ICICI Securities LIC Initiating Coverage Note

Equity Research INDIA
November 11, 2022

BSE Sensex: 60614
Life Insurance Corporation of India BUY
ICICI Securities Limited
is the author and Valuation belies prospects; VNB levers under-
distributor of this report
appreciated; equity sensitivity concerns overdone Rs621
Life Insurance Corporation of India (LIC) is the Indian insurance market leader with 44%
Initiating coverage share of the total APE market (on a weighted basis) as of FY22. Robust back-book (AUM
of Rs41trn as of Q1FY23), high brand value, difficult-to-replicate agency strength of
Insurance 1.33mn individuals (as of Sep’22) are competitive moats. Increasing non-participating
mix (currently ~5% in APE mix as of Q1FY23) and change in surplus distribution policy
are significant growth drivers of value of new business (VNB) and in turn embedded
Target price Rs917 value (EV). This, against the strong growth outlook of the Indian life insurance
(especially through lens of sum assured), makes LIC a strong investment proposition
Shareholding pattern considering that it is currently trading at 0.73x FY22 price to EV. Concerns on equity
Mar Jun Sep sensitivity to EV is overdone and the relative ease of increasing VNB margin through
’22 ’22 ’22
Promoters 96.5 96.5 96.5 change in mix is under-appreciated.
Institutional  Initiate with BUY and target price of Rs917, based on 15x FY24E VNB of Rs98bn and 0.7x
investors 1.2 1.9 1.3 FY24E EV of Rs6.2trn. We have factored an impact of ~Rs400bn (FY23+24) to factor 10%
MFs and others 0.8 0.7 0.6
FI/Banks 0.2 0.1 0.3 correction in equity market while our discounted EV multiple adequately factors any further
FIIs 0.2 0.1 0.2 risk from the high equity market sensitivity of the surplus book. The multiple of 0.7x to EV is
Others 2.3 2.6 2.4 equivalent to almost 50% market share correction based on current sensitivity of EV to equity
Source: BSE
market movements. Even at this multiple, resultant upside at CMP is 48%, implying attractive
valuation of the stock.
 Under-penetration (especially through sum assured lens), high entry barriers and
favourable regulatory environment make us positive on life insurance prospects in
ESG disclosure score India; LIC is a play on the same. India’s life insurance under-penetration becomes starker
Year 2020 2021 Chg from the lens of sum assured and protection gap. Basis reducing protection gap from 85% to
ESG score NA NA NA 65% over next the 10 years, APE / VNB CAGRs can be 15% / 16%. From the point of view of
Environment NA NA NA improvement in sum assured as a % of GDP (from 87% currently to 150% in line with certain
Social NA NA NA
Asian peers), APE / VNB CAGRs can be 18% / 20% over next 10 years. These CAGRs will
Governance NA NA NA
Note - Score ranges from 0 - 100 with a higher score obviously be much higher if achieved within a shorter timeframe. Regulatory support towards
indicating higher ESG disclosures. increasing the penetration over next 5 years will also aid the prospect.
Source: Bloomberg, I-sec research
 VNB growth will be very high for LIC: this is a fairly certain narrative. The VNB multiple
should therefore be high for the company. VNB growth for LIC will be driven by increase
in: 1) non-par mix, and 2) gradual increase in surplus distribution towards shareholders. We
have seen that product-mix-driven increase in VNB margin is a fairly straightforward objective
as seen from industry peers. SBI Life / HDFC Life / IPRU Life VNB margins expanded from
~17% / 23.7% / 16.5% in FY18 to 26% / 26.7% / 28% in H1FY22, largely driven by change in
mix. Additionally, for VNB, the assumed proportion of future surplus to be distributed to
shareholders (by year of surplus emergence) will increase as follows: 5% for FY22, 7.5% for
FY23,
 7.5% for FY24 and 10% from FY25 onwards in case of the participating book of LIC.
The current (trailing) VNB multiple (market cap less EV)/VNB for HDFC Life / SBI Life / IPRU
Life is 31x / 22.5x / 17.7x while LIC is quoting below its EV, signaling a significant valuation
gap with its peers. We expect LIC to clock VNB margin of 14%/15% and VNB of
Rs83bn/98bn in FY23E/FY24E. Accordingly, we value LIC at multiples of 15x FY24E VNB
and 0.7x FY24E P/EV. We have factored an impact of ~Rs400bn (FY23+24) to factor 10%
correction in equity market while our discounted EV multiple adequately factors any further
risk from the high equity market sensitivity of the surplus book. The multiple of 0.7x to EV is
equivalent to almost 50% market share correction based on current sensitivity.
Market Cap Rs3927bn/US$48bn Year to Mar FY21 FY22 FY23E FY24E
Research Analysts: Reuters/Bloomberg LIFI.BO / LICI IN Weighted APE (Rs bn) 456 504 595 654
Shares Outstanding (mn) 6,325.0 Growth 10% 18% 10%
Ansuman Deb
ansuman.deb@icicisecurities.com 52-week Range (Rs) 949/589 EV (Rsbn) 956 5,415 5,782 6,183
+91 22 6807 7312 Free Float (%) 3.5 VNB (Rsbn) 42 76 83 98
Ravin Kurwa FII (%) 0.2 Growth 83% 9% 18%
ravin.kurwa@icicisecurities.com
Daily Volume (US$/'000) NA VNB margin (%) 9 15 14 15
+91 22 6807 7653
Absolute Return 3m (%) (8.8) PAT (Rs mn) 30 41 46 64
Absolute Return 12m (%) NA P/EV (x) 0.1 0.7 0.7 0.6
Sensex Return 3m (%) 3.3 EVOP as % of IEV (%) 37 12 11 11
Sensex Return 12m (%) 1.7 RoE (%) 74% 44% 34% 34%
Please refer to important disclosures at the end of this report

Life Insurance Corporation of India, November 11, 2022 ICICI Securities
 Higher equity share of AUM (especially non-par) should result in relatively
higher unwind. LIC’s non-par equity mix stood at 20% as of Jun’22 while that of
HDFC Life / IPRU Life / SBI Life was at 6.7% / 9.6% / 7.1% as of Q1FY23. The higher
unwind limits the downside to RoEV. We factor-in a 9% unwind rate for FY23E/FY24E
based on estimates of equity return of ~12% and debt return of ~8% assuming 75:25
debt:equity book within the non-par AUM
 Concerns on surplus book sensitivity to equity markets are overdone. We have
factored an impact of ~Rs400bn (FY23+24) to factor 10% correction in equity market
while our discounted EV multiple adequately factors any further risk from the high
equity market sensitivity of the surplus book. The multiple of 0.7x to EV is equivalent
to almost 50% market share correction based on current sensitivity of EV to Equity
markets.
 Structural competitive strengths cover key areas of distribution, cost,
capability to write non-par business, and brand. (1) Scale is evident from the
low cost ratios (FY22 total opex ratio stood at 14.2%, second-lowest after SBI Life)
and large AUM (Rs41trn). (2) Trust in brand is evidenced from the 275mn in-force
policies in the individual segment being serviced in India as at FY22. Additionally,
~75% of individual policies sold by LIC in H1FY22 were to new customers. (3)
Product mix is dominated by participating life insurance policies, which creates low
balance sheet risk and lower capital requirements; PAR mix (basis individual APE)
stood at 92% as of Q1FY23). (4) Presence across India through an omni-channel
distribution network with an unparalleled agency force. As at Jun’22, LIC had
1.33mn individual agents, 77 bancassurance partners, 74 corporate agents, 226
brokers, a company website portal for digital sales, 19,747 total micro insurance
agents, and118 insurance marketing firms. The agency had industry-leading
productivity (Rs394k Individual Agency NBP per agent). (5) Technology capabilities
to support customer connect and drive operating efficiencies. (6) Robust risk
management frameworks. (7) Highly experienced and qualified management team,
distinguished Board and strong corporate governance framework (LIC had 12
Independent Directors amongst 15 Board of Directors).
 LIC’s new business growth plan has multiple levers. These include: (1)
Increasing bancassurance markets share, direct sales, upselling/cross selling, ticket
size and launching new products. (Individual banca NBP mix increased from 1.54%
in Q1FY22 to 2.65% in Q2FY22 and the absolute NBP has increased by 135.4%
YoY in Q1FY23). (2) Diversifying the product mix by increasing the contribution of
the non-participating portfolio (currently non-par APE mix stands at ~5% of total
APE). (3) Reinvigorating the distribution with aim to increase productivity aided by
leveraging technology. (4) Maximising value creation through various commercial
levers and financial levers.
o LIC app users have increased from 4.54mn in FY21 to 5.82mn in Q1FY23 while
the number of portal-registered customers has grown from ~17mn to 19.75mn
in the same period).
o Dynamic and strategic asset allocation within regulatory framework to improve
yields on investments, improvement in persistency and changes to surplus
distribution policy from 5% in FY22 to 7.5% each year for FY23/FY24 and 10%
from FY25 onwards
 Risks include possible impact of events like pandemic, which have impact on
distribution partners, investment portfolio and increase in death claims. Additionally,
interest rate fluctuations and equity movements may materially and adversely affect
LIC’s profitability.
2
TABLE OF CONTENT
Investment thesis – strong business drivers make current (0.7x FY22 P/EV)
valuations attractive ........................................................................................................ 4
Indian market is underinsured; more stark from lens of sum assured ............................ 4
Market leader with business moats............................................................................... 10
Attractive valuations ...................................................................................................... 11
Expect EV/VNB of Rs6.2trn/98bn in FY24E ................................................................. 12
LIC has inherent strengths in the form of size, distribution, brand and growth
optionalities .................................................................................................................... 16
LIC has the highest market share in terms of premiums .............................................. 16
Par-heavy individual mix gives lower interest rate risk, lower new business strain ...... 17
LIC’s cross-cyclical product mix caters to diverse consumer needs ............................ 19
LIC offers competitive pricing in its term and annuity products .................................... 22
LIC – a trusted brand with customer-centric business model ....................................... 24
Distribution via individual agents is the key strength for LIC ........................................ 24
Bancassurance is a huge opportunity for LIC ............................................................... 27
Case study: Tata AIA – good banca mix despite no bank parentage, LIC can also do the
same.............................................................................................................................. 30
LIC’s cost structure is second lowest amongst top listed peers ................................... 31
AUM composition: Government securities constitute >60% of AUM as of Q1FY23 .... 33
Persistency improved in Q1FY23; there is room for improvement ............................... 34
LIC’s reinsurers enjoy strong rating from top rating agencies. ..................................... 36
Digital initiatives undertaken by LIC will ensure business competitiveness ................. 37
Company strategy: Building on available growth levers for volume and margin... 39
Diversify product mix by increasing the contribution of non-participating portfolio ....... 39
Reinforce omni-channel distribution network and increase its productivity .................. 40
Maximise value creation through commercial and financial levers ............................... 40
Capitalise on growth opportunities in the Indian life insurance sector .......................... 41
Company Overview ........................................................................................................ 42
Subsidiaries and associates ......................................................................................... 42
Details on IDBI Bank, now an associate of LIC ............................................................ 42
Board of directors .......................................................................................................... 43
Management organisation structure ............................................................................. 43
Key risks ......................................................................................................................... 45
Financial summary ........................................................................................................ 48
Index of Tables and Charts ........................................................................................... 49
3
Investment thesis – strong business drivers make

current (0.7x FY22 P/EV) valuations attractive
Indian market is underinsured; more stark from lens of sum assured
India’s life insurance penetration stood at 3.2% in CY20 compared to the global average
of 3.3%. This is despite the fact that penetration of the Indian industry is not comparable
to developed markets, such as the United States / Australia, where mandatory pension
contributions are not included in the insurance pie.
Furthermore, due to the higher share of savings than protection within life insurance
premiums, the actual protection provided by insurance in India would be much lower
compared with even other developing markets. At US$59 in CY20, insurance density in
India remains very low compared with other developed and emerging market economies.
Chart 1: Life insurance premium as % of GDP
Life Insurance density US$
5000 4528
4500
3861 3667
4000 3574
3500
3000
2329
2500 2050 1959 1918
2000
1281
1500
1000 568 560 415
360 244 241
500 151 59
0
Germany
Australia
PR China
Singapore
United
Thailand
World
Japan#
South Africa
Malaysia#
India#
States
Switzerland
Kingdom
France
Brazil
Taiwan
Korea#
South
United
Source: Life Insurance Council

# refers penetration as on FY20 and for rest CY20
Chart 2: Life insurance density (premium per capita)

Life Insurance penetration (premium to GDP)
16.0 14.0
14.0
12.0 11.2
10.0 8.8
7.6
8.0 6.4 5.8
6.0 5.1
4.3 4.0
3.4 3.3 3.2 3.0 2.8
4.0 2.4 2.3
2.0 1.1 0.5 0.5
0.4
0.0
Australia
Germany
Russia
UK
Singapore
PR China
United States
World
Japan#
Thailand
Pakistan
Switzerland
India#
France
Malaysia#
Sri Lanka
South Africa
Brazil
Taiwan
So Korea#

