LIC shareholders may get some good news soon, the company plans to recoup the losses

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Siddharth PriyadarshiRelease Date: Sat, 29 Oct 2022 02:30 PM (IST)Updated Date: Saturday, 29 October 2022 02:30 PM (IST)

New Delhi, Business Desk. India’s largest insurance company LIC is working on a new plan to support its falling share price. Life Insurance Corporation of India (LIC) is looking to issue dividends and bonus shares worth Rs 1.8 lakh crore to pay dividends or issue bonus shares. This is claimed in a Reuters report.

LIC investors have faced huge losses in the recent past. LIC shares were priced at Rs 949 at the time of listing a few months ago, but are currently trading below Rs 600. With this decision, the country’s largest insurer LIC aims to restore investor confidence by improving its share price.

LIC shares continue to fall

The state-owned insurance company listed on the Indian stock exchange in May, but its stock fell more than 35%. As a result, the investors have sunk around Rs. 2.23 lakh crore. Now the company is trying to strengthen its share. But the big question is how much and how much relief will be given to investors facing losses.

What is the scheme of LIC?

LIC is now considering steps to boost its share price. LIC plans to transfer Rs 1.8 lakh crore from non-participating funds to shareholders. Let us tell you that the company’s non-participating funds are around Rs 11.57 lakh crore.

What are participating and non-participating funds?

Life insurance companies mainly sell two types of products, one is participating and the other is non-participating. Profits of participating funds are shared with clients whereas non-participating funds give a fixed return. LIC keeps its premiums in a non-participating fund.

Will investor confidence return?

Transferring funds from non-participating funds to shareholders’ funds is one way to increase investor confidence. The net worth of the insurance company is expected to increase by 18 times due to the transfer of non-participating funds. Investors are also expected to get strong returns through this. LIC shares were priced at Rs 949 per share at the time of listing, but are currently trading below Rs 600.

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Edited by: Siddharth Priyadarshi

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