LIC Q4 Results: Profit Jumps But Premium Falls 8%

Life Insurance Corp.'s standalone profit surged and its premium income rose in the fourth quarter over last year.

The state-owned insurer's standalone after-tax profit jumped around 4.7 times to Rs 13,428 crore from Rs 2,372 crore over the same period in the previous fiscal, according to an exchange filing.

The net premium of the company declined 8% year-on-year to Rs 1.3 lakh crore.

Sequentially, its bottom line rose 1.1 times while net premium rose 18% over the last quarter.

LIC Q4 FY23 Highlights (Standalone, YoY)

• Revenue fell 7% to Rs 2 lakh crore.

• The management expense ratio increased to 16.24%, as against 13.53%.

• The 13^th month persistency ratio—or customer retention—improved to 70.16% from 69.24%, and to 55.99% from 55.62% for the 61^st month.

• The solvency ratio, which measures the extent to which assets cover commitments for future liabilities, rose to 187% from 185%. It's above the minimum requirement of 150%.

The board has recommended a dividend of Rs 3 per share.

• After-tax profit jumped 8 times to Rs 36,397 crore from Rs 4,043 crore.

• Embedded of LIC rose 7.5% over last year to Rs 5.8 lakh crore.

• The of new business for the current fiscal, on a gross basis, was Rs 11,553 crore as against Rs 9,920 crore, up 16.5%.

• Net VNB margin stood at 16.2% versus 15.1%.

• Assets under management have risen 7.7% to Rs 44 lakh crore from Rs 41 lakh crore.

• While the total premium was up 11% year-on-year, individual premiums—renewal and new business premium—gained 5.8% and group premiums were up 20.2%.

• Expenses of management rose to 15.53% from 14.5%.

• Persistency on a premium basis improved for the 13th and the 61st month to 77.09%, from 75.59%, and to 61.8%, from 61%, respectively.

• The yield on investments on policyholders funds, excluding unrealised gains, fell to 8.29% as against 8.55% in FY22.

• LIC's market share measured by first year premium income fell to 62.58% in March 2023 from 63.25% in March 2022.

The unusual jump in profis in FY23 is on account of the behemoth changing its distribution policy in December last year, in the run-up to its initial public offering.

LIC had a single fund for both participating and non-participating plans, and any surplus was shared with policyholders and shareholders in a 95:5 ratio.

Ahead of the IPO, the fund was divided into two, and the surplus from non-participating plans was given to shareholders along with 5% of the surplus from the participating fund. This contributed to the disproportionate increase in profit over last year.

"Our efforts towards enhancing the share of non-par products in the overall product mix are bearing fruits. With the increase in profit, net VNB margin and IEV we are well-positioned to continue our growth journey, in the service of the nation and its citizens," said Siddhartha Mohanty, chairperson of LIC.

"The regulatory initiatives towards 'Insurance for All' by 2047 will present opportunities to grow for the sector and we intend to participate in that growth."

Shares of LIC closed 0.61% higher before the results were announced on Wednesday, as compared with a 0.34% decline on the benchmark Sensex.