IPO hard sell: LIC boasts of Rs 37-trillion AUM before overseas investors

Ahead of its initial public offering (IPO), Life Insurance Corporation of India’s (LIC’s) top management is impressing upon potential global investors the scale and size of the insurance behemoth that trumps the size of many economies in the world.

At a closed-door meeting with global investors, the largest asset manager in the country boasted of its nearly Rs 37 trillion assets under management (AUM) — 16.6 times that managed by the second-largest insurer SBI Life.

The numbers are as of March 31, 2021.

The assets of LIC are 1.2 times the net assets of the entire Indian mutual fund industry, which had AUM of Rs 31.43 trillion as of March 31, 2021 (about Rs 37.3 trillion until November this year).

The standalone assets that LIC manages are equal to 18.7 per cent of India’s GDP and worth more than gross domestic product (GDP) of the UAE, Bangladesh, Malaysia, Singapore, Hong Kong, South Africa, New Zealand, and Pakistan.

LIC, the single-largest holder of stocks in the country, holds shares worth 4 per cent of total market cap of companies listed on the National Stock Exchange — which the management highlighted in its presentation, according to sources.

LIC remained the only life insurance provider in the country from 1956 (the year of incorporation) to 2000.

This resulted in a strong brand presence, making it synonymous with the life insurance segment itself, the management said.

The strong brand and an early-mover advantage are the key drivers in maintaining a leadership position, and as of March 31, 2021, LIC was servicing 286 million policies.

According to Brand Finance, LIC’s brand is valued at $8.66 billion, with a brand strength index (BSI) score of 84.1 out of 100 in 2021, with a corresponding AAA– brand strength rating.

LIC is the second most valuable brand in India, after Tata Group; the insurer was recognised as the third strongest and the 10th most valuable global insurance brand in 2021 by the Brand Finance ranking.

The management also assured potential investors of its strong corporate governance framework, with its “multi-layered supervisory structure from the government, the board and its sub-committees, the central management committee, and policyholders council”.

The management team has more than 35 years of working experience in key areas which is a “key competitive advantage”, it said.

The largest insurance company has also a revamped information technology system and a dedicated “enterprise risk management cell” that evaluates and manages inherent risks via IT.

LIC’s profit after tax (PAT) went up 6.9 per cent to Rs 2,906.77 crore in FY21, its annual report showed.

In FY20, LIC had reported a PAT of Rs 2,712.7 crore.

LIC’s premium income grew to Rs 4.03 trillion in FY21, from Rs 3.79 trillion a year ago, while income from investment grew to around Rs 2.79 trillion last financial year, from Rs 2.35 trillion in FY20.

Photograph: Danish Siddiqui/Reuters