Amidst the week global sentiments, the initial public offering of Life Insurance Corporation of India (LIC) tested the Indian markets and investors, who were up to it, said LIC Chairperson MR Kumar.
In an interaction with the media after the listing ceremony, he said the insurer is confident about retaining and regaining its market share. He also shared LIC’s expansion plans. Edited excerpts:
The share got listed at a discount. Your thoughts:
The markets are in jittery and we were not expecting a big listing. But it will pick up as we go along. I’m sure a lot of people, especially policyholders, who have missed out on the allotment will pick up the shares. I don’t see any reason why it should be tepid for too long.
Participation by foreign institutional investors in the IPO was very low. Was it a concern?
The lower participation of FIIs were due to the global market sentiment. The LIC IPO has tested Indian market and Indian investors. But they were up to it. Without FIIs, would any other IPOs managed like this? The six-time subscription from policyholders made a huge difference.
As a listed entity, how prepared are you for disclosures and quarterly results?
We are quite prepared. We have also recruited people from the market. We have a CFO and head of investor relations. We have the systems in place and have good IT infrastructure. Hence, we have no issues on issuing disclosures. We are told that, our RHP was one the best documents in terms of disclosures.
How frequently will the embedded value be published?
The regulator expects half-yearly and that is what the industry is doing. Since listed in May, the first one will be in June.
What is the plan for scaling up the business post-listing and new products?
We have already introduced a couple of non-par, protection and guaranteed products. They have picked up well in the previous quarter. Going forward, we intend to increase the sales of existing products and introduce some new plans.
LIC has been losing market share. Do you see it getting arrested at some time?
The market share is a question of growth. LIC’s base is quite huge. So, even if I grow slightly slower and lose market share, it doesn’t really matter as long as I’m growing fast. We still have 63 per cent market share. I don’t see any reason why we can’t get it back. But, even if we stay there, if I get good growth, that will be very useful.
We have gained market share in February and March. It’s not a one way story. Due to Covid-19 pandemic, the last two years were little difficult. Maybe, we lost more because of the inability of the agency force to reach out to customers. We have arrested the trend by giving them an app. Going forward, we will be able to further arrest this and probably, it will settle at about 63 per cent where we are today and we won’t lose more. To me, policyholders, investors and shareholders will be looking at how fast the company is growing. They are not really bothered about the market share. Basically, it’s growth that is going to be the focal point.
April was a good month in terms of sales. Do you expect this to continue?
The base was very low. If we can ensure the same growth trajectory for the first quarter, it will be a great year.
How well is LIC prepared to take on digital capabilities in the insurance segment?
We have good infrastructure and are building on the digital part as well. With the digital marketing channel, we are going to tap the bancassurance segment. We have the highest number of bank outlets at more than 60,000. That’s something yet to be tapped. Banks find it easier to sell non-participating policies like ULIPs. Once we start doing that, we will show good growth.
Have you spoken to any large banks for such partnerships?
As of now, we haven’t. The existing tie ups have to be utilised. We have meetings going forward, and will try to find out whether we can have a separate digital platform with each one of them. We are looking for a Chief Digital Officer.
Has the issue with IDBI Bank been settled now and how much equity you can hold?
The Reserve Bank of India and the insurance regulator have already given us a six-year and 12-year time period, respectively. We are still within that time limit. There is no hurry as such. The government is to take a call on disinvestment of IDBI Bank.
There are questions on indirect pressure from the government for investments. Your views?
We invest in government and non-government companies. We take a call. Some of the PSU stocks are good for holding and are handsome in paying dividends. DIPAM or the government is not asking us to do…they say you take a call. If it’s good and we find some merit in it for three to five years, we go for it.
Will there be a FPO this year?
No, I don’t think so. DIPAM Secretary has already said it will not be for one year. There is no timeline to reach the five per cent stake dilution.
What will be the role of the agency channel?
We are strong on agency channel. We will not give it up. A lot of new agents, especially youth, are coming in. As much as 42 per cent of our agents are millennials. They see a potential in India’s insurance market and want to make a career for themselves. That is something we will focus on. But at the same time we are not going to let up on the digital, bancassurance and other channels available. The tie up with Policybazaar is going well. Going forward, we will ramp it up as well.