Mumbai: The size and dominance of the Life Insurance Corp of India (LIC) are reflected in the numbers released by the company in its draft red herring prospectus (DRHP).
The domination of the 65-year-old insurance behemoth in the domestic market is well known, but it is also a global giant – being the fifth largest by life insurance and ranked 10th in terms of total assets, the company said quoting a Crisil study.
Purely in terms of assets under management (AUM), LIC s also the largest asset manager in India as of September 30, 2021, with an AUM of ₹39 lakh crore which includes, policyholders’ investment, shareholders’ investment and assets held to cover linked liabilities.
“The AUM is 3.3 times the total AUM of all private life insurers in India, more than 1.1 times the entire Indian mutual fund industry’s AUM and 18.5% of India’s annualised GDP for fiscal 2022,” LIC said.
The corporation was formed on September 1, 1956, by merging and nationalising 245 private life insurance companies in India with an initial capital infusion of just ₹5 crore. It was the only life insurance company in India until the opening up of the market in 2000.
In terms of AUM, LIC is approximately 16.2 times the second-largest player in the Indian life insurance industry. Moreover, the corporation’s investments in listed equity represented around 4% of the total market capitalisation of NSE as of September 2021.
In terms of gross written premium (GWP), the total premium written by an insurer before reinsurance and commissions, LIC has a 64.1% market share and a 66.2% market share in terms of new business premium (NBP).
LIC had the highest gap in market share by life insurance GWP relative to the second-largest player in India as compared to the market leaders in the top seven markets globally, said Crisil.
Despite its strong reach, LIC faces challenges with decreasing business and higher Covid-related claims.
“Our total number of individual policies and group policies (in terms of lives insured) issued in India decreased by 16.76% from 75 million for fiscal 2019 to 62.43 million for fiscal 2020 and further decreased by 15.84% to 52.54 million for fiscal 2021,” LIC said.
“The pandemic and the related lockdowns adversely affected sales of our individual policies primarily in the fourth quarter of fiscal 2020 (down 22.66% to 6.35 million policies from 8.21 million policies in the fourth quarter of fiscal 2019), and the first quarters of fiscal 2021 and fiscal 2022 (down 46.20% to 1.91 million policies and down 34.93% to 2.31 million policies from 3.55 million policies in the first quarter of fiscal 2019, respectively),” the insurer added.
The corporation’s persistency ratio or the proportion of business that is retained from the business underwritten and is measured in terms of the number of policies and premiums underwritten has also decreased.
LIC’s persistency ratio by individual business in India in the 13th month was 72% as of March 31, 2020, compared to 77% as of March 31, 2019, which means a lower percentage of policyholders are opting to continue to renew their policies.
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