# refers penetration as on FY20 and for rest CY20
4
Indian life insurance can have APE/VNB CAGR of 15-20% possible over next
decade as derived from related extrapolations of multiple key parameters.
Similarly, we also checked how Indian life insurance companies fared in terms of
product mix and persistency vs other geographies.
Some of the key findings of this macro study are as follows:
 From point of view of reducing protection gap from 83% currently to 65%, APE/ VNB
CAGR will be 14.7%/16% over next 10 years. The CAGR will be significantly higher
(32%) if the same is achieved in shorter term. Regulator has an aim to increase the
insurance penetration to 8-10% (Currently 3-4%) by FY27.
 From point of view of sum assured as % of GDP improving from 87% in FY22 to
150%, APE/ VNB CAGR will be 18%/19.5% over next 10 years, considering GDP
growth of 12% CAGR for next 10 years.
 From point of view of premium density, India’s per person premium has to grow 4x
to reach Chinese levels implying similar 4x possible growth in total premiums of
Indian life insurers (chart 2 above)
The global reinsurer Swiss Re uses mortality protection gap and protection margin as
metrics to assess the adequacy of insurance coverage. Mortality protection gap is the
difference between the resources needed and the resources already available for the
family to maintain their living standards, in the event of death of a working family
member. Protection margin is the ratio of protection gap and protection needs.
Table 1: Estimating APE / VNB by FY32E (basis protection gap)
Current Protection Gap 83%

Protection available 17%
Sum Assured today (A) (Rs trn) 212
Additional Sum Assured required to reduce Protection gap to 65% ( B) (Rs trn) 212
Total sum assured has to be (C = A+B) 424
Expected growth in sum assured in next 10yrs @7% ( D ) 834
FY22 APE (weighted basis) (E ) 1.2
Expected Annual APE % Total Sum assured in force (F = E / A) 0.57%
Expected APE in 10 years (trn) (G= F*D) 4.72
APE CAGR 14.7%
VNB Margin (Assumption based on 15% margin of LIC and 22% margin of private players ) 18%
VNB (Rs trn) 0.22
Expected VNB margin FY32 20%
Expected FY32 VNB 0.94
VNB CAGR 15.9%
Source: ICICI Prudential Investor presentation, I-Sec research
Estimating VNB, assuming sum assured as percentage of GDP increases to 150% in

next 10 years (parity with other SE Asian countries) and GDP grows by 12% CAGR in
the same period, APE/ VNB CAGR will be 18%/19.5% over next 10 years (refer chart
13 below for Asian countries data)
Table 2: Estimating APE / VNB by FY32 (basis Sum Assured % of GDP)

Rs trn CY22 CY32 CAGR CY21-CY31
GDP 236 733 12%
Penetration 87% 150%
Sum Assured in force 206 1,099 18%
APE % Sum Assured 0.57% 0.57%
APE 1.17 6.27 18%
VNB Margin 18.0% 20.0%
Expected VNB (Rs trn) 0.21 1.25 19.5%
Source: I-Sec research
5
Chart 3: Life expectancy (years) improvement Chart 4: India’s insurable population estimated at
expectations remain positive for life insurers ~1bn by CY35
Life expectancy (Years) 2020 2040E 2060E

100
7 11
78 90 17
76.1
76 80
73.1 70
74 58
60 61
72 60
(% )
50
70 69.3
40
68 30
66 20 35
28 23
64 10
2040E
2060E
2020
0
Less than 20yrs 20-64yrs 65yrs and above
Source: HDFC Life Investor presentation Source: HDFC Life Investor presentation
Chart 5: Sum assured percentage of GDP can Chart 6: Protection Gap indicates huge upside
improve significantly for India potential for India life insurance space
Sum assured as % of GDP Protection gap

83
350 332 18 16.5 90
300 16 80
252 251 14 70
250 61
12 60
US$ trn
200 55
153 10 8.4 50
143
150 127 8 54 71 74 55 40
76
6 3.9 30
100 2.8
4 2 20
50 22 0.9 0.7 0.6
2 10
0 0 0
Australia
Korea
Korea
Singapore
Singapore
USA
Thailand
Thailand
Japan
Japan
India
Malaysia
South
Malaysia
India
South
Indonesia
Source: ICICI Prudential company presentation Source: ICICI Prudential company presentation
Note: Numbers highlighted inside the boxes are protection gap ratio
6
Chart 7: Addressable population coverage* Chart 8: …leaving enough headroom for growth
indicates strong thesis for protection opportunity beyond FY35 if we assume number of policies to
in India… increase by 20% p.a. up to FY35
Addressable population coverage Estimated growth (10% CAGR) in addressable

population* and insured population indicates that ~31%
Population of the addressable population will be covered by FY35
covered by 350 244.2
12% retail
300
protection
policies 250
166.2
200
150 103.2
100 71.5
50 76.9
0 8.4 13.3 31.3
FY22
FY25
FY30
FY35
Inforce no. of lives for retail protection/no. of returns with income
*Addressable population coverage refers to Inforce no. of lives for retail Note: Assumed 10% lapse rate for in-force policies each year
protection/no. of returns with income >Rs0.25 mn *Addressable population refers to number of person who have filed income
above 0.25mn
Chart 9: Even after registering strong growth of Chart 10: Sum assured towards retail credit (which
20/25%, sum assured as % of GDP will still remain is voluntary in nature) has also seen a robust 16%
below the current ratio for global peers CAGR between FY14-FY22
Home loans Others
332%
350% 40000
300% 252% 251% 35000
250%
30000
200% 153% 143%
127% 125% 25000 17856
150%
74% 20000
100%
22% 15000 9339
50%
10000 6454
0% 4711 15893
Singapore
USA
India @ 25%
India @ 20%
Japan
Malaysia
South Korea
India (Current)
5000 9746
Thailand
5386 7468
CAGR*
CAGR*
0
FY14
FY16
FY18
FY22
Note: For calculation of GDP, growth rate of 10% is assumed between
FY22-30 and 8% between FY30-FY35
7
Indian life insurers also can increase persistency as evident from a
comparison with Japanese and Taiwanese peers
Table 3: Persistency ratio of trend of Taiwan and Japan
Taiwan 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
13th month persistency 85 85.3 87.5 87.2 89.2 90.4 88.4 91.5 92.4 93.9
25th month persistency 76.4 77.7 77.2 81.4 81.7 83.5 86.7 86.3 86.5 87.9
Japan 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
1 Year persistency 98.5 97.4 98.3 99.2 99.1 99.1 99.1 98.8 99.4
2 Year persistency 95 78.2 94.9 96.2 96.3 96.5 93.6 95.5
3 Year persistency 91.6 69.8 92.1 93.3 94.2 85.4 91.1
4 Year persistency 86.5 56.4 79.5 87.9 92.9 83.4
5 Year persistency 80.7 35.6 73.8 81.2 91.3
Source: ICICI Prudential company presentation
Retiral solutions likely to provide huge tailwind to savings products

Expected rise in ageing populations will increase demand for annuities as seen in other
geographies.
Chart 11: Pension fund assets percentage of GDP

Pension market % of GDP
140 131.7
120
96.8
100
80
50.6 54.3
60
40
21.2
20 9.3
0
Australia
HK
USA
South
Japan
India
Africa
Source: Company data
Table 4: As a proxy for China, we have shown below the annuity mix of Ping
which has increased sharply
Written premium 2015 2016 2017 2018 2019 2020
Participating insurance 41.5 38.6 39.4 36.4 29.3 21.5
Universal insurance 28.5 24.8 20.8 19.5 16.7 17.0
Traditional life insurance 11.4 13.7 16.6 17.6 19.5 19.6
Long-term health insurance 9.7 11.8 13.9 15.8 17.5 19.3
Casualty & short-term health insurance 6.8 7.2 7.3 7.7 7.8 8.7
Annuity 1.3 3.4 1.7 2.7 9.1 13.7
Investment-linked insurance 0.8 0.5 0.3 0.3 0.2 0.2
Source: Ping AN annual report
8
Table 5: In developed countries like Japan, annuity mix remains higher and
stable
2015 2016 2017 2018 2019
Term Insurance 30% 31% 33% 35% 37%
Whole Life Insurance 20% 21% 21% 22% 23%
Whole Life with Term Rider 15.9% 14.0% 12.4% 10.2% 8.5%
Whole Life with Variable Accumulation Rider 9.4% 8.1% 6.9% 5.7% 5.0%
Endowment Insurance 5.0% 5.3% 5.2% 5.1% 4.9%
Variable Insurance 1% 2% 2% 2% 2%
Health Insurance 2% 2% 2% 2% 2%
Juvenile Insurance 0% 0% 0% 0% 0%
Cancer Insurance 0% 0% 0% 0% 0%
Others 17% 17% 17% 18% 17%
Table 6: US has seen a consistent high mix of annuity

2015 2016 2017 2018 2019 2020
Annuities 49.0% 47.8% 45.7% 48.3% 48.1% 48.2%
Ordinary individual annuities 30% 29% 26% 28% 28.6% 26.9%
Group annuities 19% 19% 19% 20% 19.5% 21.3%
Accident and health 26% 26% 27% 25% 27% 27%

Group 20% 20% 21% 19% 18.4% 18.4%
Other 6% 5% 6% 5% 8.4% 8.9%
Credit 0% 0% 0% 0% 0.1% 0.1%
Life 25% 26% 28% 27% 25% 24%

Ordinary life 0% 0% 0% 0% 19.6% 19.3%
Group life 16% 17% 18% 18% 5.2% 5.1%
Credit life (group and individual) 9% 9% 9% 8% 0.1% 0.1%
Industrial life 0% 0% 0% 0% 0.0% 0.0%
Total, all lines 100% 100% 100% 100% 100.0% 100.0%
Source: Insurance information institute
Chart 12: Annuity APE has been strong for HDFC Life, IPRU Life and SBI Life
FY19 FY22 CAGR
6.0 70%
58%
4.9 60%
5.0 46%
50%
4.0
3.5
Rs bn
3.0 3.1 40%

3.0
30%
2.0 18%
1.1 20%
0.8
1.0 10%
- 0%
HDFC Life SBI Life IPRU Life
Source: Company data.
9
Market leader with business moats

LIC is Indian insurance market leader with 44% total APE market share (on a weighted
basis) as of FY22. It has been providing life insurance in India for more than 65 years
and is the largest life insurer in India, with a 68% market share in terms of NBP, 71% in
terms of number of individual policies issued, 86% in terms of number of group policies
issued in FY23-TD as well as by the number of individual agents, which comprised 53%
of all individual agents in India as at FY23-TD. LIC was formed by merging and
nationalising 245 private life insurance companies in India on 1st Sep’56. From
incorporation until 2000, LIC was the only life insurer in India. It was identified by IRDAI
as a Domestic Systemically Important Insurer (D-SII) on the basis of size, market
importance and domestic and global inter-connectedness as of Sep’20.
 Brand name ‘LIC’, was recognised as the third strongest and 10th most
valuable global insurance brand as per the Insurance 100 2021 report released
by Brand Finance. As per RHP filed by the company, the brand value of LIC in
CY21 was US$8,655 million, with a Brand Strength Index (BSI) score of 84.1 out of
100, corresponding to AAA- brand strength rating.
 Distribution is the biggest strength in insurance; LIC is well endowed in
agency while bancassurance is an opportunity. LIC’s 1.3mn agency force has
been a very strong economic moat for the company. Agent network productivity of
LIC has been far superior to industry peers. (Refer Exhibits 34-41). Bancassurance
and alternate channels contributes only 2.7% (Individual NBP basis) (As on Q1F23)
of LIC APE and LIC contributes only 5% of total Individual bancassurance
commission. As such, bancassurance-driven growth is a lever for LIC. Open
architecture (regulator is proposing that banks can have tie ups with 9 insurers (Link)
can further help to increase the bancassurance premium mix.
 Strong back-book boost capability to support new business strain. LIC is fifth
largest insurer globally by life insurance GWP and 10th largest globally in terms of
total assets managed (as of FY21 for LIC and as of CY20 for others). LIC has total
AUM of Rs41trn as on Q1FY23 and is largely held under government securities.
(Refer exhibits 44-47).
 Expansion of non-participating segment will be a big driver for VNB margin
expansion. LIC has launched all new products in non-par categories. These include
LIC Bima Ratna and LIC Dhan Sanchay in Q1FY23 and LIC new pension plan on
5th Sep’22. LIC had 16 individual participating products, 19 individual non-
participating products, 11 group products (including one credit life and one annuity
product) in its portfolio, along with 8 rider benefits as of Q1FY23. (Refer Table 13
and 14).
10
Attractive valuations
LIC is trading at 0.7x trailing price to EV, which is a significant discount to Indian peers.
Comparison with global peers indicated an average P/EV of 0.8x suggesting a discount
again.
Chart 13: Price to Embedded Value (EV) comparison
Price to Embedded Value
3.79
4.00
3.50 3.15
3.00
2.27
2.50
2.00 1.73
1.37
1.50
1.00 0.57 0.57 0.70
0.50 0.25 0.15
-
AIA Group Ltd
IPRU Life
Insurance Co-H
HDFC Life
Max
LIC
Insurance Gr-H
SBI Life
Prudential Plc
New China Life

