LIC IPO: How India’s Largest Life Insurer Fared In FY21
A man talks on a mobile phone outside the LIC branch in Mumbai, India. (Photographer: Getty Images/Himanshu Bhatt/NurPhoto)

LIC IPO: How India’s Largest Life Insurer Fared In FY21

State-run Life Insurance Corporation of India, planning to go public this year, saw business grow in the pandemic-hit 2020-21.

India’s largest life insurer has a 67.52% market share by new business premium as of June. The government, which owns 100% in LIC, has approved an initial public offering as part of its divestment plan. It still has not disclosed how much stake it plans to sell.

Here’s how LIC’s financials fared in FY21...

  • Total revenue rose 10.7% over the year earlier to Rs 6.82 lakh crore.

  • After-tax profits were at Rs 2,900.56 crore, up 6.92% year-on-year.

  • Its profit after tax to total income ratio remained at 0.004, in line with the prior year.

  • Growth rate of new business premiums in linked life segment surged more than eightfold against a 148.11% jump a year ago.

  • In the non-linked category, new business pension premiums rose 32.92% against a 7.55% fall a year ago. Group premiums rose 0.81% against 39.01% growth registered in FY20.

  • The non-linked life category contracted 1.55% against a 4.51% growth in FY20.

  • Net premiums, the major component of the revenue, were at Rs 4.03 lakh crore, up 6.33% over the year ago.

  • This increase was aided by a 25% rise in single premiums to Rs 1.5 lakh crore and a 9% increase in renewal premiums to Rs 2.19 lakh crore.

  • While single premiums contributed to 37.22%, renewal premiums formed 54.34% of the revenue from premiums earned during the year.

  • First-year premiums, that contributed 8.44% of the total premium for the year, fell 41.4%.

  • Gross interest, dividend and rent income from investments was Rs 2.34 crore, up 8.33% year-on-year.

  • Investment yield reduced to 7.42% from 7.54% a year ago.

  • LIC has Rs 1,293.4 crore worth of policyholder reserves for FY21.

  • Its policyholder investments worth Rs 22.93 lakh crore in government securities and bonds are 12.51% higher than the year earlier.

  • Its policyholder equity investment of Rs 5.94 lakh crore is 79.64% higher than the prior year.

  • Gross non-performing asset ratio has improved to 7.78% from 8.17%.

  • Net NPA ratio was at 0.05% against 0.79% in the year ago.

  • Persistency ratio by the number of policies and the annualised premium for the 13th, 25th, 37th, 49th and 61st month have improved.

  • Net retention ratio for the year is 99.89%.

  • A debt-free company, LIC has cash reserves of Rs 3,029.3 crore as on March 31, 2021.

The cabinet committee on economic affairs has cleared the LIC IPO proposal. Deloitte and SBI Caps have been appointed as pre-IPO transaction advisers.

Also read: India Approves Sale of Nation’s Biggest Insurer in Mega IPO

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