Insurance sector may face impact if West Asia crisis prolongs: LIC chief
The insurance sector may witness some moderation if the Middle East crisis persists for a longer period, as it could reduce people’s income levels, LIC CEO and MD R Doraiswamy said.
“We are all going through a very tough time, as already communicated by our Prime Minister. The country has been showing a good amount of resilience and so far has protected the end consumer from the complete impact of the West Asia crisis,” he told PTI in an interview. But in case the crisis continues for a longer time, he said, “It will certainly have a cascading impact on individuals, affecting both their spending and saving patterns. We hope the crisis is resolved at the earliest so that the situation returns to normalcy as quickly as possible. That is what we are looking forward to.”
He further said if the broader segment of economy is impacted, the insurance industry cannot remain isolated.
If society as a whole gets affected and the income of people and their saving capacity get affected, naturally, it may affect the insurance industry, he said.
It is noted that various segments of the economy, especially the energy sector, have been hit after the West Asia war broke out on February 28, raising fear slowdown in economic growth and rising inflation. Asked if Life Insurance Corporation of India (LIC) is prepared for further dilution of stake by the Centre, Doraiswamy said, “We have been prepared right from day one. When we started preparing for the IPO, we were prepared for this kind of subsequent actions as well. So the call is taken by the government.” As and when a decision is taken on the timing and quantum of further stake dilution, LIC will be fully prepared to work closely with the government to ensure the initiative achieves the success it deserves.
LIC came with an initial public offering, the biggest till 2022 in terms of size, resulting in the government raising about Rs 21,000 crore by diluting just 3.5 per cent stake in the insurance behemoth.
Prior to 2022, LIC was wholly owned by the Government of India.
He further said the government has been focusing on complying with the listing requirements under which any listed company will have a public float of 10 per cent or 15 per cent at different schedules and time. The government is focused on achieving this goal, but due to current market volatility, it is waiting for the right time to launch the next public offering, he added. Post-IPO, Doraiswamy said, LIC has done quite a good amount of activity in rewarding the shareholders.
In the last quarter, he said, LIC has announced a 1:1 bonus and then followed up with a good dividend, which is 67 per cent more than what was declared in the previous year.
The board of LIC, while finalising FY26 numbers, recommended a final dividend of Rs 10 per equity share of Rs 10 each (equivalent to Rs 20 per equity share pre-bonus issue basis), subject to approval of shareholders.
Last week, LIC posted a 23 per cent increase in net profit to Rs 23,420 crore in the March quarter, the highest by any financial services firm in the country.
