Page 13 - Insurance Times February 2021

LIC of India

LIC IPO: Govt selects actu- collect Rs 2.10 lakh crore from stake of the pandemic," the publication

ary sale this fiscal. This includes Rs 1.20 quoted LIC chairman MR Kumar as
saying. "As contrarian players, we felt
lakh crore from central public sector
The government has selected actuarial enterprises' (CPSE) disinvestment and better days would come."
firm Milliman Advisors for ascertaining Rs 90,000 crore from selling stake in Worth mentioning here is that
embedded value of LIC, ahead of its financial institutions. benchmark equity indices plunged over
initial public offer (IPO).
So far this fiscal, the government has 40% from January highs to a four-year
The government plans to sell minority been able to mop up Rs 12,778 crore low on March 24 when the
stake in insurance behemoth Life from CPSE disinvestment. government announced a nationwide
Insurance Corporation (LIC) and list it lockdown that triggered a panic that
on the bourses, and has already LIC's equity strategy pays earnings would collapse as businesses
appointed Deloitte and SBI Caps as shuttered. Foreign investors, mutual
pre-IPO transaction advisors. off with record profit of funds and individual retail investors fled
Department of Investment and Public Rs. 33,000 cr in March and April fearing the worst.
Asset Management (DIPAM) Secretary LIC has already booked net profit of Rs But LIC's investment decision to sell
Tuhin Kanta Pandey said, "Government 33,085 crore on sale of equities so far during the earlier part of the year and
has selected Milliman Advisors LLP this year as compared to Rs 18,371.47 the subsequent buying when others
India as the Reporting Actuary for the crore profit in the entire previous were fleeing proved beneficial with the
Embedded Value of LIC. Work to start fiscal, in a report. insurer registering record-high profits
soon." while raising its stakes in many
LIC purchased equities worth Rs companies at the same time.
LIC needs to develop an Indian 64,801 crore in the first nine months
Embedded Value (IEV) reporting of the fiscal year up to the first week "This was a strategy to create future
framework for necessary disclosures of January, as against Rs 40,510 crore profits that would sustain solvency
for the proposed IPO. in the same period last year, the ratios and increase returns to
policyholders," Kumar added. "It
Milliman Advisors would be required to report mentioned. In the previous fiscal worked and as of today, we have made
work with LIC to develop IEV in line year, the state-owned insurer our highest-ever profits."
with the requirements of the relevant purchased equities worth Rs 61,590 Profits booked by LIC this year are the
Acts and regulations, Actuarial Practice crore. highest ever in the history of the
Standards and guidance notes issued "After the lockdown started, and we insurer. With the upward momentum
by the Institute of Actuaries of India were sure of cash flows to take care in markets continuing, LIC's profits for
and LIC Act, 1956, and to provide of claim settlements, we started the full financial year are expected to
support during the IPO process. buying equities as the stock markets double over the previous year
The government has budgeted to crashed day after day in the aftermath according to company officials.

The Insurance Times, February 2021