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Govt nudges LIC to tweak product strategy

October 27, 2022

Govt nudges LIC to tweak product strategy
The government is nudging LIC to tweak its product strategy to maximise profitability in a bid to help the country’s largest insurer realise its full growth potential and yield better returns for investors, an official said.

Life Insurance Corporation (LIC) has been trading below the issue price of ₹949 a share ever since it got listed on stock exchanges on May 17. It listed at ₹872 apiece on NSE. 

On Tuesday, the scrip settled at ₹595.50, down 0.72% from the previous close.

Foreign brokerages, however, remain bullish on LIC setting a higher target price over the next year as they feel that the insurer has good medium-term market potential, negligible high risk assets and robust core operating Return on Embedded Value (ROEV).

Citi in a research report dated October 14 set a target price of ₹1,000 for LIC scrip, saying LIC is ‘positioned better than mature global players’. 

The Finance Ministry in its performance review has been sensitising the LIC management about the steps that could be taken to better investor wealth and focus on non-participating products or term plans to improve profitability. 

“With the listing of LIC, the process of modernisation of the over 65-year-old institution has started. We are working with the management so that they modernise their product offering and lower dividend payout to policyholders,” the official told PTI.

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