Insurance C-H
China Pacific
China Life
Source: Bloomberg, I-Sec Research.
11
Expect EV/VNB of Rs6.2trn/98bn in FY24E

 Reference rate assumptions: SBI Life has highest forward rate compared to other
listed peers for next 1 year and 5 years while LIC’s VIF reference rate assumptions
are largely in line with IPRU Life and HDFC Life for the same horizon. For 10th year,
SBI Life has lowest forward rate assumptions compared to peers. Over 30 years,
reference rate assumption for LIC is comparable to HDFC Life / IPRU Life while it is
high for SBI Life.
Table 7: Forward rate assumptions
LIC forward rate assumption HDLI IPRU life SBI Life
For VIF For VNB Forward rate assumptions
1 4.34 4.23 4.34 4.35 4.56
2 5.65 5.56 5.65 na na
3 6.7 6.59 6.70 na na
5 7.9 7.73 7.90 7.90 7.94
10 8.36 8.29 8.36 8.36 7.27
15 7.97 7.91 7.97 7.97 7.76
20 7.57 7.49 7.57 7.59 8.19
25 7.27 7.22 7.27 7.28 6.45
30 7.08 7.06 7.08 7.09 8.78
35 6.97 6.98
40 6.9 6.94
Source: Public disclosures
 Group fund management business has a Board-approved crediting rate where

there is no explicit specified charge.
 EV split between ANW and VIF. LIC’s legacy business results in large VIF mix in
EV compared to other players
Table 8: LIC has higher proportion of VIF mix in EV compared to peers
Rs bn LIC HDFC Life IPRU Life SBI Life
VIF 5,310 212 196 271
ANW 105 88 95 125
Embedded Value 5,415 300 291 396
VIF% of EV 98% 71% 67% 68%
Source: Public disclosures
 VNB margin has improved and is healthy at 15.1% as of FY22. Gross VNB split
is 45%, 27%, 28% among individual participating, individual non-participating and
group respectively.
12
Chart 14: LIC VNB margin trend---this will improve Chart 15: FY22 VNB split among segments
with mix improvement
VNB Margin (%)
16 15.1 Group Ind

13.6 28% participating
14
45%
12 9.9
10
8
6
4
2
0
FY21
FY22
Q1FY23
Ind non-
participating
27%
Source: Company data Source: Company data
 Improvement in VNB between FY21 and FY22 is split between change in

mix (35%), 29% new product, 13% due to increase in volumes and rest due
to increase in risk-free rate.
Chart 16: LIC VNB improved from Rs4.1bn in FY21 to Rs7.7bn in FY22
9,000 LIC VNB walk
8,000 803
7,000 1,012 454
6,000 1,222
5,000
4,000 7,651
3,000
2,000 4,160
1,000
-
opening VNB Change in Mix New Product Increase in Others FY22
volumes
Source: Company
 LIC has high sensitivity to equity movement and change in tax rate; the low
sensitivity of LIC EV to interest rates is notable. The low sensitivity to interest
rates is driven by the high participating book.
Table 9: Impact on EV on account of 100bps change in reference rates and
equity movements
HDFC Life SBI Life IPRU Life LIC
An increase of 100bps in the reference rates -2.00% 0.40% -4.20% -0.40%
A decrease of 100bps in the reference rates 1.60% 0.10% 4.60% -0.30%
Decrease in Equity Value 10% -1.40% -1.50% -1.90% -6.50%
Source: Company presentation
13
 High VNB sensitivity to change in interest rates. The high interest rate scenario
is likely to give support to LIC VNB (especially in FY23E). For example, the repo
rates have been hiked by 190bps in FY23-TD and 100bps increase in reference
rates would lead to ~180bps increase in VNB margin of LIC.
Table 10: Impact on VNB on account of 100bps change in reference rates
HDFC Life SBI Life IPRU Life LIC
An increase of 100 bps in the reference rates na (1.8%) (3.5%) 12.2%
A decrease of 100 bps in the reference rates Na 2.1% 3.2% (31.2%)
Source: Public disclosures. Note: HDFC Life reports impact on margin, hence ‘na’
 EV walk: LIC has shared EV walk with several line items unique to the company
(not seen with peers), but all with good reasons. We explain the same below.
o Bifurcation impact: Company has separated the funds between non-
participating and participating in FY22 (in Sep’21). This resulted in jump in EV
from Rs0.95trn as of FY21 to Rs5.41trn as of FY22. As such, the bifurcation
impact is separately mentioned in EV walk at Rs3.7trn. The bifurcation impact
is less than the impact assessed in Sep’21 by Rs407bn due to the fall in equity
(50% contribution to the drop) and increase in reference rates (50% contribution
to the drop).
o Unwind of Rs227bn is split between real world returns of Rs180bn and
expected real world excess returns of Rs47bn. The unwind on opening EV of
Rs227bn in FY22 is only 4.8% (including the fund bifurcation impact of Rs3.7trn
on opening EV). However, we believe that the unwind on the surplus book under
the fund bifurcation would be included within the fund bifurcation impact and the
full year of unwind will not be there considering the bifurcation of funds in Sep’21.
For future estimates, our unwind rates are upon the total book and based on
estimates of equity return of near ~12% and debt return on ~8%, which gives a
weighted unwind of 9% assuming 75:25 debt: equity book within non-par AUM.
o Negative operating variance of Rs52bn. Company has a policy of expense
assumptions reassessment on a quarterly basis. It did it at FY22-end, which led
to a negative Rs52bn operating variance. This will be key going forward in the
sense that we would ideally want a nil/positive operating variance.
o Newly modelled plans contributed a positive Rs143bn in EV walk.
Company had modelled 94% of the product universe representing 91% of the
reserves and APE as of Mar’22. The newly modelled item accounts for the
remaining 6% of the product universe.
o ‘Others’ contributed Rs166bn split Rs83bn release from global reserves and
Rs83bn from data purification exercises. This can continue to happen every
year, but we do not factor-in any such items for forecast
 Economic variance: We have factored an impact of ~Rs400bn (FY23+24) to factor
10% correction in equity market while our discounted EV multiple adequately factors
any further risk from the high equity market sensitivity of the surplus book. The
multiple of 0.7x to EV is equivalent to almost 50% market share correction based on
current sensitivity.
14
Table 11: Embedded value walk
Rs bn FY21 FY22 FY23E FY24E
Opening IEV 465 956 5,415 5,782
Bifurcation 3,742
VNB added during the year 42 76 83 98
Unwind 95 227 487 520
Variances in operating experience 4 -2 - -
Newly modelled parts 143 - -
Others 18 166
Change in operating assumptions 14 -52 - -
IEV operating earnings 172 558 571 618
Economic variances 252 57 -195 -208

Change in economic assumptions 41 102
IEV total earnings 464 717 376 410
Capital contributions / (dividends paid out) 27 - -9 -9

Closing IEV 956 5,415 5,782 6,183
Source: I-Sec Research
Table 12: LIC EV and VNB margin senstivity

Change in Indian Change in New Business
Sensitivity –Scenarios Embedded Value Margin(Percent)
An increase of 100 bps in the reference rates -0.40% 1.80%
A decrease of 100 bps in the reference rates -0.30% -4.70%
10% increase in acquisition expenses Not applicable -0.30%
10% decrease in acquisition expenses Not applicable 0.30%
10% increase in maintenance expenses -0.40% -0.60%
10% decrease in maintenance expenses 0.40% 0.50%
10% increase in discontinuance rates -0.20% -0.50%
10% decrease in discontinuance rates 0.20% 0.50%
5% increase in the mortality/ morbidity rates 0.00% -0.10%
5% decrease in the mortality/ morbidity rates 0.00% 0.10%
Assumed tax rate increased to 34.94% -24.30% -4.80%
Equity values decrease by 10% -6.50% -0.40%
Source: Company presentation
15
LIC has inherent strengths in the form of size,

distribution, brand and growth optionalities
LIC has the highest market share in terms of premiums
LIC is a market leader with 68% market share in total NBP, 46% in terms of weighted
APE, 80% in terms of group NBP and 42% in individual NBP as of FY23-TD. LIC has
been gaining market share in the group NBP while individual NBP has been on a
declining trend (from Jun’20 to Dec’21). However, with renewed focus on non-
participating saving products, the company has the potential to grow faster than
industry.
LIC is ranked fifth globally in terms of life insurance GWP (comparing LICs life insurance
premium in FY21 to the same for global peers in CY20), and 10th globally in terms of
total assets (comparing LIC’s assets as at FY21 with assets of other life insurers as at
CY20).
Chart 17: Declining market share trend between Apr’20 to Dec’21 has seen trend
reversal in CY22.
NBP market share APE Market Share
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
-
May-20
May-21
May-22
Jun-20
Jun-21
Jan-22
Jun-22
Jan-21
Mar-21
Mar-22
Feb-21
Feb-22
Jul-22
Jul-20
Jul-21
Oct-21
Apr-22
Apr-20
Oct-20
Apr-21
Aug-20
Sep-20
Nov-20
Dec-20
Aug-21
Sep-21
Dec-21
Sep-22
Nov-21
Aug-22
Chart 18: LIC overall NBP market share Chart 19: LIC overall APE market share ( weighted)
LIC NBP market share LIC weighted APE market share
78 70 65 63
75 61
76 58
74 60 53 52
71 71 71 51 49
72 70 48 47 46
69 69 50 44
70 69
68
68 66 66 40
66 30
63
64
62 20
60
10
58
56 -
FY23-TD
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23-TD
FY14
FY15
FY17
FY18
FY21
FY22
FY12
FY13
FY16
FY19
FY20
Source: Life Insurance Council Source: Life Insurance Council
16
Chart 20: LIC individual NBP market share Chart 21: LIC group NBP market share
LIC Indiviual NBP market share LIC Group NBP market share
80 83 82
66 67 68 82 81
70 81 81 81
59 56 59 56 81 80
60 52 50 80
50 79 79
50 44 42 79 78 78
78 77
40 76
77
30 76
20 75
74
10 73
- 72
FY23-TD
FY23-TD
FY12
FY13
FY14
FY15
FY19
FY20
FY21
FY22
FY14
FY15
FY16
FY17
FY18
FY22
FY16
FY17
FY18
FY12
FY13
FY19
FY20
FY21
Chart 22: LIC individual APE market share Chart 23: LIC group APE market share
LIC Ind APE market share LIC Group APE market share
70 63 62 62 90 82
60 80 69
51 68 65 68 68 66 66
48 70 63 64
46 61
50 44 42 43 40 60 53
37 37
40 50
30 40
30
20
20
10 10
- -
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23-TD
FY23-TD
FY12
FY13
FY14
FY16
FY17
FY20
FY21
FY15
FY18
FY19
FY22
Par-heavy individual mix gives lower interest rate risk, lower new
business strain
LIC product map
Table 13: Product mix basis total APE
9MFY22 Individual Group Total
Par 92% 0% 64%
Non-par savings 1% 25% 8%
Protection 1% 1% 1%
Health 0% 0% 0%
ULIP 2% 0% 1%
Annuity / Pension 4% 74% 25%
Total 100% 100% 100%
Source: Company data.
17
Table 14: Product mix basis total NBP
9MFY22 Individual Group Total
Par 70% 0% 20%
Non-par savings 0% 25% 18%
Protection 0% 1% 1%
Health 0% 0% 0%
ULIP 5% 0% 1%
Annuity / Pension 25% 74% 60%
Total 100% 100% 100%
Chart 24: Product map basis total NBP as of Chart 25: Product map basis total APE as of
Q1FY23 Q1FY23
Term, 0.4% Savings,
Individual Par Individual Non Par Group
0.7%
Linked, Health,
5.2% 0.1% 100.0
90.0 25.2 29.4 37.2
80.0
70.0 5.7 5.0
%
60.0 4.9
Annuity / 50.0
Savings, 40.0
23.3% PAR, 70.3% 69.1 65.6
30.0 57.9
20.0
10.0
-
FY21
FY22
Q1FY23
Chart 26: LIC single premium as % of overall LIC Chart 27: Private single premium as % of overall
NBP private NBP
LIC Single premium % of total NBP Private insurer single premium % of total NBP
100% 60%
86%
90% 82% 82% 49%
76% 79% 79% 78% 50% 47% 47%
80% 71%
65% 68% 40% 42%
70% 60% 40% 34% 35% 35%
60% 51% 31% 29% 30% 31%
50% 30%
40%
30% 20%
20% 10%
10%
0% 0%
FY13
FY15
FY17
FY19
FY21
FY12
FY14
FY16
FY18
FY20
FY22
FY23-TD
FY12
FY15
FY16
FY17
FY20
FY21
FY22
FY13
FY14
FY18
FY19
FY23-TD
18
LIC’s cross-cyclical product mix caters to diverse consumer

needs
Non-participating segment is a focus area; will lend VNB growth

LIC’s policies address consumer needs through the four principal stages of life, namely,
beginning of savings, career and marriage, family needs and retirement planning and
retirement and asset drawdown.
LIC has a broad, diversified product portfolio covering various segments across
individual products and group products. LIC had 16 individual participating products, 19
individual non-participating products, 11 group products (including one credit life and
one annuity product) in its portfolio, along with 8 rider benefits as of Q1FY23.
LIC has launched all its new products in non-par categories. These include LIC Bima
Ratna and LIC Dhan Sanchay in Q1FY23 and LIC new pension plan on 5th Sep’22.
High participating mix lends balance sheet strength

