Why is trust of 30 cr policyholders being undervalued, asks Surjewala over LIC IPO

"LIC's tagline is "zindagi ke saath bhi, zindagi ke baad bhi", then why such hurry Modiji?" asked INC leader Randeep Surjewala at a press conference in Delhi on Tuesday.

He questioned why the PM is selling companies that took years to built and hard-earned money of people. "30 crore Indians are a part of LIC. If you assume there are 4 members in each family, 120 crore people are affected by LIC's IPO which has been done hurriedly under 2 months," said the Congress leader.

Why is the trust of 30 crore policy holders being undervalued at much less than the market value, asked Surjewala.

It is important to note here that Life Insurance Corporation of India (LIC) is launching its initial public offer (IPO) on Wednesday, May 4. Through this the government will liquidate 3.5% of its stake in the LIC. LIC is the largest life insurer in India and has a market share of 61% in New Business Group (Individual and group). By global Gross Written Premium (GWP), it is ranked fifth and with regards to total assents it stands at 10th position globally.

"We don't object to the disinvestment policy, but the intent, purpose and modus operandi of the government's desperation to list LIC's IPO despite lower valuations, global uncertainties and a volatile market is intriguing and highly questionable. That's our only objection."

He added that LIC gives employment to over 13,94,000 families.

Raising questions for the Modi govt, "Why was the LIC valuation of rupees 12-14 lakh crores in February 2022 reduced to rupees six lakh crores in just two months?"

The LIC valuation has been reduced from 2.5 times the embedded value to 1.1 times the embedded value in just two months. The next comparable companies are HDFC Life, SBI Life, and ICICI Prudential Life, which are all trading at higher embedded values, pointed out Surjewala.

He further asked, "Why did Modi govt suddenly reduce the valuation of LIC as also the issue size after road shows in India and abroad?"

"Why has the disinvestment target been reduced from Rs. 70,000 crore by selling 5% to Rs. 21,000 crore by selling 3.5%?"

"Is Modi govt ignoring LIC's key indices- high RoE, compound annual growth rate of the company and net premium earned by the company and its market share in India?"

In FY 2021, LIC's RoE was 82%, which is the highest in the world, and 4 times its nearest competitor. LIC's compound annual growth rate is 5.1% between 2016-2020, which makes it the third ranked company in the world. LIC was number 5 in the world in the net premium earned with a premium of USD 56 billion. In 2021, LIC's market share was in the Indian market was 64% of the total insurance market. LIC is the sixth largest in the world when it comes to assets under management, whose worth is USD 526 billion.

"Why is govt trying to sell LIC when domestic and global financial markets are in a turmoil?" asked Surjewala. Is LIC not a part of the disinvestment process that was stopped due to the Russia-Ukraine war and turmoil in the global market, he wondered.