LIC bonus shares LIC dividend and LIC share Price.
LIC bonus shares and higher dividend to support LIC share Price.
Source: Reuters
India's largest PSU insurer LIC plans changes to revive battered shares by means of LIC Bonus shares and dividend. Life Insurance Corporation of India (LIC) shares were priced ₹949 a piece during listing but are currently trading below ₹600 after heavy correction.
Life Insurance Corporation of India (LIC) is planning to transfer nearly $22 billion from policy holders' funds into share holders fund earmarked to pay dividends or issue bonus shares as applicable, two sources said on Friday, as the country's largest insurer LIC aims to shore up both its own net worth or market value and investor confidence.
The state-owned insurer listed on Indian stock exchanges in May, but its stock has since dropped by more than 35% from listing price, wiping off nearly 2.23 trillion Indian rupees in investor wealth in a very small span of time.
Life Insurance Corporation of India (LIC) is now looking to looking at steps to revive LIC share price, said a government official, who did not want to be named due to regulatory compliance.
The Life Insurance Corporation of India (LIC) plans to transfer 1.8 trillion Indian rupees ($21.83 billion), a sixth of the ₹11.57 trillion lying in its non-participating fund, to its shareholders' fund value, according to an official aware of the development.
Life insurance companies primarily sell two types of products: the first are 'participating policies' where profits or surplus are shared with customers and second are 'non-participating,' or 'non-par,' policies that have fixed returns and profit are transferred to share holders. Life Insurance Corporation of India (LIC) parks the premium it collects from the latter in a non-participating fund as per rules and policy.
Transferring some of that into the shareholders' fund is one of the way to shore up investor confidence as it would result in higher dividend payouts in the future and appreciate LIC Share Price.
The surplus in the non-participating fund is earmarked for shareholders and it can be transferred to shareholders fund with approval from LIC's board members, which is yet to be taken.
The transfer, if concluded, would increase LIC's net worth by about 18 times from its current value of about ₹105 billion and top the net worth chart among all insurers, including SBI Life and HDFC Life, both the officials told
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A bigger shareholder und value would draw the attention of new and existing equity share holders as the amount can be used by Life Insurance Corporation of India (LIC) to transfer dividend or issue LIC bonus shares in future, said Mr Harvinder Singh, a partner at law firm DSK Legal.
LIC shares Price were priced at ₹949 a piece during listing but are currently trading below ₹600 rupees which gives about 35% loss
Seven of nine brokerages covering the stock have 'buy' or 'strong buy' rating, with the median price target of ₹840 , according to Refinitiv data available
"The move would increase the book value per share(Price to book) and may help in improving the sentiment around LIC's shares and LIC Share Price.
The issue of LIC Bonus shares will results in increase in number of shares as per ratio decided by the board. But there will also a download Price adjustment in LIC Share Price.
This story has been published and collected from a wire agency feed without modifications to the text. Only the headline has been changed.
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