Assets under management (AUM) of Life Insurance Corporation of India (LIC) subject to initial public offerings (IPOs) rose to 38 trillion rupees as of September 2021, compared with 37 trillion rupees as of March 2021, people familiar with the matter said.

As of September 2021, its AUM was almost 3 times that of all private life insurers in the country and more than 15 times that of SBI Life, the second largest life insurer. SBI Life’s AUM is around Rs 2.4 trillion as of September 2021, sources said.

In addition, as of September 2021, 61.67% of LIC’s AUM was from participating policies, 37% from non-participating policyholder investments, 1.15% from unit-linked policies and 0.16% from shareholder investments.

The state-owned insurance giant is expected to file a draft of its red herring prospectus with market regulator Securities and Exchange Board of India this week. This could be the largest IPO the Indian capital market has ever seen, with the government looking to raise anywhere between Rs 50,000 crore and Rs 1 trillion from LIC’s listing on the exchange.

LIC is also one of the largest institutional investors in the country with a total stand-alone investment of Rs 39.49 trillion, of which Rs 9.78 trillion was invested in equities as of September 2021. Additionally, over 90% of equity investment holdings are part of the Nifty 200 and BSE 200 indices.

The life insurer is looking to increase the share of non-participating products in its portfolio. Going forward, the insurer wants to focus more on unit-linked insurance plans (ULIPs), as well as protection, annuities and health products.

Traditionally, LIC has focused more on participating products, such as donation and refund programs. Now, it is looking to further diversify its product portfolio by increasing sales of its existing non-participating products and launching new products under the category.

In a non-participating policy, the insurance company does not share profits with the policyholder, nor does it pay dividends. Non-participating insurance plans provide guaranteed benefits to policyholders only. That is, the sum assured when the policyholder dies, or the maturity benefit payable when the plan expires.

Although LIC remains the largest player in the life insurance market, it is losing market share to other private players due to their diversified product portfolio and strong distribution through bancassurance partners.

LIC’s market share in new business premiums stood at 61.16% as of January 2022, compared to 66.18% in April 2021, thus costing private sector life insurers nearly 500 basis points of market share.

Complete News Source : Business Standard