Life Insurance Corporation of India posted a net profit of 13,763 crore in Q4, up only 2.5 per cent year-on-year, as a 15.3 per cent jump in expenses of management to ₹24,709 crore for the quarter weighed on the bottomline.
In the earnings call, CFO Sunil Agrawal said there was a sharp increase in expenses of management in Q4 due to the wage revision impact in Q4, which includes arrears of payments, gratuity and leave encashmant and pension liability. The arrears and gratuity have been completely accounted for in Q4 whereas the pension liability will be amortised over financial years.
LIC had changed its accounting policy in September 2022, regarding transfer of accretion on available solvency margin from Non-Participating Policyholders account to Shareholders account. Accordingly, it transferred ₹29,519 crore (net of tax) in FY24 compared with ₹27,241 crore in the previous year, which supported profitability. The transfer for Q4 was ₹8,058 crore against ₹4,542 crore in the year-ago period.
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The profit after tax for FY24 was at ₹40,676 crore, 11.8 per cent higher y-o-y. The life insurer sold total of 2.0 crore individual policies in FY24, 0.2 per cent lower on year. Overall expense ratio for FY24 was 15.6 per cent compared with 15.5 per cent for FY23.
Total premium income for FY24 was ₹4.8-lakh crore, marginally higher than ₹4.7-lakh crore in FY23. Individual business premium grew 3.8 per cent to Rs 3.0 lakh crore, whereas the group business premium income fell 5.5 per cent to ₹1.7-lakh crore.
“During FY24, we focused on directional changes in our product mix and enhancing margins in the business. We have more than doubled our share of non-par business within our individual business. Now, we intend to focus our strategic interventions to maximize our market share across categories,” said Chairperson Siddhartha Mohanty, adding that the focus will also be on the topline growth trajectory.
Directional changes
Post listing, LIC had adopted some directional changes in approach to business, particularly product mix, with a focus on high margin products. Due to this margins have improved but topline has been muted, which is why the insurer will focus on growing the topline without losing sight on margins, Mohanty said adding that topline growth will be driven by multiple projects been undertaken including one for transformation of the agency channel, and the launch of new products.
Value of New Business (VNB) was up 4.7 per cent for FY24 at ₹9,583 crore. Net VNB margin increased 60 bps to 16.8 per cent.
Total premium, on Annualized Premium Equivalent (APE) basis, rose 0.5 per cent to ₹56,970 crore. Of this, 67.5 per cent (₹38,433 crore) was accounted for by the individual business and 32.5 per cent (₹18,537 crore) by the group business.
Within Individual Business, share of Par products was 81.7 per cent (₹31,392 crore). Non Par APE grew over two-fold to ₹7,041 crore, comprising 18.3 per cent of individual business as against 8.9 per cent a year ago.
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LIC continued to lead in market share, in terms of first year premium Income, with a share of 58.9 per cent. The life insurer had a market share of 38.4 per cent in individual business and 72.3 per cent in the group business.
LIC’s AUM increased 16.5 per cent to ₹51.2-lakh crore, and the solvency ratio improved to 1.98 from 1.87 at the end of FY23.
The 13th month persistency ratio, on premium basis, improved slightly to 77.7 per cent from 77.1 per cent but for the 61st month deteriorated to 60.9 per cent from 61.8 per cent. On the basis of number of policies, the 13th month persistency improved to 67.0 per cent from 64.3 per cent whereas the 61st month persistency fell to 48.6 per cent from 49.9 per cent.
The share price of LIC gained 0.58 per cent to close at ₹1035.80 on the BSE.