Insurance behemoth Life Insurance Corporation of India (LIC), which will be going public this financial year, has seen its new business premium crossing ₹1.5 lakh-crore milestone for the first time in its history.
The composite market share in terms of the number of policies and the first-year premium as of January-end was 77.61% and 70.02%, respectively, up from 73.54% in number of policies, and 66.26% in first-year premium, LIC Chairman M.R. Kumar said at a press conference.
LIC’s total income grew by 17.79% to ₹2.97 lakh crore as of September 2019 from ₹2.52 lakh crore a year ago, while total assets increased by 7.92% to ₹32.26 lakh crore as of September 2019 from ₹29.89 lakh crore.
Mr. Kumar cautioned that term insurance premium may go up in future.
“We have also been able to maintain increase in market share. On term cover, the way things are shaping up, the kind of stress that is there in the reinsurance business today, it is likely term cover rates may go up in future. We hope to maintain the rates... as of now.”
During the financial year 2018-19, the state-run insurer generated the highest valuation surplus of ₹53,214.41 crore, registering a growth of around 9.9% over the previous year and paid a dividend of ₹2,610.74 crore to the government.
In the Budget speech last week, Finance Minister Nirmala Sitharaman said the government would divest a part of its stake in the corporation through an initial public offering (IPO). Asked about the timing of the IPO, he said the government had indicated that it would happen in the second half of the financial year.
For the government to sell a part of its stake, the LIC Act needs to be amended since the Act mandates that the capital of LIC will be wholly subscribed by the Government of India. He also clarified gross non-performing assets were only to the tune of 1%, while net NPA ratio was around 0.04%.
Commenting on reports that LIC’s gross NPA was 6%, Mr. Kumar said, “For us most investments are in equity, government securities and a small part in corporate debt. The 6% is possibly in corporate debt. But overall, it is hardly 1% in gross. Since we made provisions, net is 0.04%.”
He also said policy holders need not worry about the IPO as the Centre had clarified that the sovereign guarantee would continue.
“There is no implication for policy holders. The Finance Minister has clarified that sovereign guarantee will continue. That being the case I don’t think there is anything to worry for the customer,” he said.
LIC has 29 crore policy holders and 12 lakh agents.
Asked how investment norms would change, he said, “We have not done the math. Generally, whether we are listed or not, we have to follow the same investment [norms].” He also said it was difficult to comment on the valuation of the company. “We haven’t done the math on valuation. We have to work it out. I can’t put a time to it.”
Interestingly, in October last, the LIC Chairman had said it was too early to go public.
Answering a query on what has changed between October and now, he said, in a lighter vein, “Perhaps, I have been overruled.”
