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IPO-bound LIC see 8-10% of total premium from bancassurance channel over next 5 years

IPO-bound Life Insurance Corporation of India (LIC) plans to strengthen its bancassurance channel and aims to generate 8-10% of its total premiums from it over the next five years.

“Only around 3% of our total premium comes from the bancassurance channel. Our goal is to increase it to at least 8-10% over the next five years. Our focus will be more on bancassurance,” a company source said FE.

“Our agency channel will continue to be strong,” the person said, adding that LIC grows its agency channel by about 10% each year.

The state insurance giant said in its Red Herring prospectus that for the nine-month period ended 31 December 2021, bancassurance partners raised Rs 916.99 crore of its New Business Premium (NBP) for its individual products in India, equivalent to 2.56%. the company’s new business premium for individual products and Rs 1,489.66 crore of the new business premium for group products. This represented 1.65% of the company’s NBP for group products in the country.

As of December 31, 2021, the company had 70 bancassurance partners in the country.

In India, as of December 31, 2021, LIC has the largest agent network of 1.33 million unique agents, which is 55% of the country’s total agent network and 6.8 times the number of agents for the second largest life insurer.

For the overall Indian market, the share of new business generated for individual life insurance through bancassurance channels increased from 24% in FY2016 to 29% in FY2021. Private players are relatively more dependent on bancassurance for new business, with their share increasing 52 % in fiscal 2016 to 55% in fiscal 2021.

“While the agency channel will remain the foundation of distribution for most life insurers, with accelerated digital adoption and advances in technology life insurers will focus on improving productivity and efficiency over the next few years by focusing on utilizing an omni-channel strategy and using both digital and physical sales methods,” LIC said in its Red Herring prospectus.

Speaking to reporters during an IPO press conference here, LIC chief executive Siddhartha Mohanty said the government did not opt ​​for a new issue of shares for LIC, opting instead to dilute their stake as the company is liquid and healthy.

The planned IPO has received interest from “several” anchor investors – both local and domestic. The Government plans to dilute 3.5% of its stake in LIC to raise between Rs 20,000 crore and Rs 21,000 crore.

LIC has set the price range for the issue at Rs 902-949 per share. The sale of shares will be via an offer to sell (OFS) of up to 221.3 million shares and will open on May 4th and close on May 9th.

https://www.financialexpress.com/market/ipo-news/ipo-bound-lic-eyes-8-10-of-total-premium-from-bancassurance-channel-in-next-5-yrs/2508473/ IPO-bound LIC see 8-10% of total premium from bancassurance channel over next 5 years

Chris Barrese

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