Page 12 - The Insurance Times October 2021

LIC sees surge in death ment Authority of India (IRDAI) if they The government is considering selling
pick up a stake larger than 5 per cent a 5%-10% stake in the company, which
claims in FY21 in an insurance company, said Rajesh could raise between Rs 40,000 crore
The number of death claims reported Dalmia, partner at EY India. and Rs 1 trillion, according to people
to LIC in FY21 amid the Covid-19 pan- Allowing foreign investors to invest in with knowledge of the matter, who
demic, surged to its highest-ever level LIC would aid its listing, expected to be asked not to be identified as the mat-
in at least five years at over 11 lakh. ter is private.
the largest initial public offering in In-
LIC received 11.42 lakh death claims in dia. Although the embedded value of The potential valuation is based on
2020-21 and settled 11.47 lakh claims, LIC is yet to be derived, the issue size preliminary talks and may change af-
including the pending ones from the could be around Rs 1 trillion. ter further discussions, due diligence
previous year. It paid a total of Rs. The listing would involve part-sale of and an official valuation report, the
24,195.01 crore for death claims in the government's stake in the insurer people said. A spokesperson for the fi-
FY21. nance ministry declined to comment.
and raising fresh equity share capital.
The data, however, does not specify A part of the public offering may be LIC didn’t immediately respond to an
how many death claims were related reserved for employees and policyhold- email seeking comment.
to the pandemic. This was a 17.1 per ers of LIC. Prime Minister Narendra Modi’s gov-
cent jump in the number of death ernment is pushing ahead with LIC’s
claims reported to LIC in FY20 at 9.75 LIC IPO: Centre plans big IPO to help plug a widening budget
lakh. In all, it had settled 9.32 lakh push to retail participation gap as it aims to raise Rs 1.75 trillion
death claims in FY20, and paid out Rs. by March through divestments. The
17,419.57 crore. The government and the Life Insur- LIC sale is key to the government
ance Corporation of India (LIC) are
The number of death claims reported planning a campaign to give a big push achieving this target. India may also
to the insurer has been steadily declin- to participation by retail investors, that allow foreign direct investment in the
ing in the last five years at least, when includes opening of demat accounts for insurer to ensure diversified and strong
10.5 lakh death claims were reported policyholders in IDBI Bank, in the run- demand across investors.
in FY17. It was expected that death up to its initial public offering (IPO). The
claims for LIC would have spiked in the campaign will aim to make retail inves- LIC launches app for its
quarter ended June 30, 2021, when Development Officers
tors as well as LIC policyholders aware
the second wave of the pandemic hit Life Insurance Corporation of India
of India's largest public offering, said an
the country. (LIC) has launched a new mobile app
official.
for exclusive use of its Development
Govt may permit foreign In an effort to give LIC policyholders a Officers.
chance to own a part of the insurance
direct investment in LIC company, the government has re- Called PRAGATI (Performance Review
Application, Growth And Trend Indica-
The government is considering allow- served 10 per cent of the issue of IPO tor), it is a comprehensive mobile ap-
ing foreign direct investment (FDI) in for its policyholders. To ensure the plication which gives information that
Life Insurance Corporation of India quota is subscribed by policyholders, an is updated near real-time on the per-
(LIC) to enable overseas investors to awareness campaign is being planned formance of their agency force in criti-
buy stakes in the insurer. that would include helping the policy- cal areas of business like premium col-
"Discussions on structuring the in- holders in opening demat accounts lection and agency activisation, apart
through IDBI Bank, in which LIC owns
crease in foreign shareholding and the from monitoring the team in activities
ceiling are ongoing and a decision is yet over 49 per cent stakes. such as usage of agents mobile app and
to be taken," an official said. NACH validations, LIC said in a state-
LIC to seek Rs. 10-trn valu-
FDI of up to 74 per cent is permitted ment.
in insurance companies, but LIC and ation “We believe that this mobile app,
other public sector insurance compa- India is seeking a valuation of between PRAGATI, will be a major asset in the
nies come under their own statutes. Rs 8 trillion ($109 billion) and Rs 10 arsenal of our development officers
The current norms mandate foreign trillion for state-backed Life Insurance which will empower them to plan their
investors to seek permission from the Corp. in what’s slated to be the business strategies and monitor the
Insurance Regulatory and Develop- nation’s biggest initial public offering. performance of their team,” it said. T

12 The Insurance Times, October 2021