks in India, more government bonds than the RBI.
issue size is reduced to Rs 21,000 crore then definitely valuations will become better as compared to previous one
valuation will come at 1.1x of embedded value which looks reasonable
What is the meaning of embedded value?
Definition: Embedded value is the sum of the net asset value and present value of future profits of a life insurance company.
Key challenges
poor new policy growth- losing market share to private insurance players -especially in urban areas.
margin in insurance + investment products is low.
difficult to value LIC
The company said its earnings per share (EPS) stood at Rs 4.70 per share in FY21
command a valuation of 202 times its earnings. The average PE of the life insurance industry is 80.
it should not be a bother as the company is a leader in the industry with a dominant market share, thus it commands a premium.
growth prospects for the industry are also good.
Even globally, the issue is more expensive than its peers. An Insurance and China Life Insurance – two of the biggest insurers in the world – trade at 0.54x and 0.21x embedded value. Even their PE ratios are in single digits.
IPO Details
Date 4 to 9 May
902-949 price
15 share
21,008.48Cr – ofs
Retail- discounts – 45, Employee-45, policy holder 60 Rs 889 (Rs 60 discount)
Results-12-13 may , Listing 17th May
Post Issue Share Holding 96.50%
Conclusion: positive from the long-term perspective.
LIC to maintain its market leadership position backed by robust business traction
the structural story for the life insurance industry remains intact as uncertainties during the pandemic have highlighted the benefits of life insurance.”
GMP -62 949-1011 -6.53%
LIC : Anchor book in Rs 21,000 crore LIC IPO gets fully subscribed
Domestic mutual funds invest Rs 4,002 crore in LIC IPO’s anchor quota
strategic sale of 3.5% in the insurer. The total number of shares offered in the IPO is 22.10 crore equity shares.