All eyes on Dalal Street are on the upcoming mega initial public offering (IPO) of the Life Insurance Corporation of India (LIC). The proposed initial share sale of the state-run life insurance behemoth will be the largest the country has seen so far. The IPO, through which the government will likely raise Rs 21,000 crore by offloading 3.5 percent of its 100 percent stake, will likely hit the Street early next month.
LIC’s IPO is likely to take the top spot in terms of size from Paytm parent One97 Communications, whose Rs 18,300-crore share sale in November failed to attract the kind of investor response enjoyed by most primary market offerings in November 2021.
|Company||Size (in crore rupees)|
|New India Insurance||9,600|
LIC’s IPO comes amid intense competition in the industry, with the state-run company losing market share to private sector peers over the past few years.
Here’s a look at some of the biggest strengths, weaknesses, opportunities and threats for LIC:
|Brand name, vast portfolio, market share, inorganic growth, high disposable income||Highly competitive industry, lack of investment in tech, loss-making investments in past|
|Product portfolio expansion, ability to spend heavily on ads||Pandemic, assumptions may not materialize, interest rate fluctuations may affect profitability|
Here’s how LIC fares among peers on five key metrics:
LIC has a market share of more than 66 percent. However, it has been losing market share to private sector peers in the recent past.
LIC has the strongest network of agents in the country. As of March 2021, the state-run life insurer had more than 13.5 lakh agents across the country.
New premium business
A new business premium – or the premium acquired from new policies in a given period – is an important measure of profitability for insurance companies.
The solvency ratio indicates an insurer’s ability to meet its long-term debt obligations. An insurer with a high solvency ratio has more chances of meeting its policy-related liabilities.
Profit after tax