LIC posts highest ever half-year PAT of ₹17,469 crore

Life Insurance Corporation (LIC) of India posted a net profit of ₹17,469 crore for H1 FY24, the insurer’s highest ever half-yearly profit, largely on account of transfer of ₹13,768 crore,  pertaining to accretion on available solvency margin, from non-participating policyholders’ fund to shareholders’ account.

Profit after tax of ₹16,635 crore for the year ago period, is not entirely comparable as it included ₹4,542 crore of a similar transfer during the respective six-month period. Accordingly, the comparable PAT comes to Rs 12,093 crore as per which the H1 FY24 profit was 44.5 per cent higher on year.

LIC had changed its accounting policy in September 2022 regarding transfer of this amount (net of tax), as per which it had transferred Rs 27,241 crore to the shareholders’ account in FY23.

Total premium income fell 10.72 per cent y-o-y to ₹2.1-lakh core, largely on account of a 30.9 per cent decline in group premium to ₹70,977 crore. Individual business premium rose 5.5 per cent to ₹1.3-lakh crore.

In the post earnings call, the management said that group business declined because the insurer did not get some large corporate accounts that were due this quarter but are likely to be acquired in the coming quarters.

In terms of first year premium income, LIC maintained its market leadership with 58.5 per cent share. In terms of individual business the market share was 40.35 per cent, and at 70.26 per cent in the group business.

However, value of new business (VNB) fell 10.1 per cent y-o-y to ₹3,304 crore. Net VNB margin was at 14.6 per cent, flat from the previous year.

The margins were flat due to change in the product mix led by the focus on non-par products, realignment of product benefits and readjustment of margins under non-par policies, and some amount of pricing competitiveness in the non-par segment which weighed on margins.

“During the first six months of this financial year, we have been able to implement strategies successfully to enhance the share of non-par products in our overall individual business. The current VNB margins are an indicator of our initiatives delivering the objective of maintaining profitability as we change direction,” Chairperson Siddhartha Mohanty said.

“We are conscious of the market dynamics in certain parts of our business and are working towards profit-oriented consolidation,” he said, adding that the distribution mix is also more diversified with increase in share of bancassurance and alternate channels.

On an annualised premium equivalent (APE) basis, total premium was ₹22,627 crore, of which 64.7 per cent was individual business and 35.3 per cent was group business. Within individual, participating products comprised 89.2 per cent.

Non-participating APE grew 19.9 per cent to ₹1,575 crore, with its share in individual APE rising to 10.8 per cent from 9.0 per cent a year ago. 80.6 lakh individual policies were sold during the six-month period ended September, lower than 83.6 lakh policies in the previous year.

13th month persistency ratio on a premium basis, a measure of customer stickiness, improved to 78.5 per cent from 77.6 per cent a year ago, whereas the 61st persistency deteriorated slightly to 62.5 per cent from 62.8 per cent.

Embedded value was up 21.7 per cent yo--y at ₹6.6 lakh crore. Solvency ratio stood at 1.90 times. LIC’s AUM rose 10.5 per cent y-o-y to ₹47.4-lakh crore.

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