Mumbai: The government tends to appreciate the Life Insurance Corporation (LIC) at a more conservative price than expected by some previous analysts.
In fact, some have even estimated that it will be the most valuable company in India.
While the assessment will be in several Lakh Crore Rupees, it will be in one digit, which will place it under a company such as Reliance Industries (RS 16 Lakh Crore) and TCS (Rs 13.8 lakh Crore).
However, even in conservative assessment, the initial public offering (IPO) will be the largest in this country.
To push policy holders to participate in the IPO, LIC will issue shares with discounts to customers.
The corporation is interested in participating policy holders such as, in the future, there will be a shift in the distribution of surplus.
At present, the corporation only distributes 5% of surplusus to shareholders as a 10% permitted with the remaining distributed to policyholders.
Conservative prices will provide comfort for retail investors.
Milman’s actuarial company has submitted its report about embedded LIC values, which will function as a basis for pricing.
According to the insurance industry source, comparing LIC assets under management (AUM) with private players will provide disproportionate assessments.
This is because most corporate funds represent a guaranteed return plan, insurance funds and pension funds from employers.
Margin in this business is very low.
At present, the SBI Life Insurance State Bank owned by India has a CRORE RS 1.2 lakh market capitalization on assets under the management of Rs 2.4 Lakh Crore.
LIC has an AUM which is almost 15 times higher.
This has encouraged many people to set a value of more than Rs 15 Lakh Crore, which turned out to be too optimistic, according to the actuary.
Corporations tend to make embedded values report part of the draft red herring prospectus, which will result in combining the results of the first semester.
In the past, when the government has improved ambitious prices for public sector units such as general insurance companies and new Indian Assurance, LIC must enter and support the problem.
This time, the success of this problem will be accounted for only to market demand.
IPO IPO prices can appreciate it with reliance, TCS
