SUMMARISED HIGHLIGHTS FROM THE ARTICLE IN ET/28/2/2022 BY SANKET DHANORKAR TITLED
‘SHOULD
YOU INVEST IN LIC IPO? HERE ARE THE GOOD, BAD AND DOWNRIGHT UGLY DETAILS’
I
summarise hereunder the highlights from the article of Sanket Dhanorkar in ET
of 28/2/2022 on the LIC IPO.
1. Gross
NPA in FY 2020-21 was 7.78%, the next highest being 0.9% of Bajaj
Allianz Life.
2. New Business premium market share in individual insurance has declined from 56% in 2017-18 to 50% in FY 2020-21 and to 44% in HY 2021-22
3. Return on equity in FY 2020-21 was
81.7% with the next highest being 18.7% of Max Life.
4. Dividend Pay-out ratio of LIC was 99% in 2018-19, the next highest
being of Max Life at 86.1%.No dividend
has been paid by LIC to GOI for the last
two years.
5. LIC’s Overall Expense Ratio has been
lower at 14.2% compared to 16.9% of Private insurers.
6. Reinsurance premium for ceded
business has been 0.1% of total premium of LIC lower than 2.3% for private
insurers.
7. LIC has a strong network of
individual agents at 13.43 lks as at 30/9/2021 with higher productivity than
the private peers.
8. There is higher dependency on
individual agency channel and lagging far behind private peers in Banking and other
alternate channels.
9. LIC gets 94% of New Business premium
from individual agents while it is lowest in banking channel at 3.1%. The next
lowest is 32.2% by Bajaj Allianz Life. The highest percentage comes from SBI
Life at 65.4%. Direct channel business is lowest for LIC at 2.2%.
10. Asset mix is skewed towards debt at
79.5%. ICICI Pru life has 54.5% in debt and 45.5% in equity assets.
11.Private life insurers are stronger in
higher margin of linked products. LIC had only 0.3% linked premium and was
highest in non-linked participating plans premium at 60.9%.
12.Persistency ratio of LIC was by and
large lower than private insurers upto 25th month.
13.Gross yield of LIC on investments is
lower than private life peers.
14.LIC’s ticket size was lowest at Rs
26892(average new business premium per policy) far behind private peers. There
has been focus by LIC on traditional plans and highest presence in rural areas.
The
graphic charts are annexed separately.
I don’t vouch for authenticity of all the data
furnished and in case of doubt or need
for any clarification, only the author of the aricle has to be contacted.
C H
Mahadevan
SUMMARISED
HIGHLIGHTS FROM THE ARTICLE IN ET/28/2/2022 BY SANKET DHANORKAR TITLED
‘SHOULD
YOU INVEST IN LIC IPO? HERE ARE THE GOOD, BAD AND DOWNRIGHT UGLY DETAILS’
I
summarise hereunder the highlights from the article of Sanket Dhanorkar in ET
of 28/2/2022 on the LIC IPO.
1. Gross
NPA in FY 2020-21 was 7.78%, the next highest being 0.9% of Bajaj
Allianz Life.
2. New Business premium market share in
individual insurance has declined from 56% in 2017-18 to 50% in FY 2020-21 and
to 44% in HY 2021-22
3. Return on equity in FY 2020-21 was
81.7% with the next highest being 18.7% of Max Life.
4. Dividend Pay-out ratio of LIC was 99% in 2018-19, the next highest
being of Max Life at 86.1%.No dividend
has been paid by LIC to GOI for the last
two years.
5. LIC’s Overall Expense Ratio has been
lower at 14.2% compared to 16.9% of Private insurers.
6. Reinsurance premium for ceded
business has been 0.1% of total premium of LIC lower than 2.3% for private
insurers.
7. LIC has a strong network of
individual agents at 13.43 lks as at 30/9/2021 with higher productivity than
the private peers.
8. There is higher dependency on
individual agency channel and lagging far behind private peers in Banking and other
alternate channels.
9. LIC gets 94% of New Business premium
from individual agents while it is lowest in banking channel at 3.1%. The next
lowest is 32.2% by Bajaj Allianz Life. The highest percentage comes from SBI
Life at 65.4%. Direct channel business is lowest for LIC at 2.2%.
10. Asset mix is skewed towards debt at
79.5%. ICICI Pru life has 54.5% in debt and 45.5% in equity assets.
11.Private life insurers are stronger in
higher margin of linked products. LIC had only 0.3% linked premium and was
highest in non-linked participating plans premium at 60.9%.
12.Persistency ratio of LIC was by and
large lower than private insurers upto 25th month.
13.Gross yield of LIC on investments is
lower than private life peers.
14.LIC’s ticket size was lowest at Rs
26892(average new business premium per policy) far behind private peers. There
has been focus by LIC on traditional plans and highest presence in rural areas.
The
graphic charts are annexed separately.
I don’t vouch for authenticity of all the data
furnished and in case of doubt or need
for any clarification, only the author of the aricle has to be contacted.
C H
Mahadevan
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