LIC IPO - POLICY HOLDERS - YOU NEED TO KNOW

The most awaited, most buzzed and biggest initial public offering in the Indian stock market history - LIC IPO.

Recently LIC filed it's DRHP with SEBI and there are few things we need to know to get ourselves eligible to apply for LIC IPO under policy holder category with discounted price. ( Discounted price ? it is all depend on LIC RHP).

Biggest!!! Yes this is expected to be the biggest IPO to date with an issue size of 5% of its total equity (out of this, 10% is going to be for policy holders). expecting to become the largest company in the Indian stock market by market capital on the listing.

Lets have a look on some facts about LIC. 

Life Insurance Corporation of India, was established on 1 September 1956. when the government of India passed the life insurance of India act that nationalized the insurance industry in India. You know, over 245 private life insurance companies and provident societies were merged and formed LIC of India. 

As we mentioned before, LIC is the largest insurer in India (as of FY 2020-21) compared with other life insurance players like SBI life, HDFC life and ICICI PRU life etc., in terms of market share.

Here are the details : ~ its useful to know ~

-64.1% in terms of premium collected  only by LIC (off course all other companies put together 35.9% premium).

-Issued 66.2% in New Business Premium (first time policy issued and premium collected) and  62.5%    in Renewal Premium.

-74.6% in terms of the number of individual policies issued (other 25.4%). And 81.1% of market share in group policies issued by LIC (other together 18.9% )

According to the FY 2021, LIC had 37.29 Cr policyholders and having around 1.35 million insurance agents.

And you know LIC has largest AUM assets worth of Rs.36.8 trillion as of 31st march 2021 (I hope you know why LIC has such huge volume of AUM - what will it do by collecting premiums? it couldn't be in idle position. isn't it? Yes it should be invested somewhere to earn good returns). 

Here i want to say some important facts about this LIC AUM - it is Largest DII in Indian stock market(we heard about domestic institutional investor in stock market). This AUM is 1.1 times of total Mutual Fund houses AUM in India and it is 3.3 times of total Private insurance company's AUM.

As of sept 2021, the company had 2,048 branch offices and 15554 satellite offices, covering 91% of all districts in India. The company also has branches in Fiji, Mauritius and United kingdom. It has its subsidiaries in Bahrain, Bangladesh, Nepal, Singapore and Sri Lanka.

One of the important thing that LIC was identified by IRDAI as a Domestic Systemically Important Insurer. (But what is it for? If a LIC fails (it is not joke), Govt of India involves itself and taken over the issue to comfort the policy holders)

Coming to valuation part, LIC has its Brand value of $8,655 million with Brand Strength Index Score 84.1 out of 100. It also recognized as the 3rd strongest and 10th global insurance brand.

Now coming to LIC Distribution Network, we can say it has best distribution network - 1.34 million individual agents and 72 bank assurance partners consisting of 8 PSU banks, 5 Private banks, 13 Regional and 45 co-operative banks. And having 174 alternate Channel partners comprising 44 insurance marketing firms ,59 brokers and 71 corporate agents. (Long list.. huh..).

Agents - LIC agent Network is said to be most productive in the sector with New Business Profit of Rs 4.12 Lakh per agent.

Around 60.9% of contribution was from Participating products because the policy holders get a share of profit in the form of bonuses or dividends which ensures customers will be in the company for a long period. 

Out of it's total Investment portfolio the Debt is about 75% and the Equity is about 25%. As of Sept' 2021, 37.50% Central Government securities and 24.61% State government Securities investing under Debt. 96% of LIC's debt AUM was invested in Sovereign and AAA- rated securities. Now again the 90% of the Equity investments were in stocks either part of nifty 200 and BSE 200 indices only (overall in investment portfolio 25% of equity). 99.7% of policies in LIC are non-linked (traditional) policies only.

The best part of LIC is mis-selling complaints are about 2.4 per ten thousand only, it is way less than remain all other private insurance companies.

I think it is enough to had your decision perfectly and going to try your luck in getting LIC IPO allotment under policy holder category (may be with discount).

Now we need to know there are some clarifications given in the DRHP to apply under policy holder category with discounted price.

The first thing to know is : You need to have LIC Policy but should be issued before 13.02.2022.

PAN Linkage - Yes you have to link your PAN Card to your policy before applying for LIC IPO (Last date is 28/02/2022) to get discount under policy holder category. You can link your PAN online in LIC home portal - CLICK HERE TO LINK (No need to visit office).

There is no specific time we can say to PAN linkage completion at LIC end. You can know your status of PAN LINK HERE

Demat Account - You required to open Demat account with well known stock brokers in India. Almost all are charging same pricing like Account opening fee, AMC, Equity brokerage etc., Click below to open your Demat account with

SBI SECURITIES /  ZERODHA  /  UPSTOX  /   GROWW  /  ANGEL ONE

These are the basic requirements to apply for LIC IPO under policy holder category. 

Need to clarify some common queries here. Right??

• Are only active policies eligible? - No, Not at all. Policies with status in-force and lapse, both are eligible. (but off course, surrendered policies are not eligible)

• Coming to size of premium, whatever the size of the premium, you are eligible to apply for IPO

• What about Proposer is different from insurer? 

          Here the Proposer can link his/her PAN Card to policy and can apply for IPO

• In Joint policy - Any one of the policy holder link his/her Pan card and can apply for IPO

• If policy availed in the name of HUF, Karta can link their Pan card and apply for IPO.

Now you may ask that can we apply under policy holder category as well as retail category??

Answer is YES, we can apply under policy holder category as well as retail category (which means we need to apply for one lot in each category - Total two Lots)

Some are there to know, which are - NRI policy, Not eligible to apply under policy holder category.

PAN Linkage should be done before 28.02.2022, if we didn't, we are not eligible.

If we surrendered the policy, we are not eligible.

I hope, it clarifies your doubts to apply for LIC IPO under policy holder category. If any query other than above, Please leave a comment. Please share it with your friends and families who are in need,