LiC is the biggest life insurance company in India, and still has a market share in excess of 70%. This is an awesome number in a growing market.

With all my intelligence I asked the CEO of a private insurance company (in 2001 mind you) “How much time do you think you will take to beat LiC?”. He said in about 20 years time we will catch up with the Delhi office of LiC!!

Such is the respect that the rivals have/had for LiC’s sales reach.

When it comes to fund management, they have a good team. However the team cannot match the political interference.

Nehru interfered!! Mundhra’s LiC scandal was a scandal of the 1950s.

Every government has interfered with LiC. Every government. No exceptions.

However, earlier they had more cash cows like UTI. IDBI. ICICI. IFCI – these were all government owned / controlled. Even today the gov doeins interfere, but none of these are cash cows. Well, no longer. They have independent shareholders / stakeholders.

LIC continues its mis-selling by showing the “we are owned by the government..so in a worst case scenario you will get a bail out”. We will need it soon. Will RBI be called upon to bail out LIC? or will SBI be asked to bail out LiC when the time comes?

The s…g of LiC got accelerated in 2014. In the last 5 years, LIC has bailed out the government EVERY YEAR for a cumulative bail out of Rs. 50,000 crores. This is not a small amount. Read it again, Rs. 50,000 crores.

At this rate, in 2030, LIC will need to be bailed out. Especially if they ask LIC to become a holding company for Air India with a hair brained 25% will be owned by the Gov of India scheme. BJP which can easily use people like Yashwant sinha or Arun shourie is struggling with amazing set of people. No more political comments.

Take a scenario where people stop putting their money into LiC – what do you think the government will do?

Simple turn to the next cash cow. NPS.

Only question is when will this happen. Not whether.

Read the following well compiled article…

https://www.bloombergquint.com/opinion/2018/06/30/the-liabilities-insurance-corporation-of-india