{"id":176123,"date":"2023-05-29T06:39:28","date_gmt":"2023-05-29T06:39:28","guid":{"rendered":"https:\/\/precoinnews.com\/?p=176123"},"modified":"2023-05-29T06:39:28","modified_gmt":"2023-05-29T06:39:28","slug":"lics-total-wealth-erosion-over-rs-2-trillion","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/lics-total-wealth-erosion-over-rs-2-trillion\/","title":{"rendered":"LIC’s Total Wealth Erosion: Over Rs 2 Trillion"},"content":{"rendered":"

The decline in LIC’s share price makes it the biggest wealth destroyer among IPOs which hit the market after COVID-19 took hold globally in 2020.<\/strong><\/p>\n

Since its listing, peers belonging predominantly to the private sector have largely outpaced the Life Insurance Corporation of India, which was originally formed by merging 245 private players in 1956.<\/p>\n

The stock dropped 8 per cent on the listing day, and has declined by more than a third since.<\/p>\n

It is down over 40 per cent in total from the price offered to shareholders who bought the stock in its initial public offering (IPO).<\/p>\n

The S&P BSE Sensex has risen nearly 14 per cent since then (chart 1).<\/p>\n

<\/p>\n

The decline in LIC’s share price makes it the biggest wealth destroyer among IPOs which hit the market after COVID-19 took hold globally in 2020.<\/p>\n

The total wealth erosion of over Rs 2 trillion made it a bigger wealth destroyer than all the others in the top five put together (chart 2).<\/p>\n

<\/p>\n

There are some headwinds on the business side. The growth in LIC’s annualised premium equivalent (APE), a measure of sales in the insurance industry, has slowed.<\/p>\n

The insurer has also seen some loss of market share, especially when it comes to the individual business segment (charts 3, 4).<\/p>\n

<\/p>\n

 <\/p>\n

<\/p>\n

Private players have diversified ways of sourcing business, while LIC is more dependent on its agents.<\/p>\n

This can affect business in the event of shutdowns like the pandemic or if there are regulatory issues in getting new agents, according to analysts (chart 5).<\/p>\n

<\/p>\n

Other troubles include taxation of high-value insurance policies, and the fact that a large part of LIC’s surplus goes to policy holders instead of shareholders, though it has moved to increase the shareholder proportion to 10 per cent by 2024-25, from 5 per cent earlier.<\/p>\n

A recent report of US-based short-seller Hindenburg Research alleging irregularities in the Adani group affected sentiment.<\/p>\n

The insurance behemoth has clarified that Adani accounts for less than 1 per cent of its investments.<\/p>\n

It has also increased its stake marginally in at least four out of seven Adani group companies after the Hindenburg report.<\/p>\n

A large portion of its book can be affected by capital market fluctuations, according to analysts.<\/p>\n

The equity market portfolio accounts for over 20 per cent of assets.<\/p>\n

Another headwind is rise in interest rates.<\/p>\n

Over 60 per cent of assets are invested in government securities (chart 6).<\/p>\n

<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The decline in LIC’s share price makes<\/p>\n","protected":false},"author":3,"featured_media":176122,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"\nLIC's Total Wealth Erosion: Over Rs 2 Trillion - Pre Coin News<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/precoinnews.com\/business\/lics-total-wealth-erosion-over-rs-2-trillion\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"LIC's Total Wealth Erosion: Over Rs 2 Trillion - Pre Coin News\" \/>\n<meta property=\"og:description\" content=\"The decline in LIC’s share price makes\" \/>\n<meta property=\"og:url\" content=\"https:\/\/precoinnews.com\/business\/lics-total-wealth-erosion-over-rs-2-trillion\/\" \/>\n<meta property=\"og:site_name\" content=\"Pre Coin News\" \/>\n<meta property=\"article:published_time\" content=\"2023-05-29T06:39:28+00:00\" \/>\n<meta name=\"author\" content=\"mediabest\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/precoinnews.com\/wp-content\/uploads\/2023\/05\/LICs-Total-Wealth-Erosion-Over-Rs-2-Trillion.jpg\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"mediabest\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/precoinnews.com\/business\/lics-total-wealth-erosion-over-rs-2-trillion\/\",\"url\":\"https:\/\/precoinnews.com\/business\/lics-total-wealth-erosion-over-rs-2-trillion\/\",\"name\":\"LIC's Total Wealth Erosion: Over Rs 2 Trillion - 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