LIC Q1 Results: Net profit rises 9% to ₹10,544 crore, VNB margin up 20 bps to 13.9%

LIC Q1 Results: Life Insurance Corporation (LIC) of India announced its April-June quarter results for fiscal 2024-25 (Q1FY25) on Thursday, August 8, reporting a rise of nine per cent in consolidated net profit at ₹10,544 crore. India's largest insurer's total income increased to ₹2,10,910 crore during the latest June quarter compared to ₹1,88,749 crore in the year-ago period.

The life insurance behemoth's first-year premium rose to ₹7,470 crore in the June quarter compared to ₹6,811 crore in the year-ago period. LIC earned ₹56,429 crore from renewal premiums as against ₹53,638 crore a year ago.

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LIC Q1 Results: Key Metrics

The state-owned insurer's net profit growth in the June quarter was helped by increasing sales of high-margin non-participating policies and strong growth in its group business. The net income from investments during the June quarter rose to ₹96,183 crore, compared to ₹90,309 crore in the year-ago period.

The group business' total premium income rose 30.9 per cent year-on-year (YoY) during the quarter. Group insurance covers people in the same plan and is generally taken by companies to provide insurance cover for their employees.

The insurer has been focusing on increasing the share of higher-margin non-participating policies in total policies sold. On an annualized premium equivalent (APE) basis, the insurer's share of non-participating policies in its individual business rose to 23.94 per cent from 10.22 per cent a year earlier.

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APE, a key metric for insurers, is a gauge of sales that gives the annualised total value of all single premium and recurring premium policies. Its value of new business (VNB), which measures expected profit from new premiums, rose 23.7 per cent YoY for the June quarter. The net VNB margin for the period rose to 13.9 per cent from 13.7 per cent a year ago.

LIC's VNB contracted in the previous quarter due to weakness in its group business, the insurer had said. The company's solvency ratio, a measure of an insurer's ability to meet its long-term debt obligations, rose to 1.99 from 1.89 a year earlier.

The gross non-performing asset quality (GNPA) of LIC for the quarter was at 1.95 per cent compared to 2.48 per cent last year. “During the first quarter of this financial year, our market share increased to 64.02 per cent compared to 61.42 per cent for the same quarter of previous year and 58.87 per cent for the full year ended March 31, 2024,'' said Siddhartha Mohanty, CEO & MD, LIC.

‘’The momentum around increasing share of non par products within individual segment continues and our non par Share, on an APE basis, within the Individual business has increased to 23.94 per cent in the first quarter of FY25 as compared to 10.22 per cent for the same quarter last year. While achieving these growth parameters, our margin is stable, and our expenses ratio has declined by 98 bps to 11.87 per cent in this quarter,'' added Mohanty.

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A total of 35,65,519 policies were sold in the individual segment during the June quarter, compared to 32,16,301 policies sold during the year-ago quarter, registering a growth of 10.86 per cent YoY. LIC's assets under management (AUM) increased to Rs. 53,58,781 crore compared to Rs. 46,11,067 crore, registering an increase of 16.22 per cent YoY. 

Ahead of the announcement of Q1FY25 results, shares of LIC settled 0.16 per cent higher at ₹1,125.70 apiece on the BSE. In a second stock exchange filing, LIC said that its office in Bangladesh has partially resumed operations while adding that the country's situation has yet to reach normalcy.

“LIC of Bangladesh Ltd. has partially resumed operations with effect from August 08, 2024. The situation in Bangladesh has still not reached the stage of normalcy and may continue to hamper the operations. Till the time the normalcy is restored, the impact of the situation cannot be ascertained,” said LIC.