The benefits of having a portfolio dominated by participating products include:
 Creates a balance sheet that has lower interest rate and liquidity risks compared to
a balance sheet dominated by non-participating products.
 Lower capital requirements compared to a balance sheet dominated by non-
participating products, allowing for better product diversification.
 Less need to cede premium to reinsurers. For FY19, FY20 and FY21, LIC ceded
0.1%, 0.1% and 0.1% of premium to reinsurers, respectively, on a standalone basis
compared to 1.2%, 1.6% and 1.7% of the premium ceded to reinsurers, respectively,
by the private players in India. (Source: the CRISIL report)
 Less burden of guaranteed returns, and
 Sticky customer base due to the stable long-term product offered to mass-market
customers.
Table 15: Indicative list of key individual products
Category Type of product Name of Product Primary customer needs addressed
Participating Endowment Plan LIC’s New Endowment Plan Risk cover and savings
Participating Endowment Plan LIC’s New Jeevan Anand Risk cover for whole life and savings
Risk cover and annual income benefit in case of death,
primarily for the benefit of a child/dependent family
Participating Endowment Plan LIC’s Jeevan Lakshya member(s)
Participating Endowment Plan LIC’s Jeevan Labh Risk cover and savings
Participating Endowment Plan LIC’s Micro Bachat Micro Insurance - risk and savings for low-income groups
LIC’s New Children’s Money
Participating Money Back Plan Back Plan Risk cover and for financial benefit of Children
Participating Money Back Plan LIC’s Jeevan Tarun Risk cover and educational and other needs of children
Risk cover providing both life and health cover and savings
Participating Money Back Plan LIC’s Jeevan Shiromani for High-Net-Worth customers
Participating Money Back Plan LIC’s Bima Shree Risk cover and savings for High-Net-Worth customers
Non-Participating Endowment Plan LIC’s Bima Jyoti Risk cover and savings
Non-Participating Pure Risk Premium Plan LIC’s Tech Term Pure risk cover for tech savvy customers (online)
Non-Participating Pure Risk Premium Plan LIC’s Jeevan Amar Pure risk cover
Simple risk cover for all segments with features as per
Non-Participating Pure Risk Premium Plan LIC’s Saral Jeevan Bima IRDAI specifications
Non-Participating Unit Linked Plan LIC’s Nivesh Plus Insurance and investment
Non-Participating Unit Linked Plan LIC’s SIIP Insurance and investment
Non-Participating Health Plan LIC’s Cancer Cover Protection for health/ cancer cover
19
Category Type of product Name of Product Primary customer needs addressed
Non-Participating Health Plan LIC’s Arogya Rakshak Health cover
Term Plan with Return Micro Insurance – risk cover with return of premiums on
Non-Participating of Premiums LIC’s New Jeevan Mangal maturity
Term Plan with Return Micro Insurance – risk cover with return of premiums on
Non-Participating of Premiums LIC’s Bhagya Lakshmi maturity
Source: Company
Introduction of new products

Table 16: Introduction of new products
9MFY22 FY21 FY20 FY19
% of % of % of % of
Rs mn Premium Premium Premium Premium
total total total total
New products introduced in the nine months ended 31st Dec’21
LIC's Saral Jeevan Bima 8 0 N.A. N.A. N.A. N.A. N.A. N.A.
LIC's Saral Pension 901 0.03 N.A. N.A. N.A. N.A. N.A. N.A.
LIC's Arogya Rakshak 123 0 N.A. N.A. N.A. N.A. N.A. N.A.
LIC’s Dhan Rekha 360 0.01 N.A. N.A. N.A. N.A. N.A. N.A.
New products introduced in FY21:
LIC's Jeevan Akshay -VII 49,922 1.75 26,576 0.66 N.A. N.A. N.A. N.A.
LIC's New Jeevan Shanti(1) 35,529 1.24 23,394 0.58 N.A. N.A. N.A. N.A.
LlC's Bima Jyoti 956 0.03 463 0.01 N.A. N.A. N.A. N.A.
LIC's Bachat Plus(2) 8,649 0.3 563 0.01 N.A. N.A. N.A. N.A.
New products introduced in FY20
LIC’s Jeevan Amar 2,436 0.09 2,274 0.06 949.92 0.03 N.A. N.A.
LIC’s Tech-Term 388 0.01 416 0.01 137.22 0 N.A. N.A.
LIC’s Nivesh Plus 14,734 0.52 6,773 0.17 378.68 0.01 N.A. N.A.
LIC’s SIIP 1,914 0.07 975 0.02 52.56 0 N.A. N.A.
LIC’s One Year Renewable Group Micro Term Assurance Plan 572 0.02 1,145 0.03 345.51 0.01 N.A. N.A.
New products introduced in FY19:
LIC’s Jeevan Shanti(1) - - 1,47,939 4 1,35,767 4 1,04,887 3
LIC’s Micro Bachat 86 - 136 - 1,413 0 8 -
LIC’s Navjeevan(3) 748 0 1,075 0 1,788 0 738 0
Total of new products 1,17,328 4 2,11,731 5 1,40,832 4 1,05,634 3
Total of all products 28,57,300 100 40,28,881 100 37,90,136 100 33,71,300 100
Source: Company
LIC continues to maintain high claim settlement ratio; death claims

inched up in FY22
Chart 28: Claims paid as % of total premium increased in FY22
Claims paid % of total premium Claims settment ratio - RHS
100.0 100%
90.0 95%
80.0 90%
70.0 85%
%
55.8
60.0 48.4 80%
46.0
50.0 42.2 75%
40.0 70%
30.0 65%
20.0 60%
10.0 55%
0.0 50%
FY22
FY19
FY20
FY21
Source: Company
20
Table 17: Claims experience in 9MFY22 (product-wise)
9MFY22
Claims Paid Out as a
Premium [A] Amount of Claims Amount of Claims Claims Settlement
Percentage of Premium
(Rs mn) Made [B] (Rs mn) Paid Out [C] (Rs mn) Ratio [D=C/B] (%)
Product Name [E=C/A] (%)
In India:
Non-Linked Products:
Life Participating 17,63,561 12,62,701 11,11,030 88 63
Life Non-Participating 12,072 9,065 7,679 85 64
Annuity Participating 20 1,068 1,009 95 5,085
Annuity Non-Participating 88,783 10,931 10,795 99 12
Pension Participating 3,208 3,786 2,833 75 88
Health Non-Participating 2,231 472 195 41 9
Variable Non-Participating 59 632 579 91 979
Group Non-Participating 9,46,313 3,05,541 3,03,893 99 32
Linked Products:
Life Non-Participating 20,017 48,662 45,851 94 229
Pension Non-Participating 734 8,350 3,777 45 514
Health Non-Participating 513 463 394 85 77
Group Non-Participating 22 28 28 100 128
Total in India 28,37,533 16,51,699 14,88,063 90 52
Source: Company
Death claim experience

LIC’s death claim experience varies over time, differs across product types and may be
impacted by specific events that affect mortality and morbidity. LIC’s life and health
insurance business is exposed to the risk of catastrophic mortality and illness, such as
an epidemic or pandemic (e.g. covid), or other events that may cause a large number
of mortality and/or morbidity claims.
Impact of covid: LIC has seen an increase in death rates since the onset of pandemic.
Accordingly, it, based on available information in the public domain, has not changed its
mortality assumptions. It has however on a prudent basis kept a separate reserve
without the need for changing long-term mortality assumptions.
Based on current EV Covid reserve as of FY22 stood at Rs74.2bn. This reserve is in addition to the long-term
sensitivity, mortality /
mortality reserve provided each year while determining and providing for the policy
morbidity of +5/-5% will
have almost nil impact liabilities.
‘on EV.
Chart 29: Net claims by death as % of total benefits paid has increased 6.7% in
FY19 to 10.1% to FY22
Death claims % of total benefits
12.0%
10.1%
10.0%
8.1%
8.0%
%
6.7% 6.8%
6.0%
4.0%
2.0%
0.0%
FY22
FY19
FY20
FY21
Source: Company
21
Table 18: Claims mix
Claims (Rs bn) Claims (mix)
FY22 FY21 FY22 FY21
Claims by Death 366 239 10% 8%
Claims by Maturity 2,055 1,657 58% 58%
Annuities/Pensions payment 163 146 5% 5%
Surrenders 951 801 27% 28%
Hospitalisation Benefits 0 0 0% 0%
Major Surgical Benefits 0 0 0% 0%
Domiciliary Treatment Benefits 0 0 0% 0%
Day Care Benefits 0 0 0% 0%
Lump sum Benefit / Income Benefit (by installment) 0 0 0% 0%
Other Claims Cost- Interest on Unclaimed Amount 8 9 0% 0%
Others 0 0 0% 0%
Total 3,543 2,851 100% 100%
Reinsurance ceded
Claims by Death -9 -4 0% 0%
Other benefits -0 -0 0% 0%
Total -9 -5 0% 0%
Net benefits 3,534 2,847 100% 100%

Source: Company
LIC offers competitive pricing in its term and annuity products

Note: For below charts, we have indexed all rates to premium on Rs5mn sum assured, without return
on premium for IPRU Life, which we take as 100 on our scale. For LIC price, comparison has been
for online term plan
Chart 30: Price comparison for Rs5mn sum Chart 31: Price comparison for Rs10mn sum
assured assured
5mn 10mn
140 126 200 178 176

171
180 157 161
120 107 150
100 97 160 136
100 92
84 140
75 120
80
100
60 80
40 60
40
20
20
- -
IPRU
HDFC Life
LIC
Bajaj Life
IPRU
LIC
HDFC Life
MAX Life
Bajaj Life
SBI Life
TATA AIA
TATA AIA
MAX Life
SBI Life
Source: PolicyBazaar, LIC website Source: PolicyBazaar, LIC website
22
Chart 32: Price comparison for Rs30mn sum Chart 33: Price comparison for Rs50mn sum
assured assured
30mn 50mn
600 527 1,000 878

900
500 443 426 800 705 710
416 662
372 383 700 615 639
400 353 561
600
300 500
400
200 300
100 200
100
- -
IPRU
IPRU
LIC
LIC
HDFC Life
HDFC Life
Bajaj Life
Bajaj Life
TATA AIA
TATA AIA
MAX Life
MAX Life
SBI Life
SBI Life
Source: PolicyBazaar, LIC website Source: PolicyBazaar, LIC website
.
Table 19: Immediate annuity comparison…

Bajaj HDFC Life IPRU Life SBI Life LIC
Immediate Immediate Guaranteed Smart Annuity Jeevan Akshay -
Plan name pension pension Pension Plan Plus VII
Cash Outflow (incl
GST) 10,18,000 10,18,000 10,18,000 10,18,000 10,18,000
Pension per month 5,400 5,300 4,900 4,932 5,454
Number of months 600 600 600 600 600
At the time of Death 10,00,000 10,00,000 10,00,000 10,00,000 10,00,000
IRR - Immediate
Annuity plan 6.36% 6.24% 5.77% 5.81% 6.42%
Note: Cash outflow includes GST amount for single premium
IRR is based on current age of 35 years and life expectancy of another 50 years
Chart 34: …LIC is competitive
IRR - Immediate Annuity plan
7.00%
6.36% 6.42%
6.50% 6.24%
5.77% 5.81%
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
IPRU Life
LIC
HDFC Life
Bajaj
SBI Life
Source: Company
23
LIC – a trusted brand with customer-centric business model

LIC was incorporated in 1956 and up to year 2000 it was the only life insurance provider
in India, which made LIC, as a brand, synonymous with life insurance in India. (Source:
LIC RHP). The brand LIC was recognised as the third-strongest and 10th most valuable
global insurance brand in CY21, as per the Insurance-100 2021 report released by
Brand Finance. As per the report, the brand value of LIC in CY21 was US$8,655mn,
with a Brand Strength Index (BSI) score of 84.1 out of 100, corresponding to AAA- brand
strength rating
Distribution via individual agents is the key strength for LIC

