You must have heard of this tagline, “Zindagi ke saath bhi, Zindagi ke baad bhi”. It’s from the oldest, largest, and most profitable life insurance company in the country—the Life Insurance Corporation of India (LIC). Here are 10 facts about the insurance provider that may interest you.
This article covers:
- Fact No. 1: Formed by a huge merger
- Fact No. 2: Only player in the industry for decades
- Fact No. 3: Kind institutional investor
- Fact No. 4: Shares most of its profits
- Fact No. 5: Multinational presence
- Fact No. 6: Big commissions for agents
- Fact No. 7: Biggest IPO expected in 2022
- Fact No. 8: Total assets comparable with a few global companies
- Fact No. 9: Massive customer base
- Fact No. 10: Guaranteed by the government of India
Fact No. 1: Formed by a huge merger
Before independence, there were many loosely regulated insurance companies in India that were specific to location and sector. In 1956, the government of India nationalized 245 such companies and merged them to form Life Insurance Corporation.
Fact No. 2: Only player in the industry for decades
After the merger, the government restricted insurance business to government companies only. So there was no competition for 44 yrs, until 2000, when the government permitted private companies to enter the life insurance sector.
Fact No. 3: King institutional investor
As of 31st Dec 2020, Life Insurance Corporation of India has a net worth of over Rs 38,000 cr and a portfolio of 20 stocks like Gail India, Axis Bank, Canara Bank, Maruti Suzuki, Titan Company, and more. It majorly invests in government securities. LIC’s investment in FY 2020 alone was around Rs 2.8 lakh cr, making LIC the biggest domestic institutional investor. The insurer is also a promoter of NSE with around 12.51% stake. However, all these equity investments are still less than 20% of Life Insurance Corporation’s total investments.
Fact No. 4: Shares most of its profits
LIC invests most of its funds in government bonds, corporate bonds, and only a small portion in the stock market. 95% of the profit that comes from these investments goes to the policyholders in the form of returns and bonuses, and the remaining 5% goes to the owner, the government of India.
Fact No. 5: Multinational presence
Life Insurance Corporation of India has been operational in multiple countries as a joint venture, a wholly-owned subsidiary, or through agents. As of today, they are present in Fiji, Mauritius, UK, Singapore, Bahrain, Bangladesh, Abu Dhabi, Dubai, Kuwait, Oman, Qatar, Kenya, Sri Lanka, Nepal, and Saudi Arabia.
Fact No. 6: Big commissions for agents
Collecting massive funds requires a big team. Life Insurance Corporation works with more than 11 lakh agents for the distribution of its policies. It pays up to 20% of the premium amount as commissions to its agents. That’s around Rs 21 cr in commissions as of Mar 2020.
Fact No. 7: Biggest IPO expected in 2022
In 2010, the government raised Rs 15,200 cr from the IPO of Coal India, the biggest IPO ever in the Indian stock market. Thereafter, the government has been planning to sell a 25% stake in LIC, which will fetch about Rs 1 lakh cr. This will be the largest IPO in the history of the Indian stock markets by a huge margin.
Fact No. 8: Total assets comparable with a few global companies
Total assets of LIC as of Mar 2020 was around Rs 32 lakh cr. To put that in perspective, Apple’s assets in 2020 amounted to Rs 17 lakh cr and that of Exxon Mobile amounted to Rs 26 lakh cr. Life Insurance Corporation’s total assets are even more than the GDP of 85% of countries in the world.
Fact No. 9: Massive customer base
If we try to make a country of LIC’s policyholders, it will be the 4th most populated country in the world. Yes, you read it right. It has a customer base of about 29 cr policyholders.
Fact No. 10: Guaranteed by the government of India
Since the Life Insurance Corporation of India is a 100% state-run company, the government has guaranteed to settle claims in case it defaults. This is why people prefer LIC over private companies, even if the premiums of its term insurance are costlier than that of private insurance companies. The insurer stands 19th in the list of the most desired brands in India and 2nd in the BFSI sector after the SBI.