`We are conscious of the market dynamics in certain parts of our business and are working towards profit-oriented consolidation. The distribution mix is also more diversified with increase in share of Bancassurance and Alternate Channels. We continue to remain focused on creating higher customer value through digital innovations.”Siddhartha Mohanty, chairperson, LIC
LIC’s Indian Embedded Value (IEV) surges 21.74% to Rs. 6,62,605 crore as on September 30th,2023
State-owned insurer LIC on Friday reported net profit at Rs 7,925 crore for the quarter ended September 30.
The country’s biggest life insurer had a net profit of Rs 15,952 crore in the year-ago period, LIC said.
However, the profit of the September 2023 quarter is not comparable with the corresponding figures for the quarter ended 30th September 2022, clarified LIC.
The corporation had changed its accounting policy in September 2022 regarding transfer of amount (Net of Tax) pertaining to the accretion on the Available Solvency Margin from Non Participating Policyholder’s Account to Shareholder’s Account, said LIC.
Also hurting LIC’s bottom-line was a roughly 56 per cent drop, to Rs 6,277 crore , in the amount LIC transferred from its non-participating fund to a shareholders fund in the quarter.
The premium LIC collects from ‘non-participating’ policies, which have fixed returns, is parked in a non-participating fund.
Since last year, it has been transferring some of this every quarter to its shareholders’ fund. The accounting effect is a higher profit.
LIC had said the transfers were to shore up its solvency margin
Its net premium income declined by 19 per cent to Rs 1,07,397 crore in the second quarter of the current fiscal, from Rs1,32,631.72 crore in the same period a year ago.
Total group business premiums dropped 30.9% year-over-year in the first half, after a 7.2 per cent decline in the first quarter.
The Indian Embedded Value (IEV) as on September 30th,2023 has been determined as Rs 6,62,605 crore as compared to Rs.5,44,291 crore as on September 30th, 2022 registering an increase of 21.74 per cent over the previous year.
Siddhartha Mohanty, chairperson, LIC said,“ 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.”
“We are conscious of the market dynamics in certain parts of our business and are working towards profit-oriented consolidation. The distribution mix is also more diversified with increase in share of bancassurance and alternate Channels. We continue to remain focused on creating higher customer value through digital innovations.”
Meanwhile, the corporation has appointed Boston Consulting Group(BCG) as a consultant to chart out its digital transformation, Mohanty said.
The Solvency Ratio as on September 30th,2023 improved to 1.90 as against 1.88 on September 30th,2022
The Value of New Business (VNB) for the six month period ended September 30th, 2023 was Rs. 3,304 crore as compared to Rs. 3,677 crore for the six month ended September 30th,2022.
The net VNB margin for the six month period ended September 30th,2023 was 14.6 per cent as compared to 14.6 per cent for the six months ended September 30th,2022.
LIC’s total income declined to Rs 2,01,587 crore in the latest September quarter, compared to Rs 2,22,215 crore in the year-ago period, it said.
The Assets Under Management (AUM) increased to Rs. 47,43,389 crore as on September 30th, 2023 as compared to Rs. 42,93,778 crore on September 30th, 2022 registering an increase of 10.47 per cent year on year.
The Overall Expense Ratio for the half year ended September 30th, 2023 was 15.14% as compared to 16.69% for the half year ended September 30th, 2022.
The yield on Investments on policyholders funds excluding unrealised gains was 9.06 per cent for half year ended September 30th, 2023 as against 8.32 per cent for half year ended September 30th, 2022.
The Net NPA in the policyholders fund was Rs. 8.77 crore as on September 30th,2023
as compared to Rs. 12.72 crore as on September 30th, 2022.
LIC’s smaller peers, such as ICICI Prudential Life Insurance (ICIR.NS) and HDFC Life Insurance (HDFL.NS), have reported a rise in second-quarter profit on higher premium income.
While LIC did not break out VNB for only the second quarter, it had reported VNB fell 6.8% in the first quarter.