LIC’s 1.3mn agency force has been a very strong economic moat for the company.
Agent network productivity of LIC has been far superior to that for industry peers.
Chart 35: Distribution break-up (individual NBP terms)
Individual agents Bancassurance & alternate channels

Digital marketing Micro Insurance agents
102.0% Direct sales
100.0% 0.0%
0.5% 0.4% 0.5% 0.2%
0.6% 0.5%
0.8% 1.1%
98.0% 2.6% 2.6%
2.9% 2.8%
96.0% 3.4%
94.0% 96.7% 96.2% 97.0%

95.7%
94.8%
92.0%
Q1FY23
FY19
FY20
FY18
FY17
Source: Company
Salient features of agency network

 Total 408,152 agents were trained in FY22.
 19,393 agents fulfilling the MDRT criteria in FY22: LIC has the highest number
of Million Dollar Round Table (MDRT) members among all the Indian corporates
operating in financial services industry, with a total of 583 MDRT members for CY20.
(Source: the CRISIL Report). However, not all eligible agents registered to become
MDRT members. LIC had 16,567 agents (including the 583 agents who are MDRT
members) who meet the criteria to become a MDRT member as of CY20 and this
has increased to 19,393 by FY22.
 80% of the agents recruited in FY22 are within the 18-40 years’ age group
24
Chart 36: LIC has highest agent count… Chart 37: …with highest productivity amongst
peers
FY19 FY20 FY21 FY22
1,400 1,326
450
1,200 400
Rs 000
1,000 350
300
in 000
800 250
600 200
150
400 100
146 199
200 115 61 80 50
-
Birla Sun Life

LIC
IPRU Life
HDFC Life
-
SBI Life
Max Life
LIC
IPRU Life
HDFC Life
SBI Life
Max Life
Birla Sun
Life
Chart 38: Growth in number of agents between Chart 39: …while it tapered slightly in Q1FY23
FY19-FY22 has been higher for LIC compared to
peers…
Agency workforce growth (FY19-22) Agency w orkforce growth (Q1FY23 over Q1FY22)
14 12.48 9% 8%
11.29 8%
12 7%
9.91
10 6%
5%
8 4% 3%
%
6 3%
2%
4 1%
2 0%
-1%
0 -2% -1%
Industry
Industry
LIC
LIC
Private
Private
25
Chart 40: LIC’s mix of agents by age group Chart 41: High retention period as 59% of
individual agents in India have acted for LIC for
more than five years as at FY22
18-30 30-35 35-40 Mix of agents by tenure

40-50 50-60 above 60
70%
59%
9 60%
17
50% 42%
40%
%
19
30%
13 20%
10%
0%
More than 5
Upto 5 years
13
years
29

Chart 42: LIC trained a total of 408k agents in FY22 Chart 43: LIC training infrastructure

Chart 44: 96% of total employees are deployed at Chart 45: Geographical placement of agents
divisional and branch office to look after
operational activities
Geographic distribution of individual

agents (%)
54% 53%
53%
52%
51%
50%
%
49%
48% 47%
47%
46%
45%
44%
Urban, Semi
Rural
Metro,
Urban
26
Table 20: Pan-India presence: LIC has wide presence across India
Individual Agents Branch Offices Satellite Offices Mini Offices Divisional Offices
State/Union Territory % of % of % of % of % of
Number Number Number Number Number
Total Total Total Total Total
Andhra Pradesh 61,947 4.61 105 5.13 65 4.18 19 1.62 5 4.42
Arunachal Pradesh 464 0.03 2 0.10 1 0.06 4 0.34 – –
Assam 33,704 2.51 49 2.39 26 1.67 16 1.36 4 3.54
Bihar 74,597 5.55 60 2.93 98 6.31 19 1.62 5 4.42
Chhattisgarh 23,179 1.73 30 1.46 35 2.25 19 1.62 2 1.77
Goa 3,470 0.26 11 0.54 3 0.19 3 0.26 1 0.88
Gujarat 69,687 5.19 142 6.93 62 3.99 49 4.18 7 6.19
Haryana 29,894 2.22 40 1.95 35 2.25 22 1.88 2 1.77
Himachal Pradesh 12,270 0.91 23 1.12 14 0.90 1 0.09 1 0.88
Jammu & Kashmir 7,227 0.54 17 0.83 13 0.84 12 1.02 1 0.88
Jharkhand 29,661 2.21 41 2.00 35 2.25 32 2.73 2 1.77
Karnataka 77,129 5.74 138 6.74 97 6.24 47 4.01 8 7.08
Kerala 49,050 3.65 85 4.15 109 7.01 43 3.67 5 4.42
Madhya Pradesh 78,242 5.82 110 5.37 88 5.66 130 11.08 6 5.31
Maharashtra 160,535 11.95 250 12.21 133 8.56 98 8.35 15 13.27
Manipur 973 0.07 4 0.20 3 0.19 8 0.68 – –
Meghalaya 819 0.06 3 0.15 1 0.06 5 0.43 – –
Mizoram 159 0.01 1 0.05 – – 6 0.51 – –
Nagaland 617 0.05 3 0.15 – – 5 0.43 – –
Orissa 51,438 3.83 56 2.73 65 4.18 22 1.88 4 3.54
Punjab 28,981 2.16 63 3.08 45 2.90 37 3.15 3 2.65
Rajasthan 72,751 5.41 110 5.37 88 5.66 60 5.12 6 5.31
Sikkim 652 0.05 1 0.05 1 0.06 – – – –
Tamil Nadu 85,574 6.37 173 8.45 164 10.55 143 12.19 8 7.08
Telangana 45,892 3.42 71 3.47 52 3.35 16 1.36 4 3.54
Tripura 4,124 0.31 4 0.20 12 0.77 2 0.17 – –
Uttar Pradesh 169,087 12.58 215 10.50 151 9.72 285 24.30 10 8.85
Uttarakhand 14,531 1.08 32 1.56 14 0.90 6 0.51 2 1.77
West Bengal 112,724 8.39 138 6.74 114 7.34 63 5.37 8 7.08
Andaman & Nicobar Islands 323 0.02 1 0.05 1 0.06 – – – –
Chandigarh 3,194 0.24 6 0.29 2 0.13 – – 1 0.88
Dadra & Nagar Haveli, Daman & Diu – – – – 2 0.13 – – – –
NCT of Delhi 38,964 2.90 61 2.98 19 1.22 – – 3 2.65
Ladakh – – – – 1 0.06 – – – –
Lakshadweep – – – – – – 1 0.09 – –
Puducherry 1,728 0.13 3 0.15 5 0.32 – – – –
Total 1,343,587 100.00 2,048 100.00 1,554 100.00 1,173 100.00 113 100.00
Source: Company
Bancassurance is a huge opportunity for LIC

LIC has 77 banca partners, but the contribution in terms of individual NBP remains
negligible at 2.66% as of Q1FY23.
Why is banca mix so important for LIC? Given LIC’s legacy of selling PAR products
by its existing agent network, bancassurance can help it improve its product mix into
non-par (which includes ULIP, term, guaranteed savings, etc). Diversifying the product
mix more towards non-par mix can be margin- and value-accretive over a longer period
of time.
LIC can be the biggest beneficiary of likely regulation aiming to increase the
number of bancassurance partners. Expected reforms to allow banks to choose up
to 9 insurers each in life / general / SAHI could make LIC the preferred new insurance
partner for all banks.
Why LIC is so important for banks: LIC paid total commission of ~Rs100bn in
FY21/FY22 (in terms of first year and single premium), but banca channels got only
27
Rs1.7bn of it. Total commission paid by the industry stood at Rs330bn (including
renewal commission) as of FY21, which includes Rs221bn (~Rs102bn paid on NBP and
~Rs119bn paid on renewals) paid by LIC.
Chart 46: LIC individual NBP channel mix Chart 47: SBI Life NBP channel mix
Individual agents Banca Other Individual agents Banca Other

105.0% 120.0%
100.0% 1.1% 100.0%

3.1% 2.6% 7.00% 8.00%
95.0% 3.1%
80.0%
90.0%
60.0% 65.0% 65.0%
85.0%
96.2%
93.8% 40.0%
80.0%
75.0% 20.0%
28.0% 27.0%
70.0% 0.0%
FY21 FY22 FY21 FY22
Source: Public disclosure Source: Public disclosure
Chart 48: HDFC Life NBP channel mix Chart 49: IPRU channel mix
Individual agents Banca Other Individual agents Banca Other

120.0% 120.0%
100.0% 100.0%
28.5% 27.2%
80.0% 41.9% 42.3% 80.0%
60.0% 60.0%
46.8% 45.2%
40.0% 40.0%
45.8% 44.5%
20.0% 20.0%
24.7% 27.6%
12.3% 13.2%
0.0% 0.0%
FY21 FY22 FY21 FY22
Banca becomes an important channel for LIC to make efforts to increase its mix
from the perspective of ticket size.
Basis individual NBP, ticket size of LIC is far bigger compared to that of other private
insurers. This largely due to higher rural market share compared to private insurers.
Although, smaller ticket size ensures stickiness during volatile conditions, higher ticket
size policies are required to write non-par products to ensure profitability. Training of
existing agency channel to sell high ticket size items could be challenging to an existing
customer base. Hence banking and other channels becomes imperative for LIC to
increase its non-par mix.
28
Chart 50: 9MFY22 individual NBP rural mix of LIC Chart 51: …while its rural individual NBP market
is lower compared to SBI Life, BALIC and Max… share is highest amongst peers
LIC SBI Life
By Individual NBP Urban HDFC Life ICICI Prud ential L ife
120% Max Life Baja j A llianz L ife
By Individual NBP Rural
Median of top five pr iva te players
50% 44%
100% 20%
13% 12% 12% 17% 20% 38%
80% 40%
60% 30%
40% 87% 80% 88% 88% 83% 81% 20%
20%
10%
0% Prudential
HDFC Life
Bajaj Allianz
LIC
Max Life
SBI Life
0%
Urban
Rural
ICICI
Life
Life
By Individual NBP
Chart 52: Basis individual NBP, ticket size of LIC is far lower compared to other
private insurers
FY21 - Ticket Size ( Basis Ind prem)
1,40,000
1,18,623
1,20,000 1,02,598
96,608
1,00,000 86,525
75,466
80,000
59,265
60,000
40,000 26,949
20,000
-
Kotak Life
IPRU Life
LIC
HDFC Life
BALIC
Max Life
SBI Life
Source: IRDAI Handbook
29
Case study: Tata AIA – good banca mix despite no bank

parentage, LIC can also do the same
We present below a case study of Tata AIA where we wanted to highlight its superlative
performance over the years. The company has been able to grow aggressively with very
high mix in protection (leadership in retail protection) and non-participating segments.
As of CY21, these two segments constitute ~64% of individual APE. This should lead to
higher-than-peer margins (VNB margin as per AIA annual report is 33% for “other
markets” wherein TATA AIA would be nearly 50% of the APE). However, the total
expense ratio is also much higher. Partnership with PolicyBazaar increased sales by
40% in CY21 with over 50,000 cases sold by way of an end-to-end digital journey with
tele-assistance. Bancassurance mix at ~60% of NBP implying successful partnerships
under the open architecture regime.
In view of the above, one refer to TATA AIA to be pursuing a high-cost high-margin
strategy and also serve as an example that there does exist scope for product
mix/margin to improve for other private life insurers even now and bancassurance can
be utilised even if there is no bank parentage.
Key facts about Tata AIA

Distribution is  Individual APE CAGRs over the last 5/10 years have been 34%/22% while the
skewed towards individual APE market share has increased from 1% in FY15 to 7% in FY22.
bancassurance,
 Total APE CAGRs over the last 5/10 years have been 33%/20% while the total APE
which we believe is a
market share has increased from 1% in FY15 to 7% in FY22.
proof of success of
open architecture.  Within individual segment, the product mix has increased drastically for protection
58% of individual and participating segments. This is a unique strategy considering the contrasting
and 54% of total nature of new business strain involved in these segments.
NBP is driven
o Protection APE mix has increased from 8% in FY17 to 22% in FY21. The sum
through
assured market share is highest in the individual segment of 14% as of FY22.
bancassurance.
o Participating APE mix has increased from 4% in FY17 to 17% in FY21.
o ULIP and non-par APE mix have accordingly decreased from 33%/55% in FY17
to 20%/42% in FY21.
 Persistency has also improved over the years, but has room to improve with
13th/61st month persistency at 88%/45% as of FY22.
 Distribution is skewed towards bancassurance, which we believe is a proof of
success of open architecture. 58% of individual and 54% of Tata AIA’s total
NBP is driven through bancassurance.
 Expense ratio however remained high at 38% in FY22 compared to 20.6%/18.8%
for HDFC/IPRU Life.
 AIA published the VNB margin at a segmental level where Tata AIA is under the
‘other market’ category with almost 50% share within that segment in terms of APE.
The VNB margin of that ‘other segment’ is ~33%.
30
Table 21: Estimated VNB margin of Tata AIA
Share of other
AIA Total (US$ mn) markets in total AIA Other Markets (US$ mn)
APE 5647 25% 1412
VNB 3366 14% 471
VNB Margin (estimated) 33%
Note: ‘Other markets’ data of AIA includes Tata AIA Life
Table 22: TATA AIA NBP channel mix

