LIC puts up robust show in FY22 ahead of public offering

NEW DELHI: Life Insurance Corp. of India’s (LIC) first-year premium collection, a key metric, rose 7.9% to ₹1.98 trillion for the year ended 31 March, data reviewed by Mint showed, boosting the prospects of the state-run insurer as the government gets ready to brave choppy markets to take the company public.

India’s largest insurer ended the year ended 31 March with a market share of 63.25%, lower than the previous year. However, in March, the company’s premium collections grew 51% to ₹42,319.22 crore from a year earlier, garnering a market share of 71%, the data showed.

The robust premium collections, particularly in March, will be a shot in the arm for the government as it prepares to sell shares of the insurance behemoth to the public for the first time.

A high-level committee is expected to meet this week to finalize the timing and the size of the initial share sale, a government official said, requesting anonymity. While the government can sell as much as 7.5% of LIC, it may decide to sell between 5.5% and 6.5%, depending on investor interest, another official had said earlier.

The country’s largest insurance provider sold 21.7 million insurance policies in the year ended 31 March, 3.54% more than the previous fiscal, boosting its market share to 74.6% in terms of policies sold. The data showed that about 4.9 million policies were issued in March alone, an increase of 4.88% from a year earlier and a market share of 81.2%.

The life insurance industry, on the whole, sold 29.15 million policies in FY22, of which 7.4 million were in March, with the lion’s share going to LIC.

While LIC’s individual single premium collections increased by 61% to ₹4,018.33 crore in March, group single premiums increased by 48.1% to ₹30,052.86 crore.

LIC did not respond to queries from Mint as of Wednesday.

The success of LIC’s IPO is crucial for the government to meet its asset sales goal, which has been cut to a modest ₹65,000 crore target for the current fiscal, lower than the revised ₹78,000 crore for the previous fiscal. The government could meet less than 17% of the revised asset sales target for FY22 as the Russian invasion of Ukraine, and the ensuing volatility in stock markets forced it to postpone the LIC share sale to this fiscal year. However, delaying the IPO beyond 12 May will mean that the government will have to include LIC’s December quarter financials and refile the prospectus.

Tuhin Kanta Pandey, the secretary for the department of investment and public asset management (Dipam), said last month at the Mint India Investment Summit 2022 that there is strong investor interest in the state-run company’s offer, but the Centre will proceed with the IPO only when it is confident of successfully listing the insurer.