Everything You Need to Know About LIC

LIC is India's largest insurer. The company began its operations in 1956 with a modest presence. Back then, it had only 5 zonal offices, 33 divisional offices, and 212 branches, plus its corporate headquarters. However, LIC grew rapidly in just a few years. It opened many new branches.

In 1957, Life Insurance Corporation of India had a new business worth Rs. 200 crore, which increased to Rs. 1,000 crore by 1969-70. It took another decade to cross Rs. 2,000 crore in new business. Today, LIC operates with 2,048 fully computerised branches. It has 113 divisional offices, 8 zonal offices, 1,381 satellite offices, and a Corporate Office. Its Wide Area Network links 113 divisional offices and connects branches through a Metro Area Network.

In this article, let’s check the LIC portfolio as per the latest corporate filings and see what challenges the company faced during the pandemic and due to the emergence of private players. Also, we will have a look at the dividend history of LIC and its regaining dominance in the insurance market.

• LIC was set up in 1956. The company started with 212 branches and 5 zonal offices.
• The company holds a diversified portfolio comprising 95 different company stocks worth Rs. 2,01,146.9 crore (as of June 30, 2024).
• Recently, LIC has regained its market share, which increased to 64.02% in Q1FY25. This happened due to a strong increase in group premiums collected by LIC.

LIC holds 95 different company stocks worth Rs. 2,01,146.9 crore as of June 30, 2024. Let’s check out the top 10 stocks held by LIC in terms of holding percentage (the below data is from corporate filings):

Due to the emergence of private players and during the pandemic, LIC faced several challenges. This hampered their revenue and negatively impacted their market share. Let’s understand:

• Agent movement restrictions

Due to COVID-19 restrictions on travel, LIC’s agent network struggled. As a result, the number of active agents dropped by 17.48% from 10.86 lakh in March 2021 to 8.96 lakh in September 2021.

• Exams delayed

The pandemic delayed exams for agents. This made it difficult for LIC to recruit new agents.

• Business complaints

LIC received 3,994 complaints about unfair business practices in Fiscal 2021. However, its rate of 2.1 complaints per 10,000 policies was much better than that of its competitors. It is worth mentioning that the complaint rate for the top five private players averaged 19.5.

• Technology gap

Life Insurance Corporation of India faces challenges from new competitors who focus more on digital platforms. Whereas LIC traditionally relies on physical agents to sell its products. This affects its customer base and growth.

During the first quarter of FY25, LIC regained a strong market position in new business premiums (NBP). This happened mainly due to a sharp rise in group premiums. Its market share increased to 64.02% in Q1FY25 from 59.59% in the previous quarter (Q4FY24) and 61.42% in Q1FY24.

One must be aware that this growth comes at a time when private insurers have lost ground, largely because of recent regulatory changes that impacted their business. LIC’s market share had previously peaked at 68.25% in Q3FY23 but then declined over the following quarters as private insurers, especially SBI Life Insurance and HDFC Life, gained market share.

However, LIC's latest performance in Q1FY25 shows its ability to bounce back. The company is now successfully maintaining its dominance in the Indian insurance market, particularly in the group premium.

Check out other interesting portfolios!

• Mukul Agarwal Investment Portfolio
• Ashish Kacholia’s Portfolio
• Madhusudan Kela Portfolio

LIC has declared four dividends since August 25, 2022. The dividends include both interim and final payments. The company has a current market capitalisation of Rs. 6,57,104 crore (as of September 7, 2024) with a dividend yield of 0.58%. For a greater understanding, study the table below showing LIC's dividend history: