Valuation buzz Is Life Insurance Corporation listing in the offing
State-run insurer Life Insurance Corporation (LIC) would pip many Indian IT, oil and banking firms listed on stock exchanges to emerge as the most-valued entity if listed, according to Finance Minister Arun Jaitley.”If LIC is listed, it would be the most valued company in the country with the highest valuation as well as one of the largest across the world,” he said while speaking at the diamond jubilee celebrations of India’s largest financial institution in Mumbai on Thursday, reported PTI.But Jaitley did not say if the government was planning to list the life insurer on the stock exchanges.The subject of LIC going public has been speculated by the media since June 2014 when it was valued at Rs. 5 lakh crore, based on its assets under management (AUMs). In an editorial on June 12, 2014, the BusinessLine had argued in favour of the company’s listing. “With 27 crore individual investors and an investment kitty of over â‚¹14 lakh crore (last annual report), LIC is by far the largest domestic institution and its operations cannot be conducted in a black box closed to public scrutiny,” the daily said.LIC at a glanceLIC commands a market share in excess of 70 percent in the life insurance space. “During FY 2015-16, the market share of Life Insurance Corporation of India in total first year premium has gone up from 69.21 percent to 70.44 percent,” the insurer in its 2015-16 annual report. The insurer collected Rs. 1,38,657 crore in 2015-16 by way of total first year premium, marking a growth of 22.55 percent over the previous fiscal.In July this year, LIC collected Rs. 10,737 crore out of Rs. 13,854 crore by 24 life insurance firms in India (including LIC) as first year premium, representing almost 77 percent. LIC earned Rs. 11,000 crore from its stock market investments in 2015-16 and has been a “bailout agency” for many stake sale programmes of the government when response from other investors was weak. For instance, in the Rs. 5,000 crore disinvestment of state-run power utility NTPC in February this year, the LIC ended up picking a little over 60 percent, ensuring that the stake sale did not falter. Its investments in equity was Rs. 65,000 crore during 2015-16, according to Pravin Kutumbe, executive director for investment operations at LIC, as reported by PTI in April.