LIC Q1 Profit Soars 23% to ₹13,492 Cr on Strong VNB Growth
By ThePip Desk
LIC’s Q1 net profit surged 23% to ₹13,492 crore, driven by a remarkable 61.3% increase in Value of New Business (VNB) and an expanded VNB margin of 22.9%.
Life Insurance Corporation of India (LIC) has announced a significant 23% year-on-year increase in net profit for the June quarter, reaching ₹13,492 crore. This impressive financial performance was primarily propelled by a substantial 61.3% jump in the Value of New Business (VNB).
The VNB, a critical indicator of future profitability, amounted to ₹3,136 crore, leading to a notable expansion in the VNB margin. This margin climbed by 7.5 percentage points to 22.9% from 15.4% recorded a year ago.
Key Financial Performance Indicators
- Net profit for the June quarter rose to ₹13,492 crore, up from ₹10,986 crore year-on-year.
- Value of New Business (VNB) surged by 61.3% to ₹3,136 crore.
- VNB margin expanded to 22.9%, a 7.5 percentage point increase.
- Total premium income grew 6.75%, reaching ₹1.27 lakh crore.
- Annualised Premium Equivalent (APE) increased by 8.2% to ₹13,692 crore.
- Solvency ratio strengthened to 2.42 from 2.17 a year prior.
- Assets under management (AUM) grew 4.1% to ₹59.39 lakh crore.
R Doraiswamy, MD and CEO of LIC, attributed the enhanced profitability to the company’s strategic diversification of its product portfolio. Increased sales of non-participating savings and protection products played a crucial role in this growth.
Strategic Product Diversification and Market Impact
The 18% GST exemption on individual protection plans further contributed to making these products more accessible and affordable. Within the individual business segment, the non-participating APE saw a 14.2% rise, expanding its share to 32.5% from 30.3% in the previous year.
Despite these gains, the overall expense ratio slightly increased to 10.63% from 10.47%. This marginal rise is partly due to the withdrawal of GST input tax credit following the exemption on pure protection policies.
Strengthening Financial Health and Future Outlook
LIC’s financial health also improved, with its solvency ratio strengthening to 2.42 at the end of June. This marks an increase from 2.17 reported a year ago, alongside a robust 4.1% growth in Assets Under Management (AUM) to ₹59.39 lakh crore.
The insurer anticipates that the share of non-participating products in individual APE will consistently remain within the 30-35% range. This expectation is driven by sustained demand for guaranteed products, especially amidst volatile market conditions and ongoing interest rate uncertainties.
The government’s recent 6.5% offer for sale (OFS) of LIC shares was well-received, allowing the government to meet SEBI’s requirement of reducing its shareholding to 90% before the May 2027 deadline. This successful dilution removes any immediate pressure for further stake sales.