Life Insurance Corporation (LIC) is keen to retain some of its 49.24% stake in IDBI Bank, chairman MR Kumar said on Monday, given the strategic nature of the investment in the form of gains from the bancassurance channel. The equity stake had been bought for a strategic reason, Kumar explained, which was still relevant. “It has been the strongest contributor to our bancassurance channel. Going forward, this will help us grow that channel and so I would like to see that relationship continuing,” he said, addressing mediapersons.

The chairman added there was “no sense’ as yet of the extent of the stake that would be retained as it was up to DIPAM to initiate the exercise.

The insurer had infused Rs 4,743 crore in IDBI Bank in October 2019 using policyholders’ funds. Kumar said LIC does not currently need any growth capital as it is sufficiently capitalised.

Ahead of its IPO (initial public offering), the state-owned insurer has changed its surplus distribution policy. Earlier, the ratio was 95:5 while that of private insurers is typically 90:10. Kumar justified the change, saying it was done to align with industry practices; the alignment will take place from 2025.

LIC hopes to complete the IPO and list the company in March, despite the current volatile market conditions and the geopolitical tensions between Ukraine and Russia. Kumar said: “We are watching the situation closely and carefully…but we are very keen on having a listing in March,” the chairman asserted. The insurer plans to raise around Rs 65,000-70,000 crore from its IPO.

Highlighting LIC’s  size as the fifth-largest insurer globally, with an AUM which was bigger than that of the India’s mutual fund industry, Kumar said it had held on to its leadership position with a share of 66%. “We have a cross-cyclical and compressive products portfolio. We have launched several non-par products and we believe we can create a lot of value going forward,” he said. On a like-to-like basis, an agent of LIC issues 15 policies in a year compared with four policies issued by its nearest rival, and commands a persistency ratio of 61%. LIC’s share capital was raised from Rs 100 crore to Rs 6,325 crore during September last year to help facilitate the IPO. LIC reported a profit after tax of Rs 1,437 crore for H1FY22 compared with Rs 6.14 crore in the year-ago period.

Kumar also said LIC potential investors should not worry about government control post the IPO, as decisions are taken by its board and not by the government, which will hold a 95% stake after the flotation.