FY19 FY20 FY21 FY22
Individual Agents 29% 27% 26% 25%
Corporate Agents - Banks 60% 60% 61% 58%
Brokers 5% 5% 6% 11%
Others 7% 8% 7% 6%
Total NBP 100% 100% 100% 100%
Source: Public disclosure
LIC’s cost structure is second lowest amongst top listed peers

LIC along with SBI Life has low cost structure amongst life insurance peers.
Chart 53: Commission as % of total premium (~5% for LIC as of FY22)
FY19 FY20 FY21 FY22
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Median of top
IPRU Life
LIC
HDFC Life
BALIC
Max Life
SBI Life
five private
Source: Company players
Chart 54: Opex ratio as % of total premium (~8% for LIC as of FY22)
FY19 FY20 FY21 FY22
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Median of top
IPRU Life
HDFC Life
LIC
BALIC
SBI Life
Max Life
five private
players
Source: Company
31
Chart 55: Total opex % of total premium(~13%% for LIC as of FY22)
FY19 FY20 FY21 FY22
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
Median of top
IPRU Life
HDFC Life
LIC
BALIC
SBI Life
Max Life
five private
players
Source: Company
Table 23: LIC DuPont analysis based on total premium

FY19 FY20 FY21 FY22
Total Premium 100 100 100 100
Investment income 66.19 63.49 70.43 68.48
Other income 1.7 5.3 3.2 0.2
Commission expense 6.0% 5.6% 5.5% 5.4%
Opex related to insurance business 8.3% 9.0% 8.7% 9.1%
Other expenses 1.4% 5.2% 3.3% 0.0%
Provisions ( tax and others) 6% 9% 4% 0%
Benefits paid 74.2% 66.7% 71.1% 83.6%
Interim Bonuses Paid 0.5% 0.4% 0.5% 0.8%
Change in valuation of liability in respect of life policies: 74.5% 77.5% 79.1% 69.3%
SURPLUS/(DEFICIT) -0.7% -2.7% 1.0% 0.6%
Source: Company
32
AUM composition: Government securities constitute >60% of

AUM as of Q1FY23
LIC’s non-par equity mix stood at 20% as of Jun’22 while that of HDFC Life / IPRU Life
/ SBI Life was at 6.7% / 9.6% / 7.1% as of Q1FY23
Table 24: FY22 Asset-wise AUM break-up

Policyholders’ Funds
Shareholders’
Rs mn Participating Non-Participating Total
Linked Funds Funds
Funds Funds
Carrying % of Carrying % of Carrying % of Carrying % of Carrying % of
Value total Value total Value total Value total Value total
Central Government Securities 1,06,48,205 42.42 45,18,378 31.18 98,067 21.15 16,242 25.32 1,52,80,892 38.09
State Government Securities 56,32,159 22.44 39,96,531 27.57 81,084 17.49 20,013 31.2 97,29,787 24.25
Other Approved Securities 1,81,898 0.72 39,375 0.27 4,385 0.95 - - 2,25,659 0.56
Loans 12,20,366 4.86 3,385 0.02 43.25 0.01 - - 12,23,794 3.05
Debentures, Bonds & Pass-Through
21,96,713 8.75 11,12,915 7.68 33,411 7.21 131.59 0.21 33,43,170 8.33
Certificates
Equity 48,37,976 19.28 47,65,538 32.88 2,34,541 50.59 13,697 21.36 98,51,752 24.56
Venture Funds/ Alternative Investment
2,06,337 0.82 26,762 0.18 12,051 2.6 13,562 21.14 2,58,712 0.64
Funds, Mutual Funds & ETF
Money Market Instruments 27,324 0.11 31,465 0.22 0.3 - 433.08 0.68 59,222 0.15
Other Investments 1,48,671 0.59 0.87 0 - - 60.53 0.09 1,48,732 0.37
Total 2,50,99,649 100 1,44,94,350 100 4,63,581 100 64,140 100 4,01,21,720 100
Source: Company
33
Asset break-up of investments under various categories
Chart 56: Shareholders AUM break-up Chart 57: Policyholders AUM break-up
Govt Securities Subsidiaries Debentures Govt Securities Subsidiaries Debentures

Equity Mutual funds Others Equity Mutual funds Others
100.0 - 100.0
90.0 10.1 21.9 90.0 0.6
- 0.5 0.6
80.0 1.2
- 42.8 80.0 17.0 19.7 19.7
70.0 20.3 70.0 2.1
0.9 2.3
55.0 2.2
0.8 0.8
60.0 60.0
%
%
0.6
-
50.0 12.5 50.0
40.0 40.0
30.0 56.4 30.0 67.2 64.6 65.9
20.0 44.0
33.1 20.0
10.0 10.0
- -
FY21
FY22
Q1FY23
FY21
FY22
Q1FY23
Shareholders Policyholders
Chart 58: Asset-linked AUM break-up Chart 59: Overall AUM break-up
Govt Securities Subsidiaries Debentures Govt Securities Subsidiaries Debentures

Equity Mutual funds Others Equity Mutual funds Others
100.0 100.0
90.0 13.6 12.2 90.0 12.6 12.1 10.7
3.9 3.5 0.5 0.7 0.7
80.0 34.9 80.0 17.2 19.8
19.9
70.0 70.0 2.1
0.9 2.2 2.2
0.9
4.0 0.9
60.0 50.3 60.0
%
49.4
50.0 50.0
40.0 37.2 40.0
30.0 - - 30.0 66.8 64.3 65.7
20.0 - 20.0
33.2 34.0
10.0 23.9 10.0
- -
FY21
FY22
FY21
FY22
Q1FY23
Q1FY23
Asset Linked Total
Persistency improved in Q1FY23; there is room for improvement

Table 25: LIC’s individual products persistency ratio
As at March 31,
2022
2019 2020 2021
Individual
RP & LP SP & FP TP RP & LP SP & FP TP RP & LP SP & FP TP RP & LP SP & FP TP
Products
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
Amount of premium
na
13th month 77 100 88 72 100 85 79 100 87 75.6 99.6
25th month 71 99 84 67 99 83 70 99 83 73.5 98.7 na
37th month 65 97 76 63 98 80 67 98 82 66.6 97.4 na
49th month 60 95 73 58 96 72 63 97 79 63.9 96.4 na
61st month 63 92 72 54 94 70 59 95 72 61.0 95.9 na
Source: Company
Note: Persistency Ratios in terms of amount of premium by (i) regular premium and limited premium (RP & LP), (ii) single premium and fully paid-
up premium (“SP & FP”) and (iii) total premium (TP) in India
34
Peer comparison
Chart 60: Q1FY23 vs Q1FY22 13M persistency Chart 61: Q1FY23 vs Q1FY22 25M persistency
13M 25m
Q1FY22 Q1FY23 Q1FY22 Q1FY23
100 90 93 100
85.9 85.6 85 85.5 82 86
90 90
75.3 78.7 73.7 77.6
80 80
70 61 64 70
54 56
60 60
50 50
40 40
30 30
20 20
10 10
0 0
IPRU Life
HDFC Life
IPRU Life
HDFC Life
SBI Life
LIC
LIC
SBI Life
Chart 62: Q1FY23 vs Q1FY22 37M persistency Chart 63: Q1FY23 vs Q1FY22 49M persistency
37M 49M
Q1FY22 Q1FY23 Q1FY22 Q1FY23
90 80 80 72 70.3
80 73 72 72.2 67 66.3 64.9 65
70
66.4 67.8
70 60
60 52 48 49
51 50
50
40
40
30
30
20 20
10 10
0 0
IPRU Life
IPRU Life
HDFC
HDFC
SBI Life
LIC
SBI Life
LIC
Life
Life
Chart 64: Q1FY23 vs Q1FY22 61M persistency
61M
Q1FY22 Q1FY23
70
58 55.7
60 53
48 49.3 50.3 50.8
50 45
40
30
20
10
0
IPRU Life
HDFC
SBI Life
LIC
Life
35
LIC’s reinsurers enjoy strong rating from top rating agencies.

LIC has reinsurance arrangements with different reinsurers for various lines of
businesses – such as term plans, other than term plans, health plans, accident benefit,
critical illness rider and group business.
LIC selects the reinsurers based on the terms offered, reinsurance rating, financial
stability, operational and technical support provided. They continuously monitor the
financial health of their reinsurers and have experienced nil defaults from them in FY19,
FY20, FY21 and the six months ended 30th Sep’21.
Table 26: Table of reinsurer ratings

Ratings
As at March 31, As at March 31, As at March 31, As at Sept 30,
Reinsurer Rating Agency 2019 2020 2021 2021
Swiss Re Standard & Poor AA- (very strong) AA- (very strong) AA- (very strong) AA- (very strong)
Munich Re Standard & Poor AA- (very strong) AA- (very strong) AA- (very strong) AA- (very strong)
GIC Re A M Best A- (excellent) A- (excellent) B++ (good) B++ (good)
RGA Standard & Poor AA- AA- AA- AA-
Gen Re Standard & Poor AA+ (very strong) AA+ (very strong) AA+ (very strong) AA+ (very strong)
Source: Company
Table 27: Key information on LIC reinsurers

Type of reinsurance Type of reinsurance Reinsurance ceded in Reinsurance ceded in India for the six months
Reinsurer arrangement arrangement India for FY21 ended 30th Sep’21
(surplus / quota share) (obligatory / facultative) (Rs mn) (Rs mn)
GIC Re Surplus Facultative and Obligatory 2,163.47 1,384.08
Swiss Re Surplus Obligatory 1,533.91 634.59
Munich Re Surplus Facultative and Obligatory 548.35 312.91
RGA Surplus Facultative and Obligatory 168.98 70.48
Gen Re Surplus Obligatory 2.92 1.86
Source: Company
36
Digital initiatives undertaken by LIC will ensure business

competitiveness
LIC launched its app, Ananda, during covid to enable its agents to do their business
without meeting customers face to face. Average time taken to conclude policies
through the app has been less than 8 minutes and it has now been integrated with
Whatsapp.
Digital processes have been designed to empower policyholders to carry out their
necessary processes.
37
LIC’s operational efficiency is also illustrated from its ‘Print to Post’ solutions process
Chart 65: Number of LIC app users has inched up Chart 66: …so did portal-registered customers
sharply between FY21 and Q1FY23…
LIC customer App Users (mn) Portal Registered Customers (mn)
7.03 25.03
5.75 5.82 19.75
6.03 19.3
20.03 16.9
5.03 4.54
4.03 15.03
3.03 10.03
2.03
5.03
1.03
0.03 0.03
FY21
FY22
Q1FY23
FY21
FY22
Q1FY23
38
Company strategy: Building on available growth

levers for volume and margin
 Diversify product mix – Focus on enhancing non-par share
o Launch new products based not only on customer needs but also channel
needs.
 Increase digital processes all across to drive higher efficiency
o Prepare the organisation for potential regulatory changes to respond with speed
to a new environment.
 Create optimum mix of distribution channels while retaining focus on the agency
channel.
 Enhance yields on investment portfolio without compromising on risk and quality.
Diversify product mix by increasing the contribution of non-

participating portfolio
 There is already significant demand for annuity/pension products in India, with
82.7% of the country’s employed population working in the unorganised sector.
(Source: the CRISIL report). CRISIL Research forecasts that the elderly population
(aged 60 and above) in India will increase from 116.8mn in CY15 to 316.8mn by
CY50 and the share of the elderly in India’s population will almost double from 9%
in CY15 to 17% by CY50 (source: the CRISIL report), which will result in an increase
in demand for pension/annuity products. LIC’s NBP from pension/annuity products
in India increased 33.17% from Rs152bn for FY20 to Rs203bn for FY21. LIC’s NBP
from pension/annuity products in India was Rs54,449.40mn for the six months
ended 30th Sep’21.
 Company has been putting more focus on selling ULIPs, which resulted in a
729.34% increase in LIC’s NBP from ULIPs in India from Rs911mn for FY20 to
Rs7,558.50mn for FY21. Despite this large increase, there is plenty of scope to
increase sales of ULIPs. According to CRISIL, LIC’s market share of NBP in the
linked segment in India was 2.8% for CY21. However, the company witnessed
approximately 715% YoY increase in the linked segment NBP from Rs932.6mn for
FY20 to Rs7,598.1mn for FY21. (Source: the CRISIL report). With effect 1st from
Apr’21, income earned on contributions beyond Rs0.25mn per annum in ULIPs
became taxable. This change in tax laws has led to a shift in demand towards
protection and other savings/annuities products. (Source: CRISIL report). However,
there is still a healthy demand for ULIPs with investments of up to Rs0.25mn per
annum. For the six months ended 30th Sep’21, LIC’s NBP from ULIPs in India was
Rs8,418.59mn.
39
Reinforce omni-channel distribution network and increase its

productivity
LIC plans to strategically expand its individual agency network, improve agents’
productivity and maintain focus on improving the quality of agents they recruit and the
period of their retention as agents. LIC plans to hire more millennial and post-millennial
agents by running social and digital media campaigns as well as other advertising
campaigns to increase awareness of career opportunities as an insurance agent in the
millennial and post-millennial segments and conducting more online recruitment. LIC
has also tied up PolicyBazaar recently to strengthen its distribution strength.
Continue leveraging technology

