Life Insurance Corporation has reported a 17% jump in net income at Rs 11,056 crore for the quarter to December, on the back of lower expenses led by the reduction in management outgoes, even though the national insurer had its premium income falling by 9% to Rs 1,06,891 crore from Rs 1,17,017 crore a year ago. Similarly it new premium income also plunged by 21%.
This had its total income also coming down to Rs 2,01,994 crore from Rs 2,12,447 crore in the year-ago period.
Meanwhile, employee compensation and welfare expenses declined by 30% year-on-year to Rs 14,416 crore from Rs 18,194 crore, indicating better control on expenses. In terms of percentage, the expense ratio came down by 231 bps to 12.97 from 15.28%, the company said Friday.
Another positive amidst a rash of red lines is that the company reported an improvement in the value of its new business by 50 bps, despite the higher outgo by way of the increased payout to those surrendering policies which came into play from October, while the rest of the industry saw its margins declining due to the same.
On the VNB margin side, the management led by chief executive Siddhartha Mohanty said the company closer to the three year target (since listing in May 2022) set for the VNB margin of 20 percent plus as it has already crossed the 17% margin mark printing in 17.1% for the reporting quarter, up 50 bps from the year ago period.
“Our focus and strategy remain consistent towards changing our product and channel mix to serve customer needs, in a dynamic environment. The VNB margin has also improved to 17.1% as of December compared to 16.6% for the same period last year. LIC continues to be committed to serving the society through higher insurance coverage,” Mohanty said.
Total premium income increased 5.51% to Rs 3,40,563 crore, while AUM increased 10.29% to Rs 54,77,651 crore and the overall annualized premium equivalent rose 6.11% to Rs 37,975 crore.
The country's biggest life insurer said the solvency ratio, which indicates an insurer's capacity to fulfil long-term financial commitments, increased to 2.02 in the quarter, up from 1.93 a year ago and 1.98 in the previous quarter.
The policy sales were under pressure mainly due to new regulations.
The shares of state-owned insurer LIC settled 2.15 percent lower at Rs 811 per share on the NSE on Friday.
The assets under management increased to Rs 54,77,651 crore compared to Rs 49,66,371 crore, registering an increase of 10.29% on-year.