LIC reports Q2 net profit at Rs 7,925 crore; net premium income down 18.7%

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Life Insurance Corporation (LIC) of India, the country’s largest insurer, has reported a net profit of Rs 7,925 crore for the July-September period as compared to Rs 15,952.5 crore during the same period of the previous year.

 


LIC said the profit numbers were not comparable with the year-ago period because of the change in accounting policy introduced in September 2022.

 


During the April-June quarter, the insurer had reported a net profit of Rs 9,543.71 crore.

 


In September 2022, LIC had changed its accounting policy regarding the transfer of amounts (net of tax) pertaining to accretion on the available solvency margin from the non-participating policyholder’s account to the shareholder’s account.

 

In the July-September quarter of the previous financial year, the transferred amount stood at Rs 14,272 crore and the amount in the quarter under review was Rs 6,277 crore.

 


LIC transferred Rs 27,241 crore (net of tax) during 2022-23.

 


The insurance behemoth reported a net premium income of Rs 1,07,396.77 crore in Q2 of FY24, an 18.70 per cent year-on-year (Y-o-Y) drop from Rs 1,32,104.13 crore in Q2 of FY23. Its first-year premium income rose 9.47 per cent Y-o-Y to Rs 9,988.18 crore while renewal premium was up 6.21 per cent to Rs 59,642.92 crore.

 


Single-premium income declined by 43.43 per cent Y-o-Y to Rs 37,846.04 crore.

 


In terms of market share measured by first-year premium income (FYPI) (according to the Insurance Regulatory and Development Authority of India), LIC continues to be the market leader in the life insurance business with a share of 58.50 per cent. For the six months ended September 30, 2023, LIC had a market share of 40.35 per cent in the individual business and 70.26 per cent in the group business.

 


The value of new business (VNB) margin of the company improved to 15.29 per cent in the quarter under review from 15.24 per cent in the year ago.

 


Siddhartha Mohanty, chairperson, said: “The current VNB margins are an indicator of our initiatives delivering the objective of maintaining profitability as we change direction. We are conscious of the market dynamics in certain parts of our business and are working towards profit-oriented consolidation.”

 


On a half-yearly basis, the VNB margin remained flat at 14.6 per cent in H1FY24 as compared to H1FY23 as a result of change in the product mix to focus in response to the competitive market.

 


“It is a competitive market. Accordingly, we have also revised rates in certain products in order to get a greater share in the market. Another important aspect is the impact of the risk-free rates … since these have reduced, that also has an impact on the VNB margins. Overall this is the impact of change in product mix, realignment of the product benefits and the non-participating segments,” said Dinesh Pant, appointed actuary and executive director (actuarial).

 


Income from investment increased 11.70 per cent Y-o-Y to Rs 93,942.20 crore during Q2 of FY24. In the year-ago period, it was Rs 84,103.64 crore.

 


The yield on investments on policyholders’ funds, excluding unrealised gains, was 9.11 per cent for the quarter. It was 8.73 per cent in the year-ago period and 8.78 per cent in the preceding quarter.

 


LIC’s gross non-performing asset (gross NPA) ratio declined over the preceding quarter to 2.43 per cent at the end of July-September. It reported a flat net NPA from the quarter-ago period.


In Q2, LIC’s persistency ratios on a premium basis for the 13th month and 61st month were 71.19 per cent and 55.17 per cent, respectively.


In the preceding quarter, the 13th month and 61st month persistency ratios stood at 75.10 per cent and 59.25 per cent, respectively.