Life Insurance Corporation of India (LIC) on Friday reported a massive jump in net profits for the quarter ended June 30.
The standalone net profit of the country’s largest insurer rose to Rs 682.89 crore compared with Rs 2.94 crore in the same period of the previous year. However, on a sequential basis, the profits declined from Rs 2,371.55 crore.
One of the reasons behind the sharp jump in net profits as compared to the previous year period was the transfer of Rs 1,355.76 crore from the policyholder’s account. This was negative in the same quarter of the preceding fiscal. It may be recalled that with effect from September 30, 2021, LIC had changed sharing of the surplus policy wherein it created two separate funds — a participating policyholders fund and a non-participating policyholders fund.
Before this, it had a single life fund. While 100 per cent of the surplus generated out of the non-participating business will be available for distribution to all shareholders, surplus distribution in the participating policyholders’ fund was modified to 90:10 in a phased manner.
LIC disclosed that during the quarter, net premium income stood at Rs 98,351.76 crore against Rs 81,721.42 crore in the year-ago period. “As the Covid situation normalises, we see a larger activity on the ground, therefore bringing us back closer to our model of having feet on the street and continuous in-person engagement with our customers.
While the growth numbers are very robust for the first quarter as seen in comparison to the same quarter of FY 2021-22, we are aware that the Q1 of the previous year, FY 2021-22 was impacted by a very tough second wave of Covid.
“However, the trajectory is upwards and we are looking at increased business volumes as is evident in our market share in the year to date since January 2022’’, M.R. Kumar, chairperson, LIC said while commenting on the performance during the period. However, the value of the new business (VNB) fell sequentially to Rs 1,861 crore from Rs 9,920 crore in the preceding three months. The VNB margin (profit margin on policies sold in the last year) also slipped to 13.6 per cent from 15.1 per cent in the January-March quarter.
LIC disclosed that 36.81 lakh policies were sold in the individual segment during the quarter thus showing an increase of 59.56 per cent over the same quarter last year when 23.07 lakh policies were sold. At a press conference, the top management disclosed that during the quarter, it made a net investment of Rs 34,000 crore in the stock market. They added that the drop in the VNB margin was on account of the product mix.