Author: Tanwangini Sahani & Dr. Mukta Goyal
Abstract:This paper examines the disinvestment strategy of the Life Insurance Corporation of India (LIC) in light of its proposed initial public offering (IPO). Established on September 1, 1956, LIC has played a pivotal role in India’s life insurance sector, providing tailored insurance plans that blend coverage and savings with lifelong financial support. The organization has a rich history, tracing its roots to the Oriental Life Insurance Company founded in 1818. It has evolved significantly to become a major player in global financial markets.
LIC’s IPO, announced in the 2021 Union Budget, aims to sell a 3.5% stake, raising approximately Rs 21,000 crore and valuing the insurer at around Rs 6 lakh crore. Despite this, the IPO has faced significant challenges, including a drop in share prices and underperformance compared to expectations. This paper explores the government’s strategy to achieve its disinvestment targets for the fiscal year 2022-23, the challenges involved, and the implications of the IPO’s performance on LIC’s products, services, and policies.
The study employs descriptive research methods, relying on secondary sources to analyze LIC’s financial position across several years, including growth in premiums and policy payouts. The financial data reveals LIC’s robust market presence and performance, despite increased competition and economic fluctuations. The research also investigates various disinvestment methods, such as share sales and strategic sales, and their impact on LIC’s financial stability and market position.
Keywords: Life Insurance Corporation of India, IPO, disinvestment, financial performance, market conditions, government strategy, insurance policies, strategic innovation, market capitalization, valuation, public sector enterprises, financial position, share sale, offer for sale, cross-holding disinvestment, golden share method, warehouse disinvestment, transparency.