LIC IPO: Key Details To Look At Ahead Of May 4 Opening

India’s largest life insurer is set to launch its IPO on May 4. It will close on May 9.

<div class="paragraphs"><p>The Life Insurance Corp. of India logo on a smartphone in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)</p></div>
The Life Insurance Corp. of India logo on a smartphone in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Life Insurance Corp. will launch its initial public offering with a much-reduced size, after volatility in the stock market amid Russia-Ukraine conflict and foreign selling caused a drop in its valuation.

The May 4-9 IPO will comprise an offer for sale of 22.13 crore equity shares comprising 3.5% of the total share capital at a face value of Rs 10 apiece by the Government of India, the nation’s largest insurer said in its red herring prospectus filed with the Securities and Exchange Board of India on Tuesday.

That’s expected to fetch the government Rs 21,000 crore against Rs 70,000 crore projected from a 5% sale. The issue price band is Rs 902-949 apiece, at the upper end of which the company will be valued at Rs 6 lakh crore.

Anchor investors can place bids on May 2.

10% of the LIC IPO is reserved for policyholders and they will get a discount of Rs 60 per share on the issue price. Retail bidders and employees will be granted a discount of Rs 45 apiece.

LIC’s embedded worth—a key valuation metric—was at pegged at Rs 5.4 lakh crore as of December-end, the prospectus said.

The issue will be managed by 10 book-running lead managers—SBI Caps, Kotak Mahindra Capital, ICICI Securities, Axis Capital, JM Financial, Goldman Sachs, JPMorgan, Citigroup, Nomura, and Bank of America Securities.

LIC IPO: Volatility May Be A Drag On India’s Largest Insurer’s Embedded Value


The state-owned insurer reported an after-tax profit of Rs 1,715.3 crore in the nine months through December 2021. Its revenue stood at Rs 5.1 lakh crore. It has an investment of Rs 38.4 lakh crore towards policyholders’ funds and the company is debt-free as on Dec. 31.

The 13th and 61st month persistency ratios by premium stood at 76.84% and 61.91%, respectively, as on Dec. 31. The solvency ratio stood at 177%, well above the minimum requirement of 150%. It earned an investment yield of 7.26% for April-December.

LIC’s gross and net non-performing asset ratios stood at 6.32% and 0.04%, respectively, on Dec. 31.

LIC saw its value of new business margin slip to 9.3% at the end of H1 FY22 from 9.9% in FY21. The VNB margins are the lowest among all listed peers.

LIC IPO: Embedded Value To Persistency Decoded — BQ Explains

Fact Sheet

LIC has an omnichannel distribution network. As on Dec. 31, 2021, it had:

  • 0.13 crore individual agents. This was 6.8 times the number of individual agents of the second-largest life insurer by agent network.

  • 70 bancassurance partners (comprising eight public sector banks, five private sector banks, 14 regional rural banks, 42 cooperative banks, one foreign bank).

  • 215 alternative channel partners (comprising 63 insurance marketing firms, 83 brokers, 69 corporate agents).

  • One portal on LIC’s website for digital sales.

  • 2,128 micro-insurance agents.

  • 4,769 point of sales persons - life insurance scheme.

  • 2,048 branch offices and 1,559 satellites office in India.

  • In fiscal 2019, fiscal 2020, fiscal 2021 and nine months ended Dec. 31, 2021, LIC’s individual agents contributed 96.69%, 95.73%, 94.78% and 96.20% of its new business premium for its individual products.

  • LIC has a presence across India and distributes its policies in all states, covering 91% of districts in India as compared to 81% for the entire private sector combined.

  • It had 2,390 offices located in tier 3 and tier 4 centres as on March 31, 2021, and 177 offices located in tier 5 and tier 6 rural-centres.

  • LIC’s rural individual share new business as per percentage of its total individual new business in India was 20.76% in policies, 20.19% in number of lives, 13.06% in new business premium and 14.80% in sum assured for nine-months through December.

  • LIC’s mobile app for policyholders had more than 5.13 million registered users.

  • It spent Rs 177.4 crore, Rs 424.4 crore, Rs 361.4 crore and Rs 137.3 crore on information technology on a standalone basis in FY19, FY20, FY21 and the nine months ended Dec. 31.