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 QIBs bid for 40 percent shares of their allotted quota and NII lapped up 47 percent of 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 16.48 crore 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 QIBs bid for 40 percent shares of their allotted quota and NII lapped up 47 percent of their portion.
Trends in Indian life insurance industryLife 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 percent of India’s GDP. The sum assured for individual insurance has increased at 15.7 percent CAGR 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 16.29 crore 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 QIBs bid for 40 percent shares of their allotted quota and NII lapped up 46 percent of 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 percent of 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 16.24 crore 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 QIBs bid for 40 percent shares of their allotted quota and NII lapped up 46 percent of 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 percent for 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 QIBs bid for 40 percent shares of their allotted quota and NII lapped up 45 percent of their portion.
Globally Life insurance real premium growth
