LIC-A good PSU but out of reach of investors. Review on Life Insurance Corp. - LIC

Insurance is great Business and Life Insurance is much more interesting.With more and people finding it as a measure of tax planning(there are tax breaks for insurance premium paid) and a saving avenue in addition to its risk coverage, the volume of business is increasing.

The real profit in Insurance business lies in volumes and the volumes are soaring now.With the Life expectancy in the country ever increasing the scope for further profits is high. What's more, creativity has found its way into insurance business and policies with variety of options are being offered to allure various sections of economy.The words insurance products,insurance solutions are being heard in place of insurance policies which show cases the shift in approach.

Life Insurance corporation of India has established itself firmly in Indian Insurance business. It has its army of agents who bring in more and more business regularly.They make people to realise the necessity of Insurance ,recommend a suitable policy,request them to obtain one ,repeat the process and are not relieved unless they reach their targets.

Though it is a PSU,LIC is very much running with commercial prudence and is efficient in its area of business though not so good in customer relationship .It is one of the most profitable PSUs.Its investments in shares of various companies itself are worth a lot.The chance of private players eroding its firm base are almost NIL.It is the only case where such a statement can be made whereas in case of other profit making PSUs monopoly is their major strength.

Considering the reasonable performance ,a case for privitisation of LIC for the reason of improving its performance cannot be made.Hence the argument of introducing strategic Partner who has experience in the business elsewhere to improve the business may not be successful.

However I would argue in favour of offering of atleast 10% of its shares to general public.Stock markets are fed up with many unworthy companies and really good companies are in short supply.Throwing open an investment opportunity in such a good company will increase the market capitalization and overall investor wealth.