Driven by a record premium income, Life Insurance Corporation has reported a manifold jump in net profit to Rs 682.89 crore from Rs 2.94 crore a year ago in its first earnings since going public.
The country’s biggest financial superpower which manages assets worth over Rs 41 lakh crore went public in early May with a share sale of Rs 20,500 crore.
The insurer’s profit grew manifold despite lower margins, which the management attributed to changing product mix and booking of less than 50 per cent profit from equity, which declined to Rs 5,076 crore from Rs 11,368 crore in June 2021.
However, a record 61 per cent jump in new policy sales led to profits, LIC Chairman MR Kumar told reporters during an earnings call on Friday.
Net margin from new business premium fell nearly 200 basis points to 13.6 per cent in the latest June quarter.
As the pandemic situation normalises, “we are seeing a huge amount of activity on the ground, hence bringing us closer to our model of having a ‘foot on the road’ and continued engagement with our customers and strong growth numbers clearly.” shows,” Kumar said.
He also said that the trajectory is upward and LIC is seeing an increase in business volume as is evident in its market share since January.
Total new business premium income (individual) increased from Rs 8,040 crore to Rs 10,938 crore, giving a boost to the bottom line.
Renewal premium (individual) increased by 13.03 per cent to Rs 60,007 crore in the latest June quarter from Rs 45,048 crore to Rs 49,069 crore.
Group business premium grew 33.92 per cent to Rs 38,345 crore, taking total premium income up 20.35 per cent to Rs 98,352 crore.
During the three months ending June 2022, LIC sold 59.56 per cent more policies at 36,81,764.
Kumar said the first year premium for the quarter under review stood at Rs 7,429 crore, up from Rs 5,088 crore a year ago, taking the total income to Rs 1,68,881 crore.
However, as compared to the March 2022 quarter, the performance was down in parameters, he said and attributed this to seasonal issues as the December and March quarters are the best for the life insurance sector while the first two quarters are sluggish.
In the March 2022 quarter, the insurance giant had reported a net profit of Rs 2,371 crore, first year premium of Rs 14,614 crore and total income of Rs 2,11,451 crore.
LIC Managing Director Raj Kumar said it sold 36.81 lakh new policies in the June quarter, as against 23.07 lakh policies in the year-ago quarter, mainly because its over 13 lakh agents are back on their feet.
Marketing activity picked up pace and overall business momentum remained strong. Consequently, the overall market share from first year premium income for the June quarter increased to 65.42 per cent as compared to full year market share of 63.25 per cent for FY22, the chairman said.
On an annualized premium equivalent (APE) basis, the total premium increased to Rs 10,270 crore. Chief Financial Officer Sunil Agarwal said 62.80 per cent (Rs 6,450 crore) of the total amount came from individual businesses and 37.20 per cent (Rs 3,819 crore) from group businesses.
Chairman Kumar said that the continuation ratio for 13th month and 61st month on premium basis increased to 75.75 and 58.99 respectively.
The continuity ratio based on the number of policies for the 13th month and the 61st month was 63.85 and 47.51 respectively. A high continuity ratio indicates the strength of the business of the insurer.
The assets under management increased to Rs 41.02 lakh crore at the end of June from Rs 38.13 lakh crore at the end of June 2021.
The Chairman said that the net NPAs in the policyholders’ corpus came down from Rs 194 crore to Rs 9 crore, while the gross NPA was Rs 26,620 crore, for which LIC has made a provision of Rs 26,611 crore.
The value of new business (VNB) increased to Rs 1,861 crore.
During the latest June quarter, LIC made equity investments of Rs 46,444 crore and sold Rs 12,000 crore, but made little profit in view of market volatility as profit declined from Rs 11,368 crore to Rs 5,076 crore.
LIC shares, which have already lost over a third of their issue price, closed flat at Rs 682.15, up 0.22 per cent on the benchmark Sensex, on the BSE on Friday.
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