Wages hike caps LIC net at Rs 13,762 crore but company sure of 'sunnier days' ahead

The country’s largest insurer’s asset quality improved in the final quarter of FY24, with gross non-performing asset improving to 2.01 percent from 2.56 percent.
LIC logo used for representational purpose
LIC logo used for representational purpose

MUMBAI: The nation’s largest life insurer and the financial powerhouse LIC said a massive wage hike has whittled down its better business performance including new business income and margin along with better asset quality, leading to only a marginal rise in net income at Rs 13,762 crore in the March quarter. But the management sounded confident of better show in FY25 given the uptick in the new business in the first two months of the year.

Chairman Siddhartha Mohanty told reporters Monday late evening that net profit rose only 2.5 percent annually from Rs 13,421 crore in the year-ago period even though it has earned higher margin (up 60 bps) from new business/policy sales including big-ticket (over Rs 5 lakh premium) to 15 percent from 1o percent in the previous year. Similarly the better yielding share of non-par policies jumped to 18 percent from 8.8 percent on-year, he said.

Mohanty also guided towards better show in FY25 saying April saw the new business premium more than doubling. So I expect at least double digit growth in FY25 in new business. Growth should also come from the big ticket policies of Rs 5 lakh and above, which so far has gone up significantly in terms of overall share-- from 10 to 13 percent led by the Jeevan Utsav policy.

The nation’s largest investment powerhouse earned Rs 84,425.45 crore profts from its investment, which was up from Rs 67,846.64 crore a year ago. During the full year, it earned Rs 363,943.92 crore from investments, up from Rs 306,390.13 crore a year ago.

Employee remuneration and welfare expenses went up to Rs 13,749.89 crore from Rs 10,380.51 crore for the quarter and for the year at Rs 39,583.59 crore, marginally lower than the previous year at Rs 40,093.90 crore, while total management expenses rose to Rs 24,709.05 crore from Rs 21,435.23 crore and Rs 74,080.80 crore from Rs 73,725.99 crore for the full year.

The country’s largest insurer’s asset quality improved in the final quarter of FY24, with gross non-performing asset improving to 2.01 percent from 2.56 percent.

The insurer, owned 96.5 percent by the government also declared an interim dividend of Rs 6/share.

The key business metric of value of new business (VNB) increased 4.66 percent to Rs 9,583 crore and VNB margin increased by 60 bps to 16.8 percent, the chairman said but admitted that it was whittled down by the wage hikes and pension arrears.

The non-par annualized premium equivalent (APE) share within individual business grew 9.43 percent to 18.32 percent, and the non-par APE more than doubled from Rs 3,436 crore in March 2023 to Rs 7,041 crore. Therefore, on an APE basis, the non-par share of the individual business, which was 8.89 percent in FY23 has grown to 18 percent for the year ended March 31.

However, in terms of number of policies the insurer sold lesser number of policies which marginally slipped to 2.03 crore in individual segments from 2.04 crore in FY23.

The assets under management rose to Rs 51.21 trillion as of March 2024 from Rs 43.97 trillion as of March 2023 registering a 16.48 percent on-year growth.

After repeated demand, chief financial officer Sunil Agarwal said the company, which is the largest domestic investor, pumped in Rs 1.3 trillion into equities in the year, which was more or less similar as last year, debt investment jumped more than 52 percent to Rs 78,000 crore this year.

The solvency ratio was a tad better at 1.98x against 1.87x last year.

The LIC counter closed at Rs 1,035.80, up by 0.58 percent from the previous day’s close, even as the market closed flat with a negative bias.

First-year premium rose to Rs 13,810.17 crore from Rs 12,811.19 crore in the quarter while the same for the full year marginally declined to Rs 39,037.95 crore from Rs 39,089.94 crore.

Renewal premium also marginally to Rs 77,368.08 crore from Rs 76,008.96 crore and single premium income rose to Rs 61,364.46 crore from Rs 43,143.71 crore, taking the net premium income to Rs 152,293.13 crore from Rs 131,761.11 crore by the reporting quarter and for the full year the same rose to Rs 475,069.58 crore from Rs 474,004.61 crore.

The Corporation’s surplus almost doubled to Rs 12,832.43 crore from Rs 6,503.70 crore for the quarter and at Rs 34,740.47 crore for the full year down from Rs 37,982.16 crore.

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