SIMPLY PUT: LIC is like Raj from Big Bang Theory

There are good companies, there are bad companies, and then there are companies like LIC or SBI. They are like that friend who isn’t the coolest, but they are the only ones available when you need them. Much like Rajesh Koothrappalli a.k.a Raj from the hit sitcom ‘The Big Bang Theory’.

Whether it was lifting Sheldon’s girlfriend Amy when she was in self doubt, or giving Bernadette the confidence to be a mother, or rallying alongside the creepy Howard through all the histrionics, Raj was always the friend in times of need.

That’s been the relationship between millions of Indians and the Life Insurance Corporation of India, the state-owned giant that sold three out of every four life policies in India. From when no one cared for insurance to now, when the demand is relatively better.

Every time the government wanted a share sale to be a success, there was LIC waiting with its coffers open buying out shares that didn’t have too many other takers.

But that’s history. Investing in a company should be a call on the future. And, for LIC, that looks pretty rosy too. There are just too many Indians who are yet to get life insurance and that means there’s a lot of money to be made. Betting on the biggest player in a sector is a fairly safe thing to do.

These are some of its strengths that make LIC’s IPO so hot. It has over a million agents who have sold over 283 million policies. It returns more profit for every rupee invested than any other life insurer in the world.
This one company manages more money than the entire mutual fund industry in India. And, when it gets listed on the stock exchanges, it will be bigger than most companies in India, by a mile.

There are many strengths that make LIC attractive and its public issue the mother of all IPOs in India. While everyone is queueing up for the celebrations, we thought why not bring, to the fore, some challenges that LIC faces because that’s also something you should know about before investing.

Like Raj, LIC will carry its parent’s baggage

It’s a government company and not all its decisions are geared towards making a bigger/quicker profit. Much like the fuel retailers in India or the state-owned banks, political priorities often shroud over what’s ideal for the business.

Both Raj and LIC refuse to grow up

Like most Indian companies owned by the government, LIC is neither very tech-savvy nor is it famous for great service to policyholders. Here, the comparison is not with Raj, the physicist, but with his inability to come of age. He just went from a creep to a likeable creep.

Here’s a sample complaint. LIC still deals in cheques and the drop box doesn’t even open for 20 straight days.
https://twitter.com/Adityamehriwal/status/1493117135174127617

This sarkari service would explain why more people drop out of an LIC policy after the first year. More than any other life insurance company in India.

LIC isn’t an underdog like Raj, but it isn’t a go-getter either

Insurance is a lot more competitive as a business than it used to be. LIC is still the giant, towering over all others in the space, but slowly and steadily, private insurers are eating into the pie.

Promoting yourself is necessary when you’re faced with tough competition. However, like Raj, LIC doesn’t do that very often. The number of LIC ads you’ll see is a lot less than some of the other players who splurge on advertising.

It doesn’t matter what experts say about LIC’s prospects, it seems like the entire country wants a piece of the pie. If you’re one of them, ask yourself why you are excited.