LIC plans to continue to implement various technological and digital initiatives to
increase productivity, train agents and employees, improve cost efficiencies, provide
better customer experience, provide a seamless customer onboarding process and
enhance digital channels for payments.
Current key technology-related initiatives include:
Implementing a new unique customer identification and deduplication system, which will
allow for more efficient cross-selling of products, simplify the customer experience, allow
for customisation of services, increase the efficiency of claims management as well as
provide for better customer profiling and retention. LIC has already started work on this
initiative.
 Increasing the use of the app Ananda (Ananda is completely paperless digital
platform for procurement of insurance business used by all sales corporation)
LIC plans to continue to  Increasing the online recruitment of agents.
promote the use of digital
modes of payment to  Increasing the use of online training of agents.
increase the share of  Increasing the use of digital marketing.
premiums collected through
digital modes. For FY19, LIC plans to continue to promote the use of digital modes of payment to increase the
FY20, FY21 and the six share of premiums collected through digital modes. For FY19, FY20, FY21 and the six
months ended 30th Sep’21, months ended 30th Sep’21, LIC collected Rs317bn, Rs417bn, Rs692bn and Rs342bn
LIC collected Rs317bn, of renewal premiums in India via digital modes of payment, respectively, which
Rs417bn, Rs692bn and represented 17.24%, 22.20%, 32.11% and 36.64% of total premiums paid in India,
Rs342bn of renewal respectively
premiums in India via
digital modes of payment, Maximise value creation through commercial and financial levers
respectively, which
represented 17.24%, LIC plans to increase persistency ratio
22.20%, 32.11% and
Increasing the number of policies that are revived by LIC through launch of revival
36.64% of total premiums
campaigns and encouraging convenient modes of payment, such as payment through
paid in India, respectively
the E-NACH.
LIC plans to continue to engage with policyholders, directly and through intermediaries,
to retain the policies that are being served.
40
Optimise yield on investment
LIC plans to continue to strive for a dynamic and strategic asset allocation amongst the
different asset classes allowed within the regulatory framework, depending upon the
market cycles and conditions, with a view to improve the yield on investments.
Change in surplus distribution policy will further aid VNB growth

The surplus distribution policy mandates the surplus distribution pattern for par policies
as 95:5 for the FY22, 92.5:7.5 for the FY23 and FY24, and 90:10 from fFY25 onwards
and 0:100 for non-par policies from financial year FY22 onwards.
Capitalise on growth opportunities in the Indian life insurance

sector
LIC plans to capitalise by implementing the following strategies:

 Increasing market share of the bancassurance channel by tying up with more bank
partners and improving their productivity by providing them with digital solutions for
onboarding customers.
 Increasing direct sales of individual products on LIC’s website by increasing the
marketing of the website and adding more products that are available for purchase
through it.
 Improving the share of non-participating products by increasing the focus on sales
of ULIP, protection products, pension/annuity products and health insurance.
 Recruiting more millennial agents in light of the changing demographic dynamics.
 Increasing upselling and cross-selling to individual customers and beneficiaries of
group products to cover their varied financial needs.
 Increasing the average ticket size of products.
 Increasing the productivity of intermediaries by furthering competency-building
initiatives.
 Increasing focus on group protection plans.
41
Company Overview
Subsidiaries and associates
Details on IDBI Bank, now an associate of LIC

IDBI Bank became a subsidiary of LIC w.e.f. 21st Jan’19 following the latter’s acquisition
of an additional 827,590,885 of the outstanding equity shares in IDBI Bank, which
resulted in its owning 51% of the outstanding shares in IDBI Bank. IDBI Trusteeship
Services Limited is a subsidiary of IDBI Bank, with IDBI Bank holding 54.70% of the
outstanding shares, so IDBI Trusteeship Services Limited also became LIC’s subsidiary
with effect from 21st Jan’19. On 19th Dec’20, IDBI Bank was reclassified as an associate
company due to the reduction of LIC’s shareholding to 49.24% following the issuance
of additional equity shares by IDBI Bank in a qualified institution placement (QIP).
Consequently, IDBI Trusteeship Services Limited was also reclassified from a
subsidiary to an associate on that date. LIC used policyholders’ funds to acquire all of
its equity shares in both IDBI Trusteeship Services Limited and IDBI Bank.
42
Board of directors
Table 28: LIC Board of directors
Wholetime Chairperson Mangalam Ramasubramanian Kumar
Government Nominee Director Suchindra Misra
Managing Director Raj Kumar
Managing Director Siddhartha Mohanty
Managing Director Mini Ipe
Managing Director Bishnu Charan Patnaik
Independent Director Dr. Ranjan Sharma
Independent Director Vinod Kumar Verma
Independent Director Anil Kumar
Independent Director Anjuly Chib Duggal
Independent Director Gurumoorthy Mahalingam
Independent Director Raj Kamal
Independent Director Vankipuram Srinivasa Parthasarathy
Independent Director Vijay Kumar Muthu Raju Paravasa Raju
Independent Director Sanjeev Nautiyal
Source: Company
Management organisation structure

Chart 67: Management organisation chart
Source: Company
43
Dividend policy
LIC’s dividend distribution policy was adopted and approved by the Board of directors
in its meeting on 26th Jul’21 (dividend policy). In terms of the dividend policy, the
dividend, if any, will be declared in accordance with Section 28B of the Life Insurance
Corporation Act and other applicable laws, and shall be approved by the shareholders
in a general meeting.
Table 29: Dividend payment trend.

Particulars FY21 FY20 FY19
Final dividend*** - 26,977.43 26,630.99
Total dividend*** - 26,977.43 26,630.99
Dividend per share* - 4.27 4.21
Dividend rate (%) - 43% 42%
Converted into
Mode of payment of dividend - Bank payment
Equity Shares
Dividend distribution tax*** N.A. N.A. N.A.
Note 1: Pursuant to Government of India approval dated 6th Sep’21, fully paid up capital aggregating to
Rs63,249.90mn consisting of 6,324.99mn equity shares with face value of Rs10 each were issued and allotted to
Central Government, in terms of Section 5(2) and Section 5(4) of Life Insurance Corporation Act read with
regulation 7 of LIC General Regulations, 2021.
*in Rs.
**Rs per equity share.
*** in Rs mn.
44
Key risks
The pandemic like situations could adversely affect all aspects of business,
including: (i) restricting the ability of agents to sell products; (ii) significantly
increasing expenses due to changes in rules and regulations, and investing in
new methodologies to overcome the pandemic-induced restrictions, and the
adverse changes in population mortality/morbidity or utilisation behaviours; (iii)
adversely affecting the investment portfolio; (iv) adversely affecting operational
effectiveness; and (v) heightening the risks faced in the business.
Impact on distribution partners:

Company’s distribution partners’ ability to distribute products was adversely affected
due to lockdowns and social distancing measures limiting in-person interactions. In
addition, the pandemic caused a deferral of exams by the IRDAI for individual agents
and corporate agents, which prevented them from adding as many new agents as they
would have liked to. As a result, the number of active (which means they had sold at
least one policy in the prior 12 months) individual agents decreased by 17.48% from
1,086,000 as at 31st Mar’21 to 896,208 as at 30th Sep’21.
Impact on investment portfolio

The covid like pandemic created a low interest rate environment, with the RBI bringing
the reverse repo rate to 3.35% and the repo rate to 4.00% on 22nd May’20, which
remained unchanged as at 30th Sep’21. To tide over any unwarranted volatility, the RBI
also increased borrowing limits under the marginal standing facility of the liquidity
adjustment facility window from 2% to 3% as at 30th Jun’20, where it stood as at 30th
Sep’21. The marginal standing facility stood at 4.25% as at 30th Sep’21 (lowered from
4.65% as at 22nd May’20). Investment returns are expected to remain subdued as
interest rates stay low for longer, thereby impacting life insurance products.
Increase in death claims

Insurance claims by death increased during the pandemic. For FY19, FY20, FY21 and
the six months ended 30th Sep’21, insurance claims by death in benefits paid (net) were
Rs171,288.42mn, Rs175,279.87mn, Rs239,268.94mn and Rs217,341.50mn, on a
consolidated basis, which were 6.79%, 6.86%, 8.29% and 14.47% of total insurance
claims, respectively.
LIC’s brand name, reputation and perception are critical in maintaining its leading
position in the Indian life insurance industry and any unfavourable publicity could have
an adverse effect on brand name and consequently adversely affect the business,
financial condition, results of operations and cashflows
 Adverse persistency metrics or an adverse variation in persistency metrics could

have a material adverse effect on LIC’s financial condition, results of operations and
cashflows.
 If actual claims experienced and other parameters are different from the
assumptions used in pricing of products and setting reserves for them, it could have
a material adverse effect on business, financial condition and results of operations.
45
 Interest rate fluctuations may materially and adversely affect LIC’s profitability.
 A significant proportion of LIC’s total new business premiums are generated by
participating products, and any regulatory changes or market developments that
adversely affect sales of such products could have a materially adverse effect on
business, financial condition, results of operations and cashflows.
 If LIC does not meet solvency ratio requirements, it could be subject to regulatory
actions and could be forced to raise additional capital.
 LIC is exposed to misconduct and fraud by employees and intermediaries and any
such instances could adversely affect reputation, business, financial condition,
results of operations and cashflows.
 Higher than expected operating expenses related to insurance business could have
a materially adverse effect on results of operations.
 The actuarial valuations of policies with outstanding liabilities are not required to be
audited and if such valuation is incorrect, it could have an adverse effect on
business, financial condition and results of operations.
 A significant portion of individual premium in India is concentrated in certain states.
 Certain LIC employees are members of unions that company has not recognised,
and the company may be subject to industrial unrest, slowdowns and increased
wage costs.
 LIC is subject to complex regulatory requirements and if it fails to comply with these
regulatory requirements, its operations could be disrupted or it may become subject
to significant penalties. In addition, any changes in regulatory requirements could
have a material adverse effect on LIC’s business, financial condition, results of
operations and cashflows.
 Changes in the accounting standards used in the reporting of Restated
Consolidated Financial Statements due to new pronouncements – such as Ind-AS,
interpretations, migration to new standards or even due to LIC’s decision to change
accounting policies – may significantly affect financial statements for future years,
and may materially and adversely affect the company’s financial condition and
results of operations.
 The occurrence of natural or man-made disasters and catastrophes, such as the
covid pandemic, could materially increase liabilities for claims by policyholders and
result in losses in investment portfolios, which in turn could have a materially
adverse effect on financial condition and results of operations and cashflows.
 LIC may be unable to obtain external reinsurance on a timely basis at reasonable
costs and is exposed to concentration risk with individual reinsurers. LIC utilises the
reinsurance markets to minimise its risk exposure in order to stabilise its earnings
and protect capital resources. For FY19, FY20, FY21 and the six months ended 30th
Sep’21, LIC’s reinsurance ceded was Rs3,229.81mn, Rs3,359.32mn,
Rs4,523.04mn and Rs2,458.02mn on a consolidated basis, which represented
0.10%, 0.09%, 0.11% and 0.13% of their premiums on a consolidated basis,
respectively.
 LIC may be required to infuse additional funds in IDBI Bank, one of its associates,
in the future. It may be required to ensure housing finance activity is conducted only
46
through one entity between IDBI Bank or LIC Housing Finance Limited. LIC infused
Rs47,430.00mn into IDBI Bank, on 23rd Oct’19 using policyholders’ funds. IDBI Bank
raised Rs14,351.80mn on 19th Dec’20 by way of a qualified institutional placement.
IDBI Bank has come out of the prompt corrective action framework since 10th
Mar’21, subject to compliance with certain conditions and continuous monitoring.
Price chart
1000
900
800
(Rs)
700
600
500
400
5-Aug
4-Sep
26-Jun
16-Jun
6-Jun
26-Jul
16-Jul
6-Jul
4-Oct
27-May
17-May
15-Aug
14-Sep
25-Aug
24-Sep
Source: Bloomberg
47
Financial summary
Table 30: Technical Account
P/H A/C (Rs bn) FY19 FY20 FY21 FY22 FY23E FY24E
Gross Premiums 3,403 3,828 4,059 4,301 4,853 5,435
Reinsurance Ceded -3 -3 -5 -6 -7 -8
Net Premiums 3,400 3,825 4,054 4,295 4,846 5,427
Income from Investments 2,250 2,428 2,855 2,941 3,350 3,712
Other Income 58 203 128 8 9 9
Total income 5,708 6,456 7,037 7,244 8,204 9,148
Commission 205 215 224 233 263 295
Operating expenses 544 895 652 377 529 592
Total commission and opex 749 1,111 876 610 792 887
Benefits Paid (Net) 2,540 2,572 2,907 3,595 3,997 4,436
Chg in reserves 2,536 2,966 3,211 3,072 3,345 3,746
Total expenses 5,076 5,538 6,119 6,667 7,342 8,182
Provisions -93 -91 4 -90 - -
Surplus / deficit before tax -24 -101 39 57 70 79
Add: Share of profits from
Asso 7 6 12 42 48 56
(Less)/Add: Minority Interest 25 64 -4 -0 - -
Surplus / Deficit 8 -32 46 99 118 135
Source: Company, I-Sec research
Table 31: Shareholders account

