State-owned insurer LIC (Life Insurance Corporation of India) has reported its financial results for the September quarter, revealing a net profit of Rs 7,925 crore. This marks a significant decline from the Rs 15,952 crore reported in the corresponding period of the previous year. The reduction in profit is primarily attributed to a substantial decrease in income during the mentioned quarter.
In more detailed financial breakdown, LIC’s net premium income for the second quarter of the current fiscal has seen a considerable reduction, amounting to Rs 1,07,397 crore as opposed to Rs 1,32,631.72 crore in the same quarter last year, as outlined in a recent filing by LIC.
It’s noteworthy to consider that the comparison between the latest quarterly numbers and the figures from the year-ago quarter comes with a caveat. LIC mentions that it changed its accounting policy in September last year regarding the transfer of the amount (net of tax) related to the accretion on the available solvency margin from non-participating policyholder’s account to shareholder’s account. This policy shift involved the transfer of Rs 27,241 crore (net of tax) during the fiscal year 2022-23, including a transfer to the shareholder’s account amounting to Rs 14,272 crore (net of tax) in the second quarter of the current fiscal.
The statement from LIC clarifies, “An amount of Rs 13,768 crore (net of tax) has been transferred for the six months ended September (Rs 6,277 crore for the September quarter and Rs 7,491 crore for the April-June period), due to which the profit for the quarter ended September 30 is not comparable with the corresponding figures for the September quarter.”
LIC’s total income has declined to Rs 2,01,587 crore in the quarter under review, compared to Rs 2,22,215 crore in the year-ago period. Notably, the net income from investments during the quarter rose to Rs 93,942 crore in the second quarter of this fiscal, compared to Rs 84,104 crore in the same period of 2022-23.
The solvency margin of LIC has increased to 1.90 per cent in the September quarter this year, compared to 1.88 per cent in the same quarter a year ago. On the asset quality front, gross non-performing assets ratio eased to 2.43 per cent, from 5.60 per cent in the same period a year ago.
During the six months ended September, LIC earned the highest-ever half-yearly profit after tax at Rs 17,469 crore, compared to Rs 16,635 crore a year ago. The new business premium income during the first half increased marginally to Rs 25,184 crore, as against Rs 24,535 crore in the same period of the previous fiscal. Total premium, too, rose marginally to Rs 1,34,783 crore, compared to Rs 1,27,738 crore in the year-ago period.
It’s essential to consider that Rs 4,542 crore belongs to January-March 2022 (transferred amount to the shareholder’s account) and therefore has to be excluded from Rs 16,635 crore for the calculation of H1 profit of FY23. The statement clarifies, “The profit comes to be Rs 12,093 crore. If you compare this figure with the H1 FY24 number, the profit after tax of the corporation has jumped 44.45 per cent.”
Siddhartha Mohanty, Chairman of LIC, highlighted, “During the first six months of this financial year, we have been able to implement strategies successfully to enhance the share of Non-Par products in our overall individual business. The current VNB (value of new business) margins are an indicator of our initiatives delivering the objective of maintaining profitability as we change direction.”
He further emphasized LIC’s awareness of the market dynamics in certain parts of the business and the ongoing efforts towards profit-oriented consolidation. The distribution mix is also more diversified with an increase in the share of bancassurance and alternative channels. LIC is reportedly in talks with two more banks for a tie-up.
In conclusion, there has been a directional change in terms of initiatives taken by LIC recently, indicating a strategic shift and adaptability to evolving market conditions.
