Govt nudges LIC to tweak strategy

The Central government in a bid to help insurance behemoth  LIC to realise its full growth potential and yield better returns for investors is nudging it to tweak its product strategy in order to maximise profitability, an official said.

The country’s largest insurer, Life Insurance Corporation (LIC) has been trading below the issue price of Rs. 949 per share since its listing on stock exchanges on May 17. It listed at Rs. 872 apiece on NSE.

The scrip settled at Rs. 595.50, down 0.72 per cent over the previous close.

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

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

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