“Our consistent and focused approach towards diversifying and changing our product mix is now yielding results at a faster pace. ” Chairperson Siddhartha Mohanty, said
Mumbai:
Life Insurance Corporation of India reported a nearly 50% rise in third-quarter profit on Thursday, as it moved more money to a shareholders’ fund.
LIC, India’s largest insurer, posted a profit after tax of Rs 9,444 crore for the quarter ended Dec. 31, up from Rs 6,33.4 crore a year ago.
The life insurance behemoth also announced an interim dividend of Rs 4 per share.
Its net premium income rose by 5% to Rs 1,17,017 crore in the third quarter of the current fiscal from Rs 1,11,788 crore in the same period a year ago.
The company transferred Rs 7,692 crore from its non-participating fund to a shareholders’ fund for the quarter, it said.
LIC had transferred Rs 5,670 crore in the year-ago quarter.
While LIC has been making such transfers each quarter, it said the quarterly results are not comparable with the year-ago period due to the transfers.
The premium LIC collects from ‘non-participating’ policies, which have fixed returns, is parked in a non-participating fund.
Since 2022, it has been transferring some of this every quarter to a shareholders’ fund, aiding its profit. LIC had said the transfers were to shore up its solvency margin.
LIC’s total income increased to Rs 2,12,447 crore in the latest December quarter compared to Rs 1,96,891 crore in the year-ago period.
Its solvency ratio, the measure of an insurer’s ability to meet its long-term debt obligations, improved to 1.93 in the quarter from 1.85 a year ago.
Its value of new business (VNB), which measures expected profit from new premiums, rose 8.4% year-over-year for the nine months ended Dec. 31. The VNB margin for the period rose to 16.6% from 14.6% a year ago.
LIC has been focusing on increasing the share of higher-margin non-participating policies in total policies sold.
“Our consistent and focused approach towards diversifying and changing our product mix is now yielding results at a faster pace. The same is evident in the rise in the share of Non Par business on APE basis to 14.04% of our total individual business for the first nine months of FY 2024. The fact that this is also accompanied by 200 bps increase in the VNB margin levels to 16.6% is an indicator that our strategic interventions are delivering in the manner that we envisaged. ” Chairperson Siddhartha Mohanty, said
LIC is optimistic that there will be an improvement in margins for the fiscal fourth quarter, Mohanty said in a virtual post-earnings press conference, adding that it is confident of sustaining the current earnings trajectory.
Smaller peers such as ICICI Prudential Life Insurance, and SBI Life Insurance have reported a drop in VNB margin for the April-December period as the share of low-margin market-linked products rose.
The Yield on Investments on policyholders funds excluding unrealized gains was 9.14% for nine months period ended December 31st, 2023 as against 8.58% for period ended December 31st, 2022. The net non-performing assets (NPA) in the policyholders fund was Rs. 8.01 crore as on December 31st, 2023 as compared to Rs. 10.94 crore as on December 31st, 2022.
LIC’s assets under management (AUM) increased to Rs. 49,66,371 crore as on December 31st 2023 as compared to Rs. 44,34,940 crore on December 31st, 2022 registering an increase of 11.98% year on year.
On Thursday, LIC’s scrip on BSE closed trading 6.5% higher at Rs 1,112.
Board approves LIC’s equity stake in Bima Sugam
The LIC Board also accorded approval to the proposal of the corporation to subscribe to the mMemorandum jointly with one or more entities to be incorporated for providing a one-stop electronic platform, Bima Sugam, for life, health and general insurance needs.
Consent of the board has been granted for subscription to the equity share capital of the said company not exceeding 8.3 per cent of the initial issued and subscribed share capital in the first tranche, LIC said.