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State-owned Life Insurance Corporation (LIC) reported a manifold increase in its net profit in the December quarter (Q3) of financial year 2022-23 (FY23), aided by a transfer of Rs 5,670 crore from non-participatory to shareholders’ accounts. Its net profit in Q3 stood at Rs 6,334.19 crore, compared with Rs 234.91 crore in the year-ago period.
In the nine-month period (April-December FY23), the corporation’s profits soared to Rs 22,970 crore, compared with Rs 1,672 crore a year ago. The huge jump was because of the transfer of Rs 19,941 crore to shareholder accounts over the last four quarters.
LIC reported a net premium income of Rs 1.11 trillion in Q3, up 14.51 per cent year-on-year (YoY) from Rs 97,620.34 crore a year ago, with the first-year premium income rising 11 per cent YoY to Rs 9,724.71 crore, renewal premium increasing 6 per cent YoY to Rs 60,194.87 crore, and single premium income jumping 30 per cent YoY to Rs 42,117.10 crore.
Value of new business margin, a measure of profitability of life insurance companies, stood at 14.6 per cent for the nine months of FY23, which was the same at the end of the September quarter (6MFY23), despite a rise in the share of non-par business in its portfolio.
“Within the non-par segment, there are different types of businesses. Non-par savings has a higher contribution to margins but that part of our business has not grown, whereas unit-linked plans (ULIPs) have grown. Therefore, the overall margin has not grown,” said KR Ashok, executive director, actuarial, LIC.
“Lately, we have come out with many non-par products. We could see changes in the non-par bucket on a quarterly basis because most of our agents are getting used to these new products. We need 1-2-year visibility before things happen as we want them to. As of now, we are focused on non-par products and we leave it to the customers as to what they want to buy – annuity, ULIP, or term,” said MR Kumar, chairperson of LIC.
He said LIC would reach 25 per cent margins faster than its private sector rivals. “We have come from 9 per cent to 14.6 per cent in hardly any time,” Kumar added.
LIC earned a total premium of Rs 37,545 crore on an APE (annualised premium equivalent) basis for the nine months ended December 31. Of this, Rs 23,419 crore was accounted for by the individual business and Rs 14,126 crore by the group business. In the Individual business, the share of non-participatory business increased to 9.45 per cent for the period, compared with 7.12 per cent in the whole of FY22.
Asked if LIC had reduced its exposure to Adani Group companies in light of allegations made by a US-based short seller, the chairperson said: “We buy and hold for the long term. As of now, we don’t plan to do anything. We will take a view may be few years down the line.”
“Our investment department has already reached out to them (Adani Group),” Kumar said. LIC had earlier said that it would look to engage with the group’s management and seek clarification on the report.
Last month, LIC clarified that it has invested Rs 36,474.78 crore so far in the group through both equity and debt. Total purchase value of equity, bought over many years, in the group companies is Rs 30,127 crore. LIC’s exposure in the Adani group, as on date, is 0.975 per cent of LIC’s total AUM at book value, the insurer said.
Assets under management (AUM) increased to Rs 44.34 trillion as on December 31, 2022, compared with Rs 40.12 trillion in the year-ago period, registering an increase of 10.5 per cent. Its shares closed 0.53 per cent higher on the BSE on Thursday at Rs 613.35 apiece.
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