Key takeaway from LIC's DRHP

Key takeaway from LIC's DRHP

The D-day is here and GOI has filed the DRHP for India's biggest capital event in history: LIC's public issue.

Broad Overview of the company:
a) 5th largest LI company by Gross Written Premium (GWP) and 10th largest by assets globally
b) 66.2% market share by New Business Premium (NBP).
c) 81.1% share in group policies in FY21
d) LIC Brand Value: $8.5 billion
e) Foreign subsidiaries in Sri Lanka, Nepal, Bangladesh, Singapore and Bahrain
f) Total Employees: 1.05 lac
g) Top selling products: LIC’s Jeevan Labh (22.32% of NBP) and LIC’s New Endowment Plan (18.65% of NBP)

IPO details:
a) Total Shares: 632.4 crores
b) Offer For Sale (OFS): 31.62 crore shares
c) OFS: 5% of total equity
d) Employee reservation: 5%
e) Policyholder reservation: 10%
f) Up to 60% of Qualified Institutional Buyer (QIB) portion to anchor investors
33% of anchor portion for MFs

NOTE: 10 crore shares allotted to President on 8/09/21 at Rs 10 and bonus issued (62.2 crores share) on the same date increasing the capital of the company.

Investment details:
a) Asset Under Management (AUM): 39.558 lac crores
b) AUM Breakup: 37.5% Central Govt securities, 24.78% equity securities, 24.61% state government securities and 8.07% corporate bonds
c) Yield on Equity (H1FY22): 13.69%
d) Yield on Debt (H1FY22): 7.58%

Distribution Mix (H1FY22):
a) Agents: 96.42% (1.35 million agents)
b) Banca: 2.31%
c) Digital: 0.48%

Product Mix (APE H1FY22):
a) Par Savings: 92.27%
b) Non-Par Savings: 0.58%
c) Protection: 0.61%
d) Linked (ULIP): 1.86%
e) Annuity/Pension: 4.40%

Financial Details (H1FY22):
Embedded Value (EV): 5.39 lac crores
VNB margins: 9.3%
Expense ratio: 10.1%
Total Cost ratio: 15.3%
13th-month Persistency: 88%
61st-month Persistency: 75%
Settlement ratio: 94.05%
Surrender Ratio: 1.06%
Solvency Ratio: 1.83
NBP per policy: Rs 29,758
2-year Compound Annual Growth Rate (CAGR) of GWP: 9.21%
PAT FY21: Rs 2974 crores

LIC Portal has 17.58 million registered users and the app has 5.1 million users
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Fun Fact: LIC was formed by merging 256 Private life insurance companies in 1956 and LIC was the only insurance company in India from 1956 to 2000

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