Life Insurance Corporation facts for kids
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Yogakshemam Vahamyaham
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| Statutory Corporation established by an Act of Parliament- LIC Act 1956 |
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| Traded as | |
| Industry | Insurance and Financial services |
| Founded | 1 September 1956 |
| Headquarters | Mumbai, India |
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Key people
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| Products |
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| Revenue |  ₹56,078,439 lakh (US$95 billion) (2019) |
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Operating income
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₹270,348 lakh (US$460 million) (2019) |
| ₹268,849 lakh (US$460 million) (2019) |
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| Total assets | ₹380,400,000 lakh (US$650 billion) (2021) |
| Owner | Government of India |
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Number of employees
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114,000 (2020) |
| Subsidiaries |
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Life Insurance Corporation of India (LIC) is an Indian statutory insurance and investment corporation headquartered in the city of Mumbai, India. It is under the ownership of Government of India.
The Life insurance Corporation of India was established on 1 September 1956, when the Parliament of India passed the Life Insurance of India Act that nationalized the insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state-owned Life Insurance Corporation of India.
As of 2019, Life Insurance Corporation of India had total life fund of ₹28.3 trillion. The total value of sold policies in the year 2018–19 is ₹21.4 million. Life Insurance Corporation of India settled 26 million claims in 2018–19. It has 290 million policy holders.
Contents
History
Founding organisations
The Oriental Life Insurance Company, the first company in India offering life insurance coverage, was established in Kolkata in 1818. Its primary target market was the Europeans based in India, and it charged Indians heftier premiums. Surendranath Tagore had founded Hindustan Insurance Society, which later became Life Insurance Corporation.
The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the pre-independence era included
- Postal Life Insurance (PLI) was introduced on 1 February 1884
- Bharat Insurance Company (1896)
- United India (1906)
- National Indian (1906)
- National Insurance (1906)
- Co-operative Assurance (1906)
- Hindustan Co-operatives (1907)
- The New India Assurance Co Ltd (1919)
- Indian Mercantile
- General Assurance
- Swadeshi Life (later Bombay Life)
- Sahyadri Insurance (Merged into LIC, 1986)
The first 150 years were marked mostly by turbulent economic conditions. It witnessed India's First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of and liquidation of life insurance companies in India. This had adversely affected the faith of the general in the utility of obtaining life cover.
Nationalization in 1956
In 1955, parliamentarian Feroze Gandhi raised the matter of insurance fraud by owners of private insurance agencies. In the ensuing investigations, one of India's wealthiest businessmen, Sachin Devkekar, owner of the Times of India newspaper, was sent to prison for two years.
Initial public offering
Finance Minister Nirmala Sitharaman announced a proposal to conduct an initial public offering for LIC in the 2021 Union Budget. The IPO opens on 4th May 2022 and closes on 9th May 2022. The Government of India will remain the majority shareholder after the public listing. Ten percent of shares are proposed to be allotted to existing LIC policyholders. In year 2021, government of India had proposed to significantly enhance the authorised capital of Life Insurance Corporation of India (LIC), to ₹250 billion (US$4.3 billion) to facilitate its public listing scheduled for the next fiscal year which will begin on 1 April.
Due to the scale of the offering and LIC's ownership structure, the deal has been referred to as "India's Aramco moment" in reference comparable importance and scale of 2019 IPO of Saudi Aramco.
The latest development in the LIC IPO is the slashing of issue size from 5% to 3.5% of total equity of the company. LIC will open its IPO to the public on May 4 and the process concludes on May 9. Through this IPO, the Government of India, the sole owner of LIC, is now aiming to raise ₹21,000 crore, as opposed to raising between ₹65,000 crore to ₹70,000 crore by diluting 5% equity earlier, indicating more than 50% compromise on valuation as well.As per the IPO price band for 3.5% stakes for Rs. 21,000 crore, the valuation comes to around Rs 6 lakh crore.
