LIC weighs plans to invest in health, fintech
The Centre raised Rs 31,552 crore in an offer for sale (OFS) at Life Insurance Corp of India, which MD R Doraiswamy attributes to growing
The Centre raised Rs 31,552 crore in an offer for sale (OFS) at Life Insurance Corp of India, which MD R Doraiswamy attributes to growing investor trust in the insurance behemoth. Doraiswamy tells Shilpy Sinha that LIC will now focus on meeting market expectations, expanding distribution, improving margins and evaluating opportunities in health insurance and fintech, while maintaining its leadership position in India’s life insurance market.What does OFS mean for LIC? It shows the confidence the market has in LIC. Now, it is our responsibility to live up to the expectations. Following the OFS, the 10% public shareholding target is achieved. By when will the public float rise to 25%? The government has to increase public shareholding to 25% by 2032. The government has been talking about keeping a longer gap of 18-24 months before the next stake sale. A longer gap from the government will reduce the supply overhang, which could lead to better price discovery.LIC’s stock has mostly remained below the IPO price. What explains this? Share price is a response of the market. One reason certainly would be the very low public float. To take care of this, we issued 1:1 bonus shares and increased the dividend yield. We have consistently focused on increasing the share of non-par business and improving margins.LIC’s VNB (value of new business) margins have improved sharply, but APE (annualised premium equivalent) growth has lagged the industry. What explains the divergence? We are looking to grow in all the segments.
There is a lot of volatility in the market situation. The comfort level in buying a ULIP takes a beating during such periods. We are making efforts to come back in the ULIP segment. Growth on this scale requires a lot of effort because we operate on a very high base.Why has the annuity business remained weak for LIC? Annuity has not done well in the first quarter because remittances have been affected and liquidity has been hit. ULIPs should improve as market conditions stabilise.Is LIC also looking at fintech investments? We have embarked on a big technology transformation. We are engaging technology players as vendors. We are open to investing in fintech or insurtech companies that need growth capital and provide good value as an investment opportunity. Is LIC still evaluating opportunities in health insurance? We are not shelving the plan. We are looking at everything as an investment opportunity. But there is no urgency. We have to be sure that the claims settlement ratio does not dent the brand that LIC carries. We are considering a few opportunities, but we have not reached the stage where we can say this is the best opportunity and take the plunge. Bancassurance has grown to over 8% of new business. Where do you see this channel going?The agency channel will continue to be our strength. Business through banks and alternative channels has increased from less than 3% in 2022 to over 8%, including digital, and this can increase to over 10%.
The BriefWire