Profit Jumps But Premium Falls 8%

    Profit Jumps But Premium Falls 8%

    The state-owned insurer’s standalone after-tax profit jumped around 4.7 times to Rs 13,428 crore from Rs 2,372 crore over the same period in the previous fiscal, according to an exchange filing.

    The net premium of the company declined 8% year-on-year to Rs 1.3 lakh crore.

    Sequentially, its bottom line rose 1.1 times while net premium rose 18% over the last quarter.

    LIC Q4 FY23 Highlights (Standalone, YoY)

    • Revenue fell 7% to Rs 2 lakh crore.

    • The management expense ratio increased to 16.24%, as against 13.53%.

    • The 13th month persistency ratio—or customer retention—improved to 70.16% from 69.24%, and to 55.99% from 55.62% for the 61st month.

    • The solvency ratio, which measures the extent to which assets cover commitments for future liabilities, rose to 187% from 185%. It’s above the minimum requirement of 150%.

    The board has recommended a dividend of Rs 3 per share.

    The unusual jump in profis in FY23 is on account of the behemoth changing its distribution policy in December 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 over last year.

    “Our efforts towards enhancing the share of non-par products in the overall product mix are bearing fruits. With the increase in profit, net VNB margin and IEV we are well-positioned to continue our growth journey, in the service of the nation and its citizens,” said Siddhartha Mohanty, chairperson of LIC.

    “The regulatory initiatives towards ‘Insurance for All’ by 2047 will present opportunities to grow for the sector and we intend to participate in that growth.”

    Shares of LIC closed 0.61% higher before the results were announced on Wednesday, as compared with a 0.34% decline on the benchmark Sensex.

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