Structure
The LIC's executive board consists of Chairman, currently M R Kumar, and Managing Directors, Vipin Anand, T. C. Suseel Kumar, Mukesh Kumar Gupta and Raj Kumar
The Central Office of LIC is based out of Mumbai which sits The Chairman, all four Managing Directors, and all Executive Directors (Department Heads). LIC has a total of 8 Zonal Offices namely Delhi, Chennai, Mumbai, Hyderabad, Kanpur, Kolkata, Bhopal & Patna.
LIC's Contribution to the five year plans over the years
| Plan | Year | Investment |
|---|---|---|
| 2 | 1956–1961 | ₹184 Cr |
| 3 | 1961–1966 | ₹285 Cr |
| 4 | 1969–1974 | ₹1,530 Cr |
| 5 | 1974–1979 | ₹2,942 Cr |
| 6 | 1980–1985 | ₹7,140 Cr |
| 7 | 1985–1990 | ₹12,969 Cr |
| 8 | 1992–1997 | ₹56,097 Cr |
| 9 | 1997–2002 | ₹1,70,929 Cr |
| 10 | 2002–2007 | ₹3,94,779 Cr |
| 11 | 2007–2012 | ₹7,04,720 Cr |
| 12 | 2012–2017 | ₹14,23,055 Cr |
| 13 | 2017–2022 | ₹28,01,483 Cr |
Growth as a monopoly
The corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of ₹45.9 crores (US$92 million as per the 1959 exchange rate of roughly ₹5 for US$1), had grown to 25,000 servicing around 350 million policies and a corpus of over ₹800,000 crore (US$140 billion) by the end of the 20th century.
Liberalisation post 2000s
In August 2000, the Indian Government embarked on a program to liberalise the insurance sector and opened it up for the private sector. LIC emerged as a beneficiary from this process with robust performance, albeit on a base substantially higher than the private sector.
In 2013, the first year premium compound annual growth rate (CAGR) was 24.53% while total life premium CAGR was 19.28% matching the growth of the life insurance industry and outperforming general economic growth.
Awards and recognitions
- The Economic Times Brand Equity Survey 2012 rated LIC as the No. 6 Most Trusted Service Brand of India.
- Voted India's Most Trusted brand in the BFSI category according to the Brand Trust Report for 4 continuous years – 2011–2014 according to the Brand Trust Report.
Initiatives
Golden Jubilee Foundation
LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has the aim of promoting education, alleviation of poverty, and providing better living conditions for the under privileged. Out of all the activities conducted by the organisation, Golden Jubilee Scholarship awards is the best known. Each year, this award is given to the meritorious students in standard XII of school education or equivalent, who wish to continue their studies and have a parental income less than ₹200,000 (US$3,400).
Financial
| Year | Revenue (In crores) | Profits/Loss (In crores) | Total Assets (In crores) |
|---|---|---|---|
| FY 2019 | 571,508 |
2,627 |
3,427,249 |
| FY 2020 | 628,043 |
2,710 |
3,499,834 |
| FY 2021 | 693,904 |
2,974 |
3,829,524 |
Holdings
LIC invests in sectors such as banks, cement, chemicals and fertilizers, electricity and transmission, electrical and electronics, engineering, construction and infrastructure, fast-moving consumer goods, finance and investments, healthcare, hotels, information technology, metals and mining, motor vehicles, and ancillaries, oil and natural resources, retail, textiles, transportation, and logistics.
Among the Nifty companies, LIC's holding in terms of value in 2012 was estimated to be the highest in ITC (₹27,326 crores), followed by RIL (₹21,659 crores), ONGC (₹17,764 crores), SBI (₹17,058 crores), L&T (₹16,800 crores), and ICICI Bank (₹10,006 crores). The share price drop in ITC on 18 July 2017 had caused LIC a major loss of around 7000 crores during the financial year.
LIC also holds a 51% stake in IDBI Bank, making it the only insurer in India to own a bank, since regulations prohibit insurers from holding more than 15% stake in any company, LIC will have to decide a timeline for paring its stake in IDBI bank; also LIC may have to pare its stake in LIC Housing Finance Ltd as a company cannot be the promoter of two finance companies carrying out same housing finance business in India.
