LIC IPO Day 2:Issue subscribed 1.03 times
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 1.03 times, receiving bids for 16.68 crore equity shares against offer size of 16.2 crore equity shares on May 5, the second day of bidding.
The portion set aside for policyholders portion has subscribed 3.11 times, staff 2.21 times, and retail investors subscribed 93 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 47percentof their portion.
Motilal Oswal Highlighted Risks and Concerns
Adverse variation in persistency metrics could have a material effect on LIC’s financial performance
Change in regulations could adversely impact business
LIC is highly dependent on individual agents. If LIC is unable to retain and recruit individual agents on a timely basis and at reasonable cost, there could be a material adverse effect on its operations.
If actual claims experienced and other parameters are different from the assumptions used in pricing its products and setting reserves for its products, it could have a material adverse effect on LIC business.
A significant proportion of LIC’s total new business premiums are generated by participating products and single premium products, and any significant regulatory changes or market developments that adversely affect sales of such products could have a material adverse effect on its business.
LIC IPO Live Updates:Issue subscribed 1.02 times
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 1.02 times, receiving bids for 16.48crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 3.07 times, staff 2.2 times, and retail investors subscribed 92 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 47 percentof their portion.
Trends in Indian life insurance industry
Life insurance coverage has increased appreciably The total sum assured under the individual life insurance business was Rs 170.5 lakh crore for FY21 in India, which is around 89 percentof India’s GDP. The sum assured for individual insurance has increased at 15.7 percentCAGR in FY16-20.
The total number of individual policies in force was 33.2 crore in FY21 of which the number of individual new policies issued was around 2.8 crore in FY21.
LIC IPO Live Updates:Issue subscribed 101 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 1.01 times, receiving bids for 16.29crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 3.03 times, staff 2.15 times, and retail investors subscribed 91 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 46percentof their portion.
Subscription Details
LIC Has Robust Risk Management Framework
LIC has a risk management framework where risk identification, measurement, and mitigation are undertaken through structured procedures and various Board-approved policies and controls. It has an enterprise risk management (“ERM”) cell with the Chief Risk Officer heading the cell and a team of officers supporting him at different levels.
LIC proactively manages its financial risks through diversification of investment portfolio across asset classes, regular monitoring of interest rates to address market volatility, stress and resilience testing of the investment portfolio, matching of assets and liabilities on a quarterly basis at the line of the business level where line of business liabilities account for over 5 percentof total liabilities, conservative management of reserves, and proactively reviewing the business mix to maintain alignment with customer needs and preferences.
LIC’s large, geographically diversified customer base and a participating product dominated portfolio serve as a natural hedge. The company’s lower policy ticket sizes reduces volatility. (Source: KRChoksey Research)
LIC IPO Live Updates:Issue fully subscribed
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has fully subscribed, receiving bids for 16.24crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 3.02 times, staff 2.14 times, and retail investors subscribed 91 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 46percentof their portion.
Projected growth in new business premium
LIC Enjoys Healthy Operating Metrics
LIC’s operating metrics are largely comparable to private players. LIC’s operating expense ratio in FY21 was 8.7 percent while for private players it is 12.6 percent. Total cost ratio for LIC in FY21 was 14.2 percent while it is 16.9 percentfor private players. LIC’s persistency ratio is in-line with private players, said KRChoksey Research.
LIC IPO Live Updates:Issue subscribed 98 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 98 percent, receiving bids for 15.81 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.92 times, staff 2.08 times, and retail investors subscribed 88 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 45 percentof their portion.
Globally Life insurance real premium growth
LIC Management
Mangalam Ramasubramanian Kumar is the Whole-time Chairperson of LIC. He joined LIC in the year 1983 and has experience in the insurance sector. Previously, he was the zonal manager of South, North-Central and North zones of LIC and has also headed the personnel and pension & group schemes department.
Pankaj Jain is a Government Nominee Director of the Corporation and is an officer at the Indian Administrative Service from the 1990 batch. He is presently serving as a secretary in the Ministry of Petroleum, Government of India. He is a qualified cost accountant from the Institute of Cost Accountants of India and a member of the International Financial Services Centres Authority.
Raj Kumar is the Managing Director of the Corporation. He joined the Corporation in the year 1984 as an apprentice officer and has experience in the insurance sector. He has also served as the chief executive officer of LIC Mutual Fund Asset Management Limited.
Siddhartha Mohanty is the Managing Director of the Corporation. He holds bachelor’s degree in law and a master’s degree of arts (political science) from Utkal University, Bhubaneswar, Odisha. He previously served as COO and CEO of LIC Housing Finance Limited and has held various other key positions.
