Page 13 - Insurance Times November 2020

Act under which the state-run LIC was IDBI Bank reported quoting govern- 2,44,931.33 crore last year for the
set up to prepare for the sale. ment sources. same period, implying a growth of 7.7

A stake sale in LIC is crucial for meet- However, the report added that the per cent.
ing a record Rs 2.1 lakh crore disinvest- sale structuring is yet to be decided. "In government securities and equities
ment target set for the current fiscal Life Insurance Corporation had a 51 per we have found good investment oppor-
ending March 31, 2021. cent stake in the bank as of Septem- tunities. In corporate bond investments
Pandey said only after the four stages ber 30, while the government had we are a bit cautious," said MR Kumar,
47.11 per cent. Chairman, LIC, is an exclusive interview.
converge, then a decision would be
He added that LIC plans to invest at
taken on the quantum of government "LIC has received inter-ministerial feed-
least a further Rs. 2 lakh crore, in the
stake to be diluted in LIC. back on IDBI Bank stake sale. Ministe- remaining part of this fiscal.
"Then the IPO decision would be there, rial panel is yet to decide on the struc- On its debt portfolio, LIC is not expect-
turing of IDBI Bank stake sale," the
what percentage of IPO we will go for- ing any major defaults, as it believes
report said.
ward. Only after these four things con- that with the economic activity gain-
verge... we are trying our best to do The insurance behemoth will soon seek ing momentum in the last two months,
this fiscal. But this IPO is a big issue and broad in-principle cabinet nod for the corporate financials should improve
I think it will take time," Pandey said stake sale in IDBI Bank. further.
when asked if the offering would hap-
Earlier in the day, the share price of "LIC follows strict due diligences and
pen this fiscal. the lender closed 2.61 per cent down very few companies have taken mora-
Pandey said Deloitte and SBI Caps have at Rs 33.60. On the other hand, the torium, which is not even 2 per cent
been appointee pre-IPO advisors who BSE Sensex slipped 1,066 points, or of our corporate debt," adds Kumar.
have been working with LIC to list out 2.61 per cent, to 39728 tracking weak Also, LIC's 8.25 per cent stake sale in
the items of compliance. global cues. UTI AMC (via IPO) should fetch the in-
surer some tidy gains, this fiscal.
The second part is a legislative amend-
ment that the Department of Financial LIC's equity investments On the business front, the LIC chief is
Services (DFS) is working along with ride high on market surge confident of seeing steady growth for the
DIPAM, he said. rest of the fiscal and believes that its
Books profit of about Rs. 14,800 crore efforts to rebalance the overall portfolio
This amendment would facilitate the on its investments in equities so far this with equal focus on linked/ULIP products,
initial public offering (IPO) of LIC, by fiscal can help mitigate reinvestment risk,
making changes in the LIC Act. amid the sharp fall in interest rates.
India's largest life insurer, Life Insur-
"Third, is the issue of internal changes ance Corporation, has raked in tidy To improve persistency ratios (number
in LIC like software changes to come gains on its equity investments so far of policies or premium amount re-
out with embedded value. LIC has been this fiscal, thanks to a sanguine capital tained with an insurer across different
doing old-style actuarial valuation. But market. time periods), LIC has been focusing on
for IPO they need to do embedded digital payment modes and ensuring
LIC has booked profits of Rs.14,857
value," he said. constant contact with its customers.
crore as against Rs. 11,437 crore last
He said DIPAM would come out with year for the same period (April to Sep- Additionally, its special revival cam-
an RFP to appoint an actuarial firm tember) showing a growth of 30.37 per paign has also helped bring in business
that will independently verify the ac- cent. back to the books.
tuarial value produced by LIC. Interestingly, total surrenders
LIC's investment in capital market and amounted to Rs. 7,352 crore between
LIC keen to divest its stake G-Secs this year has also grown com- April and August this year, down from
pared to last year. In the current finan- Rs. 9,133 crore last year. "The de-
in IDBI Bank: Report cial year (up to September 30), LIC's crease in surrender is heartening as it
The country's biggest institutional in- total investments in G-Sec, SDL, corpo- could imply that people are increas-
vestor Life Insurance Corporation of rate bonds and equity was to the tune ingly appreciative of the importance of
India (LIC) is keen to divest its stake in of Rs. 2,63,845.98 crore as against Rs. a life risk cover," adds Kumar.

The Insurance Times, November 2020 13