Time in the market is more important than timing the market: LIC Chairman

It’s a new phase. LIC has gone through many phases. The first phase was nationalisation, second phase was the opening up of the market and the third is listing. Listing brings some more responsibility in terms of shareholder connect and creating shareholder value. The Corporation is geared for that. We have been very competitive in the market. We know there are other listed players, and we have been watching them.

LIC’s profile will not change much but the way we do some things could undergo change. We might tweak marketing activity; we might try to get into more of bancassurance. The agency channel still commands more than 96 per cent. We can improve volumes of the bancassurance channel. At 60,000, we have the highest number of bank outlets. That can really work. We want to totally recast our digital marketing. We have already tied up with Policybazaar and we will expand that. More of initially one or two products will be sold through PB and directly, and maybe through the portal once we have that ready.

In terms of investments, we are a well-known investor. We command high value in the market, and we have a sizeable equity. Our strategy has always been to buy and hold, to take care of long-term interest of policyholders. We do not want to change that. When we have products, more of ULIPs, where the CAGR or NAV is important, we might tweak that part wherever required.

I see very strong demand both from anchors and retail investors. Policyholder’s reservation is there with a good discount of over 6 per cent, I am sure they will come in a big way. We have been watching the growth in Demat accounts, which has picked up pace quite a bit, even after February and March. We believe there are new investors coming into the market and they are interested to start equity with LIC’s IPO. There will be a lot of interest.

Why should anyone worry about valuation? It is not fair to compare us with peers; we are very large. Therefore, in terms of PE multiple we must look at similarly placed insurance companies, maybe somewhere in China. We compare favourably in terms of PE multiple. That is the way we wanted to go. The government also felt that we should reward policyholders and shareholders who are coming in for the first time.

If you look at the slightly long-term view, then March onwards, it has picked up. It has been going up and down over the last few days but it has overall picked up from March. It will stabilise very soon. The war will have some impact. We are not in a silo but we are able to manage our markets despite much of the overhang of the war.

There is no such thing as timing the market. Time in the market is more important than timing the market. Any time is a good time. When there was a serious issue like Covid, we never did it. The Finance Ministry had announced it in the Budget 2020. We had some preparations to do and it was not a good time with the pandemic, and then the war came. Now I think things have settled down. Looking ahead, any time is a good time. Having done all the work, we didn’t want to delay it any further. It makes good sense to bring it out now.

Our stance on this has been very clear and consistent. Even if the government wants it, it is we who will take the call. Our investment committee sees if it is a good thing or not. Some investments have gone southwards, but many PSU stocks we have invested in are giving good dividend. We are buy and hold, so we are not really worried. Ultimately, their value will get accreted over a period of time. We are prepared to wait for it. Now that we have a board in place with good independent directors, there will be more diligence on whether the stock is worth investing in. That will only get stronger in future .

The government and LIC are trying to divest stakes in IDBI Bank. We would like to continue the partnership, and make it a small holding, if not a major holding. If that happens quickly, then the issue between LIC HF and IDBI Bank will cease to exist. If not, we will have to find a solution. One way could be to ask IDBI to source loans for LIC HF the way HDFC and HDFC Bank were operating. It is a question of what happens first; we will wait and watch and then take a call.

We have had strategic meetings with all senior executives. Post the listing, we will meet all the senior divisional managers, zonal managers …they know what has to be done but the meeting will put things in perspective and give a roadmap to all our divisions and branches on what needs to be done this year and quarter on quarter, since we will have quarterly results. The stock market reacts to that. We will also have analyst meetings from the second and third quarter onwards. That is something we sensitise them to.

LIC is already public. It’s only that the shares were not listed. The amended LIC Act says we are not a company; we are a corporation. We will take care of the interests of the employees. They have nothing to worry about. By now, they know that.