Ipe Mini is the Managing Director of the Corporation. She holds master’s degree of commerce from the Faculty of Commerce and Management Studies, Andhra University. Previously, she was also the shareholder director of Central Bank of India.
Bishnu Charan Patnaik is the Managing Director of LIC. He joined LIC in the year 1985 and has experience in the insurance sector and has handled several positions in LIC.
Dr Ranjan Sharma is the Independent Director of LIC. He is experienced in the field of academics.
Vinod Kumar Verma is the Independent Director of LIC. He is experienced in electronics business. He is an Independent Director of LIC from October 29, 2021. (Source: Angel Broking)
LIC IPO Live Updates:Issue subscribed 97 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 97 percent, receiving bids for 15.65 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.89 times, staff 2.05 times, and retail investors subscribed 87 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 44 percentof their portion.
Life Insurance Industry Overview
Based on life insurance premium, India is the tenth largest life insurance market in the world and the fifth largest in Asia, as per Swiss Re. The size of the Indian life insurance industry was Rs 6.2 lakh crore based on total premium in FY21, up from Rs 5.7 lakh crore in FY20.
The industry’s total premium has grown at 11 percent CAGR in the last five years ending in FY21. New business premiums (NBP) grew at 15 percentCAGR in FY16-21 to around Rs 2.78 lakh crore.
In FY21 – a year impacted by the Covid- 19 pandemic, the new business premium (NBP) of the industry rose 7.5 percent. Within NBP, group business premium grew at around 15.4 percentCAGR in FY16-21, whereas individual premium rose around 14 percentCAGR during the same period.
Types of Life Insurance products, by product and customer type
LIC IPO Live Updates:Issue subscribed 96 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 96 percent, receiving bids for 15.50 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.86 times, staff 2.02 times, and retail investors subscribed 86 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 43 percentof their portion.
LIC's discounted valuations to listed peers provide comfort, says Angel Broking
At the upper end of the price band the LIC IPO is offered at Price/EV (embedded value) of 1.1x as compared to other listed players which are trading at multiples of 2.5-4.3x Sep’21 EV. Though there are concerns over LIC regarding market share loss in the individual product business and low margins, we believe that valuations factor in most of the negatives.
Expected improvements in product mix and greater transfer of surplus over the coming years are expected to drive profits from current low levels which along with cheap valuations provide comfort. Key risk to the thesis is continued market share loss in the high margin individual business and continued high contribution from low margin PAR and group insurance business.
LIC's omni-channel distribution network – mainly led by individual agents
LIC IPO Live Updates:Issue subscribed 95 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 95 percent, receiving bids for 15.40 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.85 times, staff 2times, and retail investors subscribed 86 percent, while QIBsbid for 40 percent shares of their allotted quota and NII lapped up 42 percentof their portion.
LIC Business
LIC IPO Live Updates:Issue subscribed 93 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 93 percent, receiving bids for 15.01 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.83 times, staff 1.97 times, and retail investors subscribed 85 percent, while QIBsbid for 35 percent shares of their allotted quota and NII lapped up 39percentof their portion.
Read These Key Ratios Before Subscribing LIC IPO
Read These Key Ratios Before Subscribing LIC IPO
ASBA Designated Branches To remain open on Sunday for LIC IPO
The Government of India, in order to facilitate bidding for LIC IPO, has requested that all bank branches designated to process ASBA (Application Supported by Blocked Amount) applications may be kept open for public on May 8, 2022 (Sunday). The matter has been examined and it has been decided that banks may keep all their ASBA designated branches open on May 8, 2022 (Sunday) for the above purpose.
LIC IPO Live Updates:Issue subscribed 92 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 92 percent, receiving bids for 14.93 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.81 times, staff 1.96 times, and retail investors subscribed 85 percent, while QIBsbid for 35 percent shares of their allotted quota and NII lapped up 39percentof their portion.
LIC IPO subscription remains open on Sunday as well
Life Insurance Corp India's initial public offering will open for subscription even on Sunday, a National Stock Exchange notification said.
Earlier exchanges informed that the issue will open for Saturday also.The IPO which kicked off on 4 May will open until 9 May, NSE circular said.
LIC IPO Live Updates:Issue subscribed 91 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 91 percent, receiving bids for 14.73 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.79 times, staff 1.93 times, and retail investors subscribed 84 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 38percentof their portion.
