Mumbai:,
The IPO-bound Life Insurance Corporation (LIC) on Friday said its new business premium has crossed the Rs 1.5 trillion mark for the first time, helping the national insurer improve market share to 77.61 per cent.
Speaking to media on the proposed government's plans to disinvest in LIC's via initial public offer (IPO) , chairman MR Kumar said.that, there are lot of figures floating around the market capitalization and size of IPO.
“We have not done the maths. Unless we do our internal discussion and maths, I dont think we would be able to answer that today. Valuations has to be reasonably, scientifically and lot of work has to be done,”he said.
Kumar said that, there are lot of figures floating around the market capitalization and size of IPO.
“We have not done the maths. Unless we do our internal discussion and maths, I dont think we would be able to answer that today. Valuations has to be reasonably, scientifically and lot of work has to be done,”he said adding that he said going ahead the corporation will focus on the issues of transparency and valuation..
Kumar told media that he will be meeting the government officials soon to discuss about the forthcoming IPO.
The IPO which was announced by finance minister Nirmala Sitharaman while presenting the Budget 2020, is likely to hit the market in the second half of the current fiscal.Sitharaman said government wants to raise around Rs 90,000 crore from its disinvestment plans in IDBI, where it holds 46 per cent and LIC, where it has 100 per cent stake and may offload 10-12 per cent of its holding.
The corporation's total income grew by 17.79 per cent to Rs 2,97,017.28 crore as of September 2019 from Rs 2,52,149.60 crore a year ago, Total assets of the corporation increased by 7.92 per cent to Rs 32,25,905.42 crore as of September 2019 from Rs 29,89,276.53 crore, he added.
According to the senior officials, LIC has booked profits of over Rs 23,000 from equities till Jan 31, 2020 .
Tthe life insurance behemoth purchased 46,850.33 crore in equities till January this financial year as compared to Rs 59,115.67 crore seen in last financial year.
However, he said going forward the Corporation will focus on the issue of transparency and build up valuation.
Kumar said that there lies no room of uncertainty for corporation's policyholders and the employees as the sovereign guarantee will continue for the LIC's business even after divestment of-government stake.
“We will be talking to our employees and this IPO will not lead to privatisation of the insurer.Economic Affiars Secretary has already clarified that thedisinvestment has nothing to do with privatisation and government will divest part of their holding in LIC. There are many PSU banks, and even New India Assurance and GIC Re is listed, but they continue to be government entities,” added Kumar.
He also said that there is no problem for staff or the employees they will continue to be with the LIC, which is more or less wholly controlled by the government.
Talking about Section 80 (C) of Income Tax Act, which provides tax incentive to the customers on buying life insurnace products,he said that even if the option of tax incentive for buying insurance product is withdrawn from LIC products,it won:t have much impact on LIC:s business.
Kumar said that the.Corporation going forward will focus on non-single premium and will launch new ULIP products within next 2.3 weeks that will sold aggressively. The corporation has reducedf the premium price of its term insurance plans.
On its online sales, the chairman said the Corporation's Customer Portal has 1,33,78,231 users. To increase its online presence, it launched a chatbot called LIC Mitra early January 2020.
Talking about IDBI Bank in which LIC currently owns 51 per cent of stake he said that the bank has already collected premium worth Rs 500 crore through its branches for LIC so far.
LIC is also planning to reduce its stake in IDBI Bank over the period of time and not wait for 12 year timeline given by The Reserve Bank of India (RBI) to bring down its stake from 51% to 15%.
“We have 51 per cent stake, government have also announced in this year budget that there is some disinvestment going to happen from the government's side. Time line to bring down the stake to less than 51 per cent has not yet fixed by Irdai yet. However, though the RBI has given the 12 year period, we may not want to wait for that long, specially if we are also going to be listed.”
“He also added that, once the bank comes out of PCA and start lending the profitability will go up substantially.
Speaking on the high non-performing assets (NPAs) in the insurance company LIC Chairman said, “If we you look at stress if any of the banks it is quite different from of which we have in insurance companies. While for banks most of it is a corporate debt, for us most of our investments comprises of government securities, equity and small portion of corporate debt. This 6% is part of corporate debt, but if you look overall its hardly 1% and we make provisions for everything.” According to the annual report of LIC 2018-19, the gross non-performing assets was 6.15%.
LIC saw its first year individual new business at Rs 45,199 crore in the period between April-January, 2020 as against Rs 38,474.56 crore for the corresponding period last year a growth of 17.48%.
The milestone was led by first year individual new premium, which as of January has expanded by 17.48 per cent, while the number of new policies sold jumped 29.42 per cent to Rs 45,199 crore, taking the total policies sold to 1,95,85,635, the chairman said.
The composite market share in terms of the number of policies and the first-year premium as of January end stood at 77.61 per cent and 70.02 per cent, respectively, which has increased from 73.54 per cent in number of policies and 66.26 per cent in first-year premium, the chairman said.
The pension and group schemes vertical, which looks after the group schemes and superannuation business of the Corporation, has created a new record by clocking over Rs 1 lakh crore in new premium income so far during the current financial year.
This vertical has contributed Rs 1,05,566 crore as new business premium income as against Rs 66,748 crore in the previous year. The vertical has covered 2.45 crore lives as of January under its social security schemes.
During the current fiscal year, LIC has paid 1,42,93,289 maturity claims amounting to Rs 69,748 crore as of end January, Kumar said, adding the Corporation also settled 5,99,881 death claims amounting to Rs 9,866 crore, of which 96.83 per cent claims which were non-early death, were settled within 15 days of intimation.
To comply with new Irdai regulations, LIC has modified its existing products with new features such as revised surrender value and extension of revival period from two years to five years.
During FY2018-19, LIC generated the highest valuation surplus of Rs 53,214.41 crore, registering a growth of around 9.9 per cent over the previous year and paid a dividend of Rs 2,610.74 crore to the government, again the highest in history.