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

The VNB margin expanded 110 basis points (bps) on a net basis for FY23 to 16.2 per cent—the highest for the life insurer since its listing in May 2022.

Profit after tax for FY23 was ₹36,397 crore, an over nine-fold increase. The profit comprises ₹27,241 crore of accretion on the Available Solvency Margin, transferred from the non-participating fund to the shareholders’ account, of which ₹7,299 crore was transferred in Q4-FY23.

Focus on diversification

Total premium, on APE basis, was 12.5 per cent higher at ₹56,682 crore for FY23, of which individual business accounted for 68 per cent and group business for 32 per cent. The Individual business APE grew 9 per cent year on year, whereas group APE grew 22 per cent.

LIC said that it will continue to diversify the product mix, with a focus on enhancing the share of non-participating products in FY24. Within the individual business, the APE share of non-participating products was 9 per cent as of March 31.

It will launch new products based not only on customer needs but also requirements of the distribution channels, increase digital processes to drive higher efficiency, and look to enhance yields on the investment portfolio. In the analyst call, LIC said it plans to have and promote a pipeline of high margin products to ensure profitable growth.

The yield on investments on policyholders’ funds, excluding unrealised gains, was 8.3 per cent for FY23 compared with 8.6 per cent in the previous year. The insurer said it will also prepare for “potential regulatory changes to respond with speed to a new environment”.

“The key highlight was 7.5 per cent YoY growth in EV on the back of 20 per cent VNB growth, higher rate of unwind due to increase in risk-free rate and positive changes in operating assumptions due to increase in persistency experience,” Macquarie Research said in a note, adding that MTM losses due to market movements and interest rate increase negatively affected the EV by about ₹17,200 crore. The Indian Embedded Value (IEV) of LIC was as ₹5.8-lakh crore as on March 31.

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

Shares of the insurer rose 3.6 per cent at open to an intraday high of ₹615.50. The stock later pared some gains to close 1.6 per cent higher at ₹603.55.