Life insurance corporation of India has initiated its initial public offer for five percent of its shares. It is one of the largest profit-making enterprises owned by the government of India. In this instance, it is important to know more about this enterprise.
LIC or Life Insurance corporation of India was started in the year 1956 in accordance with the Life insurance corporation of India act of 1956. As India was following a socialistic approach of economic development, LIC was introduced as an enterprise owned and operated by the government of India.
Story of formation
The Oriental Life Insurance Company, the first company in India offering life insurance coverage, was established in Kolkata in 1818. Its primary target market was the Europeans based in India, and it charged Indians heftier premiums. After that several companies emerged. The first 150 years were marked mostly by turbulent economic conditions. It witnessed India’s First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century saw a heightened struggle for India’s independence. The aggregate effect of these events led to a high rate of and liquidation of life insurance companies in India. This had adversely affected the faith of the general in the utility of obtaining life cover. In 1955, parliamentarian Feroze Gandhi raised the matter of insurance fraud by owners of private insurance agencies. The Parliament of India passed the Life Insurance of India Act on 19 June 1956 creating the Life Insurance Corporation of India, which started operating in September of that year.
Structure
The LIC’s executive board consists of Chairman, currently M R Kumar, and Managing Directors, Vipin Anand, T. C. Suseel Kumar, Mukesh Kumar Gupta and Raj Kumar. The Central Office of LIC is based out of Mumbai which sits The Chairman, all four Managing Directors, and all Executive Directors (Department Heads). LIC has a total of 8 Zonal Offices namely Delhi, Chennai, Mumbai, Hyderabad, Kanpur, Kolkata, Bhopal & Patna.
Policies
Some important policies are:
LIC tech term plan
LIC Jeevan Umang
LIC Jeevan Amar
LIC Money back years
LIC New Jeevan Anand
Role of LIC
It has been a significant driver in creating the culture of investment in insurance. It has made insurance accessible to the economically weaker sections. The long-term schemes with affordable premiums made it highly attractive. The role of Life insurance corporation as an employer is also applaudable. It provides employment to many. More than all, many other insurance firms in India has benefitted out of the trust built by LIC.
Initial public offering
Finance Minister Nirmala Sitharaman announced a proposal to conduct an initial public offering for LIC in the 2021 Union Budget. The IPO opens on 4th May 2022 and closes on 9th May 2022. The Government of India will remain the majority shareholder after the public listing. Due to the scale of the offering and LIC’s ownership structure, the deal has been referred to as “India’s Aramco moment” in reference comparable importance and scale of 2019 IPO of Saudi Aramco. The latest development in the LIC IPO is the slashing of issue size from 5% to 3.5% of total equity of the company. LIC will open its IPO to the public on May 4 and the process concludes on May 9. Through this IPO, the Government of India, the sole owner of LIC, is now aiming to raise ₹21,000 crore, as opposed to raising between ₹65,000 crore to ₹70,000 crore by diluting 5% equity earlier, indicating more than 50% compromise on valuation as well. As per the IPO price band for 3.5% stakes for Rs. 21,000 crores, the valuation comes to around Rs 6 lakh crore.
