In the current fiscal, growth of first year premiums for the life insurance industry has been down by 28% due to the novel coronavirus.
Life Insurance Corporation of India (LIC), which currently has 51% stake in IDBI Bank, could bring it down well ahead of the 12 year period stipulated by the Reserve Bank of India (RBI). Officials of the country’s largest life insurance company said that Department of Investments and Public Asset Management (DIPAM) is looking for consultants for its initial public offering (IPO) of the state-owned insurer.
Vipin Anand, MD at LIC, speaking to CNBCTV18 on Wednesday stated that RBI has given them 12 years to bring down its stake in IDBI Bank, but they have no intention of staying so long. “We are essentially looking at midterm horizon, where we would be able to make some good profit and then exit,” said Anand.
On being asked on the IPO of LIC, which was announced by finance minister Nirmala Sitharaman in this year’s Budget, Anand said that the insurer was in the process of closing its previous year accounts, which were seriously hampered because of kind of disruption in Mumbai due to Covid-19. “Most of preparation for listing has to be done at government end. I believe DIPAM is actively involved in it and they are looking for consultants,” added Anand.
In the current fiscal, growth of first year premiums for the life insurance industry has been down by 28% due to the novel coronavirus. The data from Insurance Regulatory and Development Authority of India (Irdai) shows that LIC saw first year premiums at Rs 13,793.18 crore in this fiscal as against Rs 18,764.63 crore in previous year, a fall of 26.5%. LIC believes that there is going to be paradigm shift in the Indian insurance industry in the current year and move will be more towards health products and term products.
“I don’t expect any large-scale shift to term products, but what I do expect is that people will supplement their traditional buying with additional term cover to have a higher level of cover. What I am suggesting is people could be buying what there are buying earlier, but they could also additionally buy term policies to increase the risk cover,” added Anand.
LIC, which is also one of the important players in domestic equity markets, is currently looking to invest in blue-chips and large-caps. “We are traditionally contrarian investors, at the time when valuation was available, we picked up good stocks initially. Now the market has been stabilising, we are more in blue-chip and the large-caps. LIC has invested Rs 61,000 crore in equity markets in last financial year and in the current year they have invested more than Rs 13,000 crore in equity. While in G-Sec it is estimated they would be buying Rs 35,000 crore in first quarter of this fiscal.