LIC Results: Premium Up 27% In Q2; VNB Expands 1.3 Times In H1FY23

LIC's Q2 revenue rose by 19% to Rs 2.2 lakh crore.

<div class="paragraphs"><p>The LIC logo placed outside the Bombay Stock Exchange. (Source: BQ Prime)</p></div>
The LIC logo placed outside the Bombay Stock Exchange. (Source: BQ Prime)

Life Insurance Corp.'s standalone profit surged and its premium income rose in the second quarter.

The state-owned insurer’s standalone after-tax profit jumped 10 times year-on-year to Rs 15,952 crore in the quarter ended September, from Rs 1,434 crore, according to an exchange filing.

The net premium of the company increased by 27% year-on-year to Rs 1.3 lakh crore.

The rise in standalone profit stems from the change in its distribution policy in September last year, in the run-up to its initial public offering.

LIC had a single fund for both participating and non-participating plans, and any surplus was shared with policyholders and shareholders in a 95:5 ratio.

Ahead of the IPO, the fund was divided into two, and the surplus from non-participating plans was given to shareholders along with 5% of the surplus from the participating fund. This contributed to the disproportionate increase in profit.

Sequentially, its bottom line rose 22 times.

LIC Q2 FY23 Highlights (Standalone, YoY)

  • Revenue rose by 19% to Rs 2.2 lakh crore.

  • The management expense ratio was 18.25%, as against 14.92%.

  • The 13th and 61st month persistency ratios—or customer retention—improved to 70.52% from 68.81% and and to 55.83% from 53.88%, respectively.

  • The solvency ratio, which measures the extent to which assets cover commitments for future liabilities, rose to 188% from 183%. It’s above the minimum requirement of 150%.

Half-Yearly Highlights

  • The value of new business for H1FY23 was Rs 3,677 crore as against Rs 1,583 in the six months ended Sept. last year, up 1.3 times.

  • The VNB margins stood at 14.6% as compared to 9.3 % in the previous year.

  • The embedded value as on September 30, 2022 is Rs 5,44,291 crore as compared to Rs 5,39,686 crore as on September 30, 2021.

  • Assets under management has risen 9% to Rs 42.9 lakh crore from Rs 39.5 lakh crore.

  • While the total premium was up 24% year-on-year in H1FY23, individual premiums (renewal + new business premium) were up 7% and group premiums were up 55%.

  • Operating expenses went up to 16.69% from 15.33%.

  • Persistency on premium basis fell for 13th month to 77.62% from 78.77% while it improved for the 61st month to 62.77% from 60.57%.

M.R. Kumar, chairperson, LIC said in the filing, “The results signify our gradual and consistent move towards diversifying our product mix aimed at increasing the Non-Par Business share."

In the individual business, he said that, on an APE basis, the share of non-par business has increased to 8.99% for the half year ended September 30, 2022, as against 7.12% for full year ended March 31, 2022.

"The same philosophy of diversification is visible in our distribution channel mix where the share of new business premium being sourced from banca and alternate channels has also increased."

Shares of LIC closed 1.17% higher before the results were announced on Friday, as compared to the benchmark S&P BSE Sensex which ended 1.95% higher.