 "Life Insurance Corporation")
Life Insurance Corporation (LIC) of India’s net profit for the January-April quarter of 2023-24 grew just 2.5 per cent year-on-year (Y-o-Y) to Rs 13,762.64 crore due to wage revision and arrears.
The expense of management (EoM) of the insurer increased by nearly 15 per cent from the year-ago period to Rs 24,709.05 crore.
The wage revision has three components: arrears of payment, gratuity and leave encashment, and pension liability. The first two are fully accounted for in Q4, LIC Chief Financial Officer Sunil Agarwal. “Since pension liability is futuristic in nature, we have a dispensation from the regulator allowing us to amortise it in three annual instalments going forward,” Agarwal said.
LIC’s board recommended a final dividend of Rs 6 per share for the financial year 2023-24, subject to the approval of shareholders.
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EoM regarding the additional pension liability due to wage revision to employees stood at Rs 6,306.29 crore. Of this, Rs 829.19 crore has been recognised in FY24 in the respective segments and the balance amount of Rs 5,477.10 crore pertaining to the participatory segment will be charged to the shareholders’ account over a period not exceeding three years from FY25.
The annualised premium equivalent (APE) grew by nearly 10.7 per cent to Rs 21,180 crore from Rs 19,137 crore in the year-ago period. The value of new business premium (VNB) slipped 1.6 per cent to Rs 3,645 crore Y-o-Y.
The VNB margin of the insurance company dropped to 17.21 per cent in the quarter from 19.4 per cent in the year ago.
LIC had changed its accounting policy in September 2022 regarding the transfer of amount pertaining to the accretion on the available solvency margin from the non-participating policyholders’ account to the shareholders' account. In the January-March period, it has transferred around Rs 8,000 crore.
For FY24, the amount was Rs 29,518.75 crore (net of tax) against Rs 27,240.75 crore in FY23.
Net income from investments increased 24.43 per cent Y-o-Y to Rs 84,425.45 crore in Q4FY24. Net profit for FY24 was Rs 40,676 crore as compared to Rs 36,397 crore in FY23.
LIC Chairman Siddhartha Mohanty said the corporation had increased the share of non-participatory products in the individual segment since a change in strategy last year. “We intend to focus our strategic interventions to maximise our market share across categories,” Mohanty said.
In terms of market share measured by first-year premium income (FYPI), LIC continues to be the market leader by market share in the Indian life insurance business with an overall market share of 58.87 per cent. For the year ended March 31, LIC had a market share of 38.44 per cent in the individual business and 72.30 per cent in the group business.
Net income from investments increased 24.43 per cent Y-o-Y to Rs 84,425.45 crore in Q4. For FY24, the assets under management (AUM) of the insurance major stood at Rs 51.28 trillion, up 16.62 per cent from Rs 43.97 trillion a year ago.
The yield on investments on policyholders’ funds, excluding unrealised gains, was 7.72 per cent for Q4. It was 6.85 per cent in the year-ago period and 8.90 per cent in the preceding quarter.
LIC’s gross non-performing asset (gross NPA) ratio declined over the preceding quarter to 2.01 per cent at the end of the March quarter compared to 2.15 per cent in Q3 FY24.
In Q4, LIC’s persistency ratios on a premium basis for the 13th month and 61st month were 71.86 per cent and 54.48 per cent, respectively.
In the preceding quarter, LIC’s persistency ratios on a premium basis for the 13th month and 61st month were 70.89 per cent and 56.16 per cent, respectively.
The expense of management ratio of the company stood at 16.20 per cent as compared to 16.24 per cent in Q4 FY23. The solvency ratio of the company was at 198 per cent as against 187 per cent last year.
The government who is the largest shareholder in the company will get a dividend of Rs 3,662 crore
