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LIC IPO Countdown begins + Risk just got real

The LIC IPO is coming soon. It is the big daddy of IPOs. But this is a company that is losing market share to private players. It’s market share appears larger on account of more number of policies with smaller sum assured, and more single premium policies (which increases the overall premium number). Adjusted for this, the market share is also much lower. This adjusted number is called APE (Annual Premium Equivalent).

LIC also doesn’t sell too much of some of the more sought after products, like Term Plans and ULIPs. The promoter – Government – has been using LIC to bail out other PSUs and their public offers, and from time to time, save the capital markets from falling. If this was another firm, with losing market share, not-so-great products, lack of presence on new age distribution platforms, and promoter using money to bail out other promoter firms – how would you have rated this?

We will come with a more detailed discussion on the insurance segment in the coming weeks. Keep following our channels for updates on these.


What has Russia done!

Too much has already been written about the war – so we won’t add to what is already known. Just a couple of points. Risk just got real this week. Risk that is considered tail risk, and cannot be predicted. After nearly 6-7 decade of relatively peaceful times, the Russian action just suddenly creates a new dynamic in an already volatile world. This has now increased the risk premiums, and will probably keep them elevated for some time now. Watch out for volatility across asset classes now, in the near term. 

With social media amplifying all of this more and more, a glimpse of what volatility can do was seen in Russian markets. This week it traded 4 days, and we saw -10%, +2%, -33%, +20% on these 4 days, ending the week down 27%. On one day, it hit -45% intraday. Let that sink in. Even 6 sigma events should happen on 3.4 days in 1 million days (under ideal circumstances of course). In Russian markets it did this atleast 2 times in 4 sessions. Can’t even put my head around as to what is likely to follow in the enhanced volatility environment.

Let’s hope things settle down.


Winners of the Quiz last week
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