LIC Q3 Results: Profit Jumps, Premium Grows 15%

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

The state-owned insurer's standalone after-tax profit jumped around 26 times to Rs 6,334 crore from Rs 235 crore over the same period in the previous fiscal, according to an exchange filing.

The net premium of the company increased by 15% year-on-year to Rs 1.12 lakh crore.

The rise in standalone profit stems from the change in 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.

Sequentially, its bottom line fell 60% while the net premiums fell 15% over the last quarter.

LIC Q3 FY23 Highlights (Standalone, YoY)

• Revenue rose 13% to Rs 1.96 lakh crore.

• The management expense ratio improved to 12.32%, as against 14.34%.

• The 13^th month persistency ratio—or customer retention—improved to 70.94% from 69.23%, while it fell to 56.41% from 57.28% for the 61^st month.

• The solvency ratio, which measures the extent to which assets cover commitments for future liabilities, rose 185% from 177%. It's above the minimum requirement of 150%.

• The value of new business for the first nine months of the current fiscal was Rs 5,478 crore. The company disclosed that its comparable data of 2021–22 is not available and, therefore, not mentioned.

• The VNB margins stood at 14.6%.

• Assets under management have risen 11% to Rs 44.3 lakh crore from Rs 40.1 lakh crore.

• While the total premium was up 5.92% year-on-year, individual premiums—renewal and new business premium—gained 5.92% and group premiums were up 50.15%.

• Operating expenses rose to 15.26% from 14.99%.

• Persistency on a premium basis improved for the 13th and the 61st month to 77.61%, from 62.73%, and to 76.84%, from 61.91%, respectively.

• The yield on investments on policyholders funds, excluding unrealised gains, was 8.58% as against 8.76% in 2021-22.

"We continue to remain focused on creating a portfolio mix to optimise value for all stakeholders and, in that context, increasing the proportion of non-par business in a consistent and profitable manner," LIC Chairperson MR Kumar said, in the filing.

"While the relative growth of various products within the non-par bucket will vary within each quarter, we believe we are firmly on our way to achieving the target product mix changes."

The company said the market is showing signs of robust growth and is confident of retaining and also growing market share.

Shares of LIC closed 0.53% higher before the results were announced on Thursday, as compared to a 0.23% gain on the benchmark Sensex.

(Corrects an earlier version misstated the growth in net profit)