IPO IPO: The central government is gearing up for the launch of Life Insurance Corporation’s (LIC) mega-initial public offering (IPO), which will be launched shortly. The government plans to raise up to Rs 1 lakh crore through the sale of shares in the LIC IPO, which could be India’s largest IPO to date. LIC, a household name in India, reaches practically all corners of the country. The company, headquartered in Mumbai, has 2,000 branches, more than 100,000 employees and 286 million policies.
A report from IIFL Securities detailed the strengths, weaknesses, opportunities and threats of the LIC IPO. Here are important things to know for policyholders looking to subscribe to Life Insurance Corporation’s upcoming IPO
LIC IPO: main products
In addition to savings products, life insurers offer cover against mortality (death) and morbidity (illness) risks. The product range includes term insurance, annuities, endowments, retirement plans and unit-linked savings plans (ULIPs) to meet a variety of needs.
LIC IPO: Growth Outlook
It has a slew of investments in companies – private and public – that allow the company to grow organically while also receiving capital support. It has two subsidiaries and four associated companies engaged in the pension fund, housing finance, mutual fund, banking and card business. LIC has the strongest network of agents in the country. As of March 2021, it had more than 13.5 lakh agents across the country.
LIC IPO: what opportunities lie ahead?
IIFL Securities said the company has the opportunity to expand its product portfolio and cater to customers by introducing even more products, depending on customers’ needs. “The company should look forward to expanding its presence in new regions with new products,” the report said. The report also said LIC should focus on spending a lot of money on advertising and marketing to create new product offerings and cater to new-age customers.
LIC has high disposable income, which can be used by investing in new age companies, from which even LIC can benefit in terms of technological advancement and achieve high returns, the report argues.
LIC IPO: Competitive Insurance Industry
Life insurance is a competitive industry. Despite the fact that LIC is the market leader, private companies compete with LIC in the field of better services. In addition, the report states, “The company is lacking in providing good service to their customers because of their traditional way of doing business.”
Also one of the largest employers in the country, LIC takes on this responsibility of enabling employment and rarely invests in technology to improve efficiency. In addition, the government often intervenes in the business where “maximum growth and income play a role,” according to the report. This influences the ‘decision-making and use of its resources’. Compared to private players, LIC’s spend on advertising is low, as evidenced by the “quality of advertising and content they create”.
LIC IPO: what are the biggest concerns?
“LIC must adhere to the rules and regulations set by the government. This puts limits on the company’s growth,” the report said, adding that the company has invested in many loss-making companies in the past as a result of government policies.
It further cited the wrong sales attributes of LIC agents and said the company does not have a full handle on the agents. “In order to generate personal interest, the agents are misselling the customers with policies they don’t need, causing LIC to lose customer trust,” the report said.
LIC limits its opportunities to serve the young urban population by following traditional methods. They don’t have the freedom “to collect new technologies and distribution resources,” it said.
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