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LIC – An Insurance Goliath Crafting Its Own Growth Path: Motilal Oswal Initiates Coverage

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Life Insurance Corporation of India has maintained its market leadership position in the life insurance industry underpinned by its strong brand, vast distribution, and superior customer-connect despite the advent of a large number of private players.

During FY22, LIC accounted for 63%/46% of the total new business premium/annualized premium equivalent with a distinct focus on participating business that formed 70%/92% of individual NBP/APE, respectively, in nine months-FY22.

Unlike private peers, LIC relies on its dominant agency channel (1.3 million agents, 54% of industry as of March 31, 2022) to distribute insurance products; yet it has maintained a strong control on the cost ratios.

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We estimate LIC to deliver ~10% compound annual growth rate in NBP during FY22-24E while the value of new business margin is likely to improve to 13.6% on improving product mix and higher profit retention.

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