S/H A/C (Rs bn) FY19 FY20 FY21 FY22 FY23E FY24E
Transfer from P/H A/C 26 27 30 39 46 65
Income From Investments 0 0 0 2 - -
Total Income 26 27 30 41 46 65
Total Expenses 0 0 0 - - -
PBT 26 27 30 41 46 65
Prov for Tax 0 0 0 0 0 1
PAT 26 27 30 41 46 64
Table 32: Balance sheet

Balance sheet (INR m) FY19 FY20 FY21 FY22 FY23E FY24E
Share Capital 1 1 1 63 63 63
Reserves And Surplus 8 10 69 51 95 159
Shareholders' Fund 9 11 70 115 158 222
Policy Liabilities 28,057 31,028 34,207 37,279 41,250 46,200
Linked Liabilities Provision 417 325 330 239 388 435
Funds For Future App. 0 0 0 18 12 12
Current liabilities & prov. 4,992 2,606 2,857 4,174 4,146 4,164
Minority Interest (Policyholders) 188 171 0 - - -
Total 33,663 34,142 37,464 41,825 45,955 51,033
Shareholders’ inv 4 4 4 52 56 61
Policyholders’ inv 28,777 29,579 34,984 39,114 43,221 48,255
Assets to cover linked liab. 336 322 330 240 388 435
Loans 2,499 2,374 1,088 1,110 1,110 1,110
Fixed Assets 146 146 35 36 37 39
Net Current assets 1,903 1,717 1,023 1,273 1,142 1,132
Total 33,663 34,142 37,464 41,825 45,955 51,033
48
Index of Tables and Charts

Tables
Table 1: Estimating APE / VNB by FY32E (basis protection gap) ........................................ 5
Table 2: Estimating APE / VNB by FY32 (basis Sum Assured % of GDP) .......................... 5
Table 3: Persistency ratio of trend of Taiwan and Japan ..................................................... 8
Table 4: As a proxy for China, we have shown below the annuity mix of Ping which has
increased sharply ............................................................................................................ 8
Table 5: In developed countries like Japan, annuity mix remains higher and stable ........... 9
Table 6: US has seen a consistent high mix of annuity ........................................................ 9
Table 7: Forward rate assumptions .................................................................................... 12
Table 8: LIC has higher proportion of VIF mix in EV compared to peers ........................... 12
Table 9: Impact on EV on account of 100bps change in reference rates and equity
movements .................................................................................................................... 13
Table 10: Impact on VNB on account of 100bps change in reference rates ...................... 14
Table 11: Embedded value walk ......................................................................................... 15
Table 12: LIC EV and VNB margin senstivity ..................................................................... 15
Table 13: Product mix basis total APE ............................................................................... 17
Table 14: Product mix basis total NBP ............................................................................... 18
Table 15: Indicative list of key individual products .............................................................. 19
Table 16: Introduction of new products............................................................................... 20
Table 17: Claims experience in 9MFY22 (product-wise) .................................................... 21
Table 18: Claims mix .......................................................................................................... 22
Table 19: Immediate annuity comparison… ....................................................................... 23
Table 20: Pan-India presence: LIC has wide presence across India ................................. 27
Table 21: Estimated VNB margin of Tata AIA .................................................................... 31
Table 22: TATA AIA NBP channel mix ............................................................................... 31
Table 23: LIC DuPont analysis based on total premium .................................................... 32
Table 24: FY22 Asset-wise AUM break-up......................................................................... 33
Table 25: LIC’s individual products persistency ratio ......................................................... 34
Table 26: Table of reinsurer ratings .................................................................................... 36
Table 27: Key information on LIC reinsurers ...................................................................... 36
Table 28: LIC Board of directors ......................................................................................... 43
Table 29: Dividend payment trend. ..................................................................................... 44
Table 30: Technical Account............................................................................................... 48
Table 31: Shareholders account ......................................................................................... 48
Table 32: Balance sheet ..................................................................................................... 48
Charts
Chart 1: Life insurance premium as % of GDP ..................................................................... 4
Chart 2: Life insurance density (premium per capita) ........................................................... 4
Chart 3: Life expectancy (years) improvement expectations remain positive for life insurers
........................................................................................................................................ 6
Chart 4: India’s insurable population estimated at ~1bn by CY35........................................ 6
Chart 5: Sum assured percentage of GDP can improve significantly for India .................... 6
Chart 6: Protection Gap indicates huge upside potential for India life insurance space ...... 6
Chart 7: Addressable population coverage* indicates strong thesis for protection
opportunity in India… ...................................................................................................... 7
Chart 8: …leaving enough headroom for growth beyond FY35 if we assume number of
policies to increase by 20% p.a. up to FY35 ................................................................... 7
Chart 9: Even after registering strong growth of 20/25%, sum assured as % of GDP will still
remain below the current ratio for global peers............................................................... 7
Chart 10: Sum assured towards retail credit (which is voluntary in nature) has also seen a
robust 16% CAGR between FY14-FY22 ........................................................................ 7
Chart 11: Pension fund assets percentage of GDP .............................................................. 8
49
Chart 12: Annuity APE has been strong for HDFC Life, IPRU Life and SBI Life.................. 9
Chart 13: Price to Embedded Value (EV) comparison ....................................................... 11
Chart 14: LIC VNB margin trend---this will improve with mix improvement ........................ 13
Chart 15: FY22 VNB split among segments ....................................................................... 13
Chart 16: LIC VNB improved from Rs4.1bn in FY21 to Rs7.7bn in FY22 .......................... 13
Chart 17: Declining market share trend between Apr’20 to Dec’21 has seen trend reversal
in CY22.......................................................................................................................... 16
Chart 18: LIC overall NBP market share ............................................................................ 16
Chart 19: LIC overall APE market share ( weighted) .......................................................... 16
Chart 20: LIC individual NBP market share ........................................................................ 17
Chart 21: LIC group NBP market share .............................................................................. 17
Chart 22: LIC individual APE market share ........................................................................ 17
Chart 23: LIC group APE market share .............................................................................. 17
Chart 24: Product map basis total NBP as of Q1FY23 ....................................................... 18
Chart 25: Product map basis total APE as of Q1FY23 ....................................................... 18
Chart 26: LIC single premium as % of overall LIC NBP ..................................................... 18
Chart 27: Private single premium as % of overall private NBP .......................................... 18
Chart 28: Claims paid as % of total premium increased in FY22 ....................................... 20
Chart 29: Net claims by death as % of total benefits paid has increased 6.7% in FY19 to
10.1% to FY22 .............................................................................................................. 21
Chart 30: Price comparison for Rs5mn sum assured ......................................................... 22
Chart 31: Price comparison for Rs10mn sum assured ....................................................... 22
Chart 34: …LIC is competitive ............................................................................................ 23
Chart 35: Distribution break-up (individual NBP terms) ...................................................... 24
Chart 36: LIC has highest agent count…............................................................................ 25
Chart 37: …with highest productivity amongst peers ......................................................... 25
Chart 38: Growth in number of agents between FY19-FY22 has been higher for LIC
compared to peers…..................................................................................................... 25
Chart 39: …while it tapered slightly in Q1FY23 .................................................................. 25
Chart 40: LIC’s mix of agents by age group ....................................................................... 26
Chart 41: High retention period as 59% of individual agents in India have acted for LIC for
more than five years as at FY22 ................................................................................... 26
Chart 42: LIC trained a total of 408k agents in FY22 ......................................................... 26
Chart 43: LIC training infrastructure .................................................................................... 26
Chart 44: 96% of total employees are deployed at divisional and branch office to look after
operational activities...................................................................................................... 26
Chart 45: Geographical placement of agents ..................................................................... 26
Chart 46: LIC individual NBP channel mix .......................................................................... 28
Chart 47: SBI Life NBP channel mix ................................................................................... 28
Chart 48: HDFC Life NBP channel mix............................................................................... 28
Chart 49: IPRU channel mix ............................................................................................... 28
Chart 50: 9MFY22 individual NBP rural mix of LIC is lower compared to SBI Life, BALIC
and Max… ..................................................................................................................... 29
Chart 51: …while its rural individual NBP market share is highest amongst peers............ 29
Chart 52: Basis individual NBP, ticket size of LIC is far lower compared to other private
insurers.......................................................................................................................... 29
Chart 53: Commission as % of total premium (~5% for LIC as of FY22) ........................... 31
Chart 54: Opex ratio as % of total premium (~8% for LIC as of FY22) .............................. 31
Chart 55: Total opex % of total premium(~13%% for LIC as of FY22) ............................... 32
Chart 56: Shareholders AUM break-up .............................................................................. 34
Chart 57: Policyholders AUM break-up .............................................................................. 34
Chart 58: Asset-linked AUM break-up ................................................................................ 34
Chart 59: Overall AUM break-up ........................................................................................ 34
Chart 60: Q1FY23 vs Q1FY22 13M persistency ................................................................ 35
50
Chart 65: Number of LIC app users has inched up sharply between FY21 and Q1FY23…
...................................................................................................................................... 38
Chart 66: …so did portal-registered customers .................................................................. 38
Chart 67: Management organisation chart ......................................................................... 43
51
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ICICI Securities LIC Initiating Coverage Note

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Equity Research INDIA

November 11, 2022

Please refer to important disclosures at the end of this report

Investment thesis – strong business drivers make

Source: Life Insurance Council

Chart 2: Life insurance density (premium per capita)

Source: Life Insurance Council

Table 1: Estimating APE / VNB by FY32E (basis protection gap)

Current Protection Gap 83%

Estimating VNB, assuming sum assured as percentage of GDP increases to 150% in

Table 2: Estimating APE / VNB by FY32 (basis Sum Assured % of GDP)

Life expectancy (Years) 2020 2040E 2060E

Sum assured as % of GDP Protection gap

Addressable population coverage Estimated growth (10% CAGR) in addressable

Home loans Others

Retiral solutions likely to provide huge tailwind to savings products

Chart 11: Pension fund assets percentage of GDP

Source: Company data

Table 6: US has seen a consistent high mix of annuity

Accident and health 26% 26% 27% 25% 27% 27%

Life 25% 26% 28% 27% 25% 24%

3.0 3.1 40%

Source: Company data.

Market leader with business moats

Chart 13: Price to Embedded Value (EV) comparison

Price to Embedded Value

New China Life

Source: Bloomberg, I-Sec Research.

Expect EV/VNB of Rs6.2trn/98bn in FY24E

 Group fund management business has a Board-approved crediting rate where

VNB Margin (%)

16 15.1 Group Ind

Source: Company data Source: Company data

 Improvement in VNB between FY21 and FY22 is split between change in

Economic variances 252 57 -195 -208

Capital contributions / (dividends paid out) 27 - -9 -9

Table 12: LIC EV and VNB margin senstivity

LIC has inherent strengths in the form of size,

NBP market share APE Market Share

Source: Life Insurance Council Source: Life Insurance Council

Source: Life Insurance Council Source: Life Insurance Council

Source: Life Insurance Council Source: Life Insurance Council

LIC’s cross-cyclical product mix caters to diverse consumer

Non-participating segment is a focus area; will lend VNB growth

High participating mix lends balance sheet strength

Introduction of new products

LIC continues to maintain high claim settlement ratio; death claims

Claims paid % of total premium Claims settment ratio - RHS

Death claim experience

Death claims % of total benefits

Net benefits 3,534 2,847 100% 100%

LIC offers competitive pricing in its term and annuity products

140 126 200 178 176

Source: PolicyBazaar, LIC website Source: PolicyBazaar, LIC website

600 527 1,000 878

Table 19: Immediate annuity comparison…

Chart 34: …LIC is competitive