Life Insurance Corporation of India’s maiden dividend failed to enthuse its investors, but the insurer highlighted that it needs capital for growing the business and maintaining solvency margin. The board of LIC on Monday approved a dividend of ₹1.5 per share, which translates to a payout of ₹948.75 crore aggregating to about 23.46 per cent of profit after tax.

“Out of the ₹4,043 crore of profit, the balance remains with shareholder. LIC also needs capital for growing the business. We need to have available solvency margin,” said Raj Kumar, Managing Director, LIC.

“The retention of other earnings is for the growth of the organisation and benefit of shareholders,” he stressed.

‘Q4 not comparable’

The insurer, which also announced its financial results on Monday, said the results for the fourth quarter of 2021-22 are not comparable with that of the fourth quarter of 2020-21. “Earlier, profits were declared at the year-end. So the fourth quarter numbers are not comparable,” Raj Kumar said, adding that the full financial year numbers would be a correct measure for comparison.

LIC had reported standalone net profit of ₹2,371.55 crore in Q4-FY22, down 18 per cent from ₹2,893.44 crore a year ago. For 2021-22, its net profit rose 39.4 per cent to ₹4,043.12 crore (from ₹2,900.56 crore in 2020-21.

Kumar said the numbers from the second quarter would be comparable as LIC had started releasing quarterly performance figures from September 2021.

An exercise to determine Indian embedded value (IEV) as on March 31, 2022, is under progress and expected to be completed by June 30.

LIC had an embedded value of ₹5.4-lakh crore as on September 2021.

Kumar said the IEV would be declared to the exchanges on a half-yearly basis. The insurer has also got a new software for calculation of IEV.

New business margin

He expressed confidence that LIC’s value of new business margin will be the same, if not better, than the industry average over the next five years.

Going forward, the insurer expects non-participating business to be its driver for growth. “We see a lot of opportunity,” Kumar said.

Other growth segments would include ULIPs, annuity, term and guaranteed products as well as health insurance.

LIC scrip closed 3.05 per cent lower on the BSE at ₹811.5 apiece.