LIC of India , the country's largest insurer, has reported a 5% increase in profit for the latest quarter, alongside significant improvements in its business mix and value of new business (VNB) margin.

Financial Performance

LIC's profit growth of 5% comes amid a challenging economic environment. The company's VNB margin, a key metric in the insurance industry, saw a substantial improvement of 150 basis points, reaching 15.40%. This increase indicates enhanced profitability of LIC's new business.

Strategic Shift in Product Mix

A notable development in LIC's business strategy is the significant increase in its non-participating (non-PAR) product share. The company has successfully raised its non-PAR share in the Annual Premium Equivalent (APE) to 30.00%, a substantial jump from just 7.00% before its listing. This shift aligns with LIC's goal to improve profitability and offer a more diverse product range to its customers.

CEO R Doraiswamy outlined the company's ambitious target, stating that LIC aims to achieve a 40-60 or 45-55 proportion between non-PAR and participating (PAR) products. This strategic move is expected to further enhance the company's profitability and competitiveness in the market.

Product Portfolio Expansion

LIC has significantly expanded its product offerings, now boasting a portfolio of 51 products with a substantial focus on non-PAR offerings. This diversification strategy is likely to cater to a broader range of customer needs and preferences, potentially driving future growth.

Individual Business Growth

The company reported a remarkable 32.00% jump in individual APE, indicating strong growth in its retail insurance business. This growth suggests increasing penetration and acceptance of LIC's products among individual policyholders.

Health Insurance and Future Plans

Regarding its health insurance expansion plans, LIC is taking a cautious approach. The company is re-evaluating its timeline for acquiring stakes in standalone health insurers, citing recent regulatory changes and evolving market conditions as factors influencing this decision.

Stance on Composite Licenses

LIC maintains a neutral position on the issue of composite licenses in the insurance sector. The company prefers to focus on its core strengths in life insurance and pension services. Any diversification into other insurance segments would be considered only after relevant statutory changes are implemented.

Conclusion

LIC's latest results demonstrate the company's ability to adapt to changing market dynamics, with a clear focus on improving profitability through strategic product mix changes. The significant growth in non-PAR products and individual business, coupled with an improved VNB margin, positions LIC well for sustainable growth in the competitive Indian insurance market.

LIC of India , the country's largest insurer, has reported robust financial results for the first quarter, while outlining its strategic pivot towards high-margin non-participating products and digital expansion initiatives.

Financial Highlights

LIC's profit after tax (PAT) for Q1 increased by 5.02% year-on-year to ₹10,986.00 crore, up from ₹10,461.00 crore in the same quarter last year. The insurer's total premium income grew by 4.77% to ₹1,19,200.00 crore, compared to ₹1,13,770.00 crore in the corresponding quarter.

Strategic Shift to Non-Par Products

A key highlight of LIC's performance was the significant growth in its non-participating (non-par) product segment. The share of non-par products within the individual business, on an Annualized Premium Equivalent (APE) basis, increased to 30.34% in Q1, up from 23.94% in the same quarter last year. This represents a substantial growth of 32.63% in non-par APE, rising from ₹1,615.00 crore to ₹2,142.00 crore.

Value of New Business and Margin Improvement

The insurer's focus on high-margin products has yielded positive results. The Value of New Business (VNB) for Q1 grew by 20.75% to ₹1,944.00 crore, compared to ₹1,610.00 crore in the same period last year. Notably, the net VNB margin increased by 150 basis points to 15.4%, up from 13.9% in the corresponding quarter.

Digital Expansion and Operational Efficiency

LIC's strategic pivot also includes a strong emphasis on digital expansion. While specific details of digital initiatives were not provided, the company's overall expense ratio decreased by 140 basis points to 10.47%, down from 11.87% in the same quarter last year, indicating improved operational efficiency.

Market Leadership and Asset Growth

Despite intense competition, LIC maintained its market leadership with a 63.51% share in overall first-year premium income. The corporation's Assets Under Management (AUM) grew by 6.47% year-on-year to ₹57,05,341.00 crore as of June 30.

Management Commentary

R Doraiswamy, CEO & MD of LIC, stated, "Key elements of our strategy like increase in Non Par share in Individual business, increase in VNB margin, increase in Banca share are fully on track." He also highlighted the success of the 'Bima Sakhi Yojana', which has appointed nearly 2 lakh women agents who sold over 3.26 lakh policies in Q1.

Future Outlook

Looking ahead, LIC plans to launch new products to meet evolving customer needs and further enhance its customer outreach. The insurer remains committed to working with regulatory authorities and various state and district-level insurance committees to increase life insurance penetration in India.

As LIC continues its strategic transformation, the focus on high-margin non-par products, digital initiatives, and operational efficiency is expected to drive long-term value creation for the insurance giant.