LIC shares jump 5% on ₹9,544 crore Q1 profit

Shares of Life Insurance Corporation of India (LIC) rose 5% on Friday after the state-run insurer reported a multi-fold increase in its first-quarter net profit.

LIC's net profit surged fourteen times to ₹9,544 crore for the quarter ended June compared with ₹683 crore in the year-ago period, aided by strong growth in net investment income. NII rose 29.8% year-on-year to ₹90,309 crore in Q1 2023-24 from ₹69,571 crore in the corresponding quarter last year.

Reacting to robust earnings, the company's stock jumped 5% in intraday trade to ₹679 apiece on the National Stock Exchange (NSE). The insurer's market cap stood at ₹4.19 lakh crore.

For the quarter ended June 30, 2023, LIC registered total premium income of ₹98,363 crore as compared to ₹98,352 crore in the year-ago period.

The total premium income of ₹98,363 crore for the quarter ended June comprises individual new business premium income of ₹10,462 crore, individual renewal premium income of ₹52,311 crore and total group business premium income of ₹35,590 crore.

The total individual business premium for the quarter increased to ₹62,773 crore from ₹60,007 crore for the comparable period of the previous year registering a growth of 4.61%.

On an annualised premium equivalent (APE) basis the total premium was ₹9,532 crore for the quarter ended June. Of this, 62.42% (₹5,950 crore) was accounted for by the individual business and 37.58% (₹3,582 crore) by the group business.

LIC sold a total of 32,16,301 policies in the individual segment during the quarter as compared to 36,81,764 policies sold during Q1 FY23.

The Assets Under Management (AUM) increased by ₹5.09 lakh crore to ₹46.11 lakh crore as on June 30, 2023, as compared to ₹41.02 lakh crore on June 30, 2022, registering an increase of 12.41%.

The value of new business for the first quarter was ₹1,302 crore as compared to ₹1,397 crore for the same quarter last year.

"The persistency ratios on premium basis up to the quarter ended June 30th 2023 for the 13th month and 61st month were 78.37% and 62.73% respectively. The comparable persistency ratios up to the corresponding quarter ended June 30th 2022 were 77.85 % and 62.43% respectively. Therefore, persistency on premium basis has improved by 52 bps and 30 bps for 13th month and 61st month respectively," the insurer says in its earnings release.

LIC maintained its leadership in the Indian life insurance business with a market share of 61.42% for the quarter ended June. On a comparable basis for the quarter ended June 30, 2022, the market share was 65.42%.

"During the first quarter of this financial year, we have achieved 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 year-on-year basis," says Siddhartha Mohanty, chairperson, LIC.

"We continue to work on strategies for diversifying the channel mix. We believe that we are on track to grow our business in a manner which creates superior value for all our stakeholders," Mohanty adds.