Life Insurance Corporation of India (LIC) on Thursday reported a net profit of Rs 9,543.71 crore for the quarter ended June 30. Net profit in the corresponding quarter previous year was Rs 682.88 crore.
The increase in profit on a year-on-year basis is on account of the insurer transferring an amount of Rs 7,491.54 crore from non-participating policyholders’ accounts to shareholder’s accounts.
Sequentially, the net profit was down 28.92 per cent quarter-on-quarter from Rs 13,427.81 crore for the fourth quarter of last fiscal, according to a stock exchange filing by the insurer.
The corporation changed its accounting policy in September 2022 regarding the transfer of the amount (net of tax) pertaining to the accretion on the available solvency margin from non participating policyholder’s account to the shareholder’s account.
On the operational front, for Q1FY24, LIC’s net premium income stood at Rs 98,363 crore, which was almost flat when compared with Rs 98,352 crore for Q1FY23.
LIC chairperson Siddhartha Mohanty on Thursday evening said there is a definite concern over the growth of total premium income in Q1FY24 (0.01 per cent YoY). “But from the second quarter onwards, definitely, I am expecting positive growth. My objective is to have industry growth rate or better than industry growth rate,” he said.
“During the first quarter of this financial year, we have achieved an increase in our non-par product mix as a percentage of the overall individual business. Further, our efforts to improve persistency across cohorts are beginning to show results. Our overall expense ratio has become better and our margins are stable on a year-on-year basis. Simultaneously we continue to work on strategies for diversifying the channel mix,” he added.
The persistency ratios on a premium basis up to the quarter ended June 30 for the 13th month and 61st month were 78.37 per cent and 62.73 per cent, respectively. The comparable persistency ratios up to the corresponding quarter ended June 30, 2022 were 77.85 per cent and 62.43 per cent, respectively.
Policies sold in the individual segment also fell to 32,16,301 during the quarter from 36,81,764 during the quarter ended June 30, 2022.
While the insurer has focussed on higher margin products, it would also have to look at volume growth going forward.
Annualised premium equivalent (APE) saw a contraction of 7.19 per cent year on year at Rs 9,532 crore for Q1FY24 from Rs 10,270 crore in Q1FY23.
The value of the new business (VNB) margin stood at Rs 13.7 per cent for Q1FY24 against 13.6 per cent for Q1FY23.