NEW DELHI: Ahead of its initial public offering (IPO), state-owned Life Insurance Corporation (LIC) has released its December ended quarterly (Q3FY22) result. LIC reported a massive surge in its net profit from Rs 0.94 crore in Q3FY2021 to Rs 234.91 crore in Q3FY2022 on the back of change in surplus distribution model, wherein shareholders will now get a larger share of the surplus than earlier.
The changes were made to bring LIC’s surplus distribution model at par with private life insurers. Earlier, LIC had a single ‘Life Fund’ which now has been segregated into two- participating policyholders’ fund and non-participating policyholders’ fund.
The surplus generated under the participating policyholders’ fund will be divided between policyholders and shareholders in a ratio of 90:10, wherein 90% will go to the policyholders and the remaining 10% to the shareholders. For non-participating policyholders’ fund, 100% of the surplus will go to the shareholders.
LIC chairman M R Kumar had previously said that this change will help the insurance behemoth increase its profitability, a metric that will be closely tracked once it gets listed. LIC’s first year premium rose to Rs 8,748.55 crore in Q3FY22 from Rs 7,957.37 crore in the same quarter last year while its renewal premium came in at Rs 56,822.49 crore, up from Rs 54,986.72 crore in the year-ago quarter.
LIC’s total premium rose marginally by 0.78% in Q3FY2022 to Rs 97,761.20 compared with Rs 97,008.05 crore. For the 9 months ended FY22 (April – December), net profit of the insurer stood at Rs 1,642.78 crore.
After receiving clearance from the market regulator Sebi, LIC’s stakeholder, the government of India, is planning to file the final papers for the IPO soon. This will provide details about the price band, discount for policyholders and retail buyers, and the actual number of shares that would be put on the block.
Life Insurance Corporation premium
LIC’s 1st yr premium rose to Rs 8,748.55 cr in Q3FY22 from Rs 7,957.37 cr in the same quarter last yr. Its renewal premium came at Rs 56,822.49 cr, up from Rs 54,986.72 cr in the year-ago quarter