LIC Q1 profit surges 23% on growth in value of new business

Mumbai: Life Insurance Corporation of India (LIC) reported a 23% year-on-year rise in June quarter net profit, aided by strong growth in its value of new business (VNB) and diversification in product mix.

The state-owned insurer's standalone net profit rose to ₹13,492 crore in the quarter ended June 30 from ₹10,986 crore a year earlier. Total premium income increased 6.75% to ₹1.27 lakh crore.

The biggest positive came from profitability. VNB, a key measure of future profitability, jumped 61.3% to ₹3,136 crore, while the VNB margin expanded 7.5 percentage points to 22.9% from 15.4% a year ago. The sharp improvement in margins came from product diversification, particularly higher sales of non-participating savings and protection products.


"If you look at the growth that has come here with focusing on value of the product, we wanted to focus on the non-par savings as well as protection, both have contributed to the increase," said R Doraiswamy, MD and CEO, LIC. "We have to accept that the 18% GST exemption on the protection plan on the individual side has made it a bit more affordable, which has reduced the cost."

Annualised premium equivalent (APE) rose 8.2% to ₹13,692 crore. Individual APE stood at ₹7,532 crore, while group APE increased 10.2% to ₹6,160 crore. Within the individual business, non-par APE rose 14.2% to ₹2,447 crore, increasing its share to 32.5% from 30.3% a year earlier.

However, the overall expense ratio edged up to 10.63% from 10.47%, partly because the withdrawal of GST input tax credit after the exemption on pure protection policies increased costs.

The insurer's solvency ratio strengthened to 2.42 at the end of June from 2.17 a year ago, while assets under management increased 4.1% to ₹59.39 lakh crore.

LIC expects the share of non-par products in individual APE to remain in the 30-35% range. Doraiswamy said that demand for guaranteed products has remained strong amid volatile markets and interest rate uncertainty.

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On the government's recent offer for sale (OFS), Doraiswamy said the 6.5% stake sale had been well received by the market and allowed the government to meet SEBI's requirement of reducing its shareholding to 90% ahead of the May 2027 deadline. He said that there is no immediate pressure to dilute its stake further, noting that it has about five years to increase public shareholding from 10% to 25%.