Life Insurance Corp. Chairman MR Kumar has maintained the value-of-new-business margin target of 20% in the medium term and 25% by the 2024–25 financial year.
The insurer reported a flat VNB margin of 14.6% in the first nine months of the current fiscal—same as the first six months.
This was because quarter-on-quarter, there was a change in product mix, which has not settled yet. But the company is on track in terms of its medium-term outlook, Kumar said in a conversation with BQ Prime.
This guidance would bring LIC's VNB margins on parity with that of private listed peers in the 25% range. The company's quarterly net profit jumped 26 times over a year earlier and its net premium rose 15%.
LIC is targeting to expand its non-participating policy share in the overall product mix to 15% in the fourth quarter from the current 9% levels. This should take the overall number non-par share to 11%, he said.
Non-par policies earn better margins for the insurance company than participating policies and LIC has been looking to expand its non-par portfolio.
In terms of the fall in persistency, Kumar said LIC has launched a revival campaign to understand issues and encourage people to pay premiums. "This should work in our favour in Q4."
Kumar said the insurer is keen to enter the health indemnity insurance space once a composite licence is approved by parliament and the Insurance Act is amended accordingly.
Watch the full interview here:
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