LIC business mix twist bigger threat to pvt players
New norms allow LIC to make a 10% shift in the business mix from participating policies to non-participating policies, which is only 4% now, which can take its margins to 20%
Sebi okays 63k-cr mega LIC IPO
Mumbai: Amendments to the surplus/profit distribution rules for IPO-bound LIC, which has already improved its margins by 700 bps to 9.9 per cent and will further rise to 20 per cent when the national insurer shifts its business mix to non-participating policies, can give nightmares to private players who have been thriving on this segment for too long, says a report.
According to an analysis of its initial public offer (IPO) filings by Swiss brokerage Credit Suisse, SBI Life, ICICI Prudential, HDFC Life and Max Life will face the maximum impact of the LIC move. The report notes that LIC's margin has already gone by up 700 bps to 9.9 percent after government amended LIC's surplus/profit distribution rules which allows it to make a 10 per cent shift in the business mix from participating policies to non-participating policies, which is only 4 per cent now, which can take its margins to 20 per cent.
