LIC shares gain as FY23 VNB rises 16.5 per cent, focus on growing non-par

Shares of Life Insurance Company of India (LIC) rose on Thursday as the insurer reported a 16.5 per cent increase in gross new business (VNB) value for FY23 to Rs.11,553 crore led by significant expansion in VNB margin and growth in annual premium equivalent to (APE).

VNB’s margin expanded by 110 basis points (bps) on a net basis for fiscal 23 to 16.2 percent — the highest level for the life insurer since its listing in May 2022.

Profit after tax for the financial year was Rs. 2,336,397 crore, an increase of more than ninefold. The profit consists of Rs.27,241 crore from the accumulation of available solvency margin, transferred from the non-participating fund to the shareholders’ account, of which Rs.7,299 crore was transferred in the fourth quarter of FY23.

Focus on diversification

Gross premiums, on APE basis, were 12.5 per cent higher at INR 56,682 crore for FY23, of which single business accounted for 68 per cent and group business 32 per cent. Individual business APE grew 9 percent year-over-year, while group APE grew 22 percent.

LIC said it will continue to diversify its product mix, with a focus on strengthening the share of non-participating products in fiscal ’24. Within individual businesses, APE’s share of non-participating products was 9 percent as of March 31.

You will launch new products based not only on customer needs but also on channel requirements, ramping up digital operations to drive higher efficiencies, and looking to enhance portfolio returns. In the analyst call, LIC said it plans to own and enhance its pipeline of high-margin products to ensure profitable growth.

Return on investments on policyholder funds, excluding unrealized gains, was 8.3 percent for FY23 compared to 8.6 percent in the previous year. The insurer said it would also prepare for “potential regulatory changes to respond quickly to a new environment.”

“Highlights were EV growth of 7.5 percent year-on-year on the back of VNB growth of 20 percent, higher rate of relaxation due to increase in the risk-free rate and positive changes in operating assumptions due to increased persistence experience,” Macquarie Research in a note. , adding that MTM’s losses due to market movements and increase in interest rates negatively affected EV by around Rs 17,200 crore. The Indian Embedded Value (IEV) of the LIC was INR 5.8 crore on March 31.

Total premium income grew by 10.9 per cent to ₹4.7- lakh crore for FY23, with LIC maintaining its leadership in first-year premium income with a market share of 63 per cent. First year premium income for FY23 increased by 16.7 per cent at ₹ 2.3 crore.

Shares of the insurance company rose 3.6 percent at the open to an intraday high of INR 615.50. The stock later pared some gains to close 1.6 percent higher at $603.55.