LIC's Post Issue Shareholding
LIC's Key Business Strategies
LIC intends to capitalize on the growth opportunities in the Indian life insurance sector
Country's largest life insurer wants to further diversify the product mix by increasing the contribution of the non-participating portfolio
The state-owned entity intends to reinforce omni-channel distribution network and increase its productivity
The company wants to continue leveraging technology to aid growth, drive operating efficiencies and provide digital support
LIC intends to maximize value creation through various commercial and financial levers as well as changes to Corporation’s surplus distribution policy
LIC IPO Live Updates:Issue subscribed 90 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 90 percent, receiving bids for 14.51 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.75 times, staff 1.89 times, and retail investors subscribed 83 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 37percentof their portion.
Life Insurance Industry Penetration for different Economies as on CY20
Product Mix Comparison Across Players
LIC IPO Live Updates:Issue subscribed 89 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 89percent, receiving bids for 14:34 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.71 times, staff 1.85 times, and retail investors subscribed 82 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 36percentof their portion.
LIC Valuations
LIC IPO Subscription Live
Sneak peek into Indian life insurance players
LIC IPO Live Updates:Issue subscribed 87 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 87 percent, receiving bids for 14.03crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.64 times, staff 1.82 times, and retail investors subscribed 80 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 35percentof their portion.
LIC IPO At a Significant Discount To Listed Peers, says Angel Broking
Key Financials
LIC IPO Live Updates:Issue subscribed 86 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 86 percent, receiving bids for 13.91crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.61 times, staff 1.8 times, and retail investors subscribed 79 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 35percentof their portion.
Indian life insurance market is still underinsured compared to major economies
India’s life insurance penetration stood at 3.2 percentin CY20 compared to the global average of 3.3 percent. Among Asian countries, life insurance penetration in Thailand, South Korea and Singapore were at 3.4 percent, 6.4 percent, and 7.6 percent, respectively, in CY20.
The penetration of the Indian industry is not comparable to developed markets, such as the United States and Australia, where mandatory pension contributions are not included in the insurance pie. India’s protection gap was $16.5 trillion as of CY19, which was much higher compared to its Asian counterparts. The protection gap for India was 83 percentas of CY19, the highest amongst all countries in Asia-Pacific, as per the Swiss Re report “Closing Asia’s Mortality Protection Gap – July 2020. (Source: KR Choksey)
Consider These Key Risks & Concerns Before Subscribing to LIC IPO
>> Adverse variation in persistency metrics could have a material adverse effect on financial condition
>> Interest rate fluctuations and volatility in capital markets may adversely affect profitability
>> There is significant technical complexity involved in embedded value calculations and the estimates used in the embedded value reports could vary materially if key assumptions are changed.
LIC IPO Live Updates:Issue subscribed 85 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 85 percent, receiving bids for 13.74 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.58 times, staff 1.76 times, and retail investors subscribed 78 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 34 percentof their portion.
Global Positioning Of LIC
LIC IPO Valuations
Considering the September 2021 embedded value(EV) of Rs53,96,860 million, the company is going to list at a price/EV of 1.1 x with a market capitalisation of Rs60,02,423 million whereas its peers namely HDFC Life and SBI Life are trading at P/EV of 4.0x and 3.0x, said Marwadi Financial Services.
The brokerage has assigned “subscribe” rating to this IPO as LIC is the largest life insurer in India and a trusted brand with an established track record of financial performance and profitable growth. Also, it is available at reasonable valuation as compared to its peers.
LIC IPO Live Updates:Issue subscribed 84 percent
The initial public offering of country's largest life insurance company Life Insurance Corporation of India has subscribed 84 percent, receiving bids for 13.57 crore equity shares against offer size of 16.2 crore equity shares.
The portion set aside for policyholders portion has been subscribed 2.55 times, staff 1.74 times, and retail investors subscribed 77 percent, while QIBsbid for 34 percent shares of their allotted quota and NII lapped up 33 percentof their portion.
Market Share of LIC
Expert's Take on LIC IPO
"ThisIPOis expected to be a milestone event in the capital markets not just with the issue size but also with the number of demat accounts that will be opened during this period,"GirirajanMurugan, CEO ofFundsIndia said.
He further said what the investorswouldlook before investing in theLICIPOwould be- Penetration ofLICin markets untouched by the private insurance players, being a first mover in the Insurance play in IndiaLIChas this upper hand and it continues to lead the space with its far reach of network both through agents and branches. "We are positive on thisIPO."
LIC IPO Live Updates:Issue subscribed 83 percent
Issue subscribed 83 percent:policyholders portion subscribed 2.52 times, staff 1.68 times, retail investors subscribed 76 percentof their allocated portion, QIBs34 percentand NII lapped up 33 percentof their portion.
