LIC’s increased focus on non-participating policies and higher-margin products, alongside improved persistency and distribution strength, could bolster its profit outlook despite market headwinds and regulatory adjustments.
Life Insurance Corporation of India is showing a clearer tilt towards higher-value products, a shift that analysts say could support earnings quality as the insurer adapts to new surrender rules and a more competitive market.
In the quarter ended June, LIC’s net premium income rose 7% year on year to ₹1.3 trillion, while shareholder net profit increased 23% to ₹13,500 crore, according to the company’s results. New business annualised premium equivalent, a common industry measure of sales, climbed 8% to ₹13,700 crore.
A key feature of the quarter was LIC’s deeper move into non-participating policies, or non-par products, which do not share profits with policyholders in the way traditional participating plans do. Non-par policies accounted for 32.5% of individual APE in the quarter, helped by a 14% rise in non-par APE to ₹2,450 crore. That mix shift lifted the value of new business margin by 6.5 percentage points, with the company signalling that the margin should continue edging towards the mid-20s, closer to the industry average.
The improvement came even as some parts of the product mix remained soft. Unit-linked insurance plan sales fell 17% and annuity APE declined 9%, while protection and individual savings business grew strongly in the non-par book. Commission costs rose 2% to ₹5,030 crore and operating expenses increased 13% to ₹8,510 crore, leaving the expense ratio slightly higher at 10.6%.
LIC’s distribution strength remained a defining advantage. The agency channel contributed 93.1% of individual new business premium, and individual new business premium from agents rose 15%. The insurer said it has 1.45 million agents, along with 88 bancassurance partners, 304 brokers and 176 corporate agents. The agency force shrank in urban areas after some non-serious recruits left the Bima Sakhi programme.
Persistency, a measure of how many policyholders keep paying premiums, improved over longer durations. The 61-month persistency ratio rose 300 basis points to 61.3%, while the 13-month ratio stood at 70.4%. LIC’s solvency ratio was 242%, compared with 217% a year earlier, before moderating slightly after dividend payment.
The latest results also come after the government trimmed its stake in LIC to 90% through a recent offer for sale, increasing the free float. Analysts said that, together with the product mix change, may help support the stock’s outlook. LIC also expects the effects of tax and goods and services tax-related issues to normalise, while a proposed sale of its stake in IDBI Bank remains pending.
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