- Total Premium Income: INR1,13,770 crore, up 15.66% YoY.
- Individual New Business Premium Income: INR11,892 crore, up 13.67% YoY.
- Renewal Premium Income (Individual Business): INR55,300 crore, up from INR52,311 crore YoY.
- Total Individual Premium Income: INR67,192 crore, up from INR62,773 crore YoY.
- Group Business Total Premium Income: INR46,578 crore, up 30.87% YoY.
- Market Share by First Year Premium Income: 64.02%, up from 61.42% YoY.
- Profit After Tax: INR10,461 crore, up 9.61% YoY.
- VNB Margin: 13.9%, up from 13.7% YoY.
- Solvency Ratio: 1.99, up from 1.89 YoY.
- Assets Under Management (AUM): INR53,58,780.97 crore, up 16.22% YoY.
- Number of Policies Sold: 35,65,519, up 10.86% YoY.
- Agency Workforce: 14,24,847 agents, up from 13,43,540 YoY.
- Overall Expense Ratio: 11.87%, down from 12.85% YoY.
- Persistency (13th Month, Premium Basis): 78.23%, slightly down from 78.37% YoY.
- Persistency (25th Month, Premium Basis): 72.16%, up from 72.11% YoY.
- Persistency (49th Month, Premium Basis): 66.97%, up from 64.54% YoY.
- Persistency (13th Month, Policy Basis): 67.81%, up from 66.15% YoY.
- Persistency (49th Month, Policy Basis): 54.08%, up from 52.04% YoY.
- Claims Processed: 40,54,920 claims, including 38,68,253 maturity and survival benefit claims.
- Maturity Claims: INR41,954 crore, up 21.21% YoY.
- Death Claims: INR5,467 crore, up 6.22% YoY.
Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Life Insurance Corporation of India (BOM:543526, Financial) reported a total premium income of INR1,13,770 crore for Q1 FY25, a 15.66% increase year-on-year.
- The individual new business premium income grew by 13.67% year-on-year, reaching INR11,892 crore.
- The group business total premium income increased by 30.87% year-on-year, reaching INR46,578 crore.
- Profit after tax for Q1 FY25 was INR10,461 crore, a 9.61% increase compared to the same period last year.
- The solvency ratio improved to 1.99 as of June 30, 2024, up from 1.89 the previous year.
Negative Points
- The market share in the individual business segment decreased to 39.27% from 40.84% year-on-year.
- The number of policies sold through the banca and alternate channel declined by 11.39% year-on-year.
- The overall expense ratio, although improved, still stands at 11.87%, indicating room for further cost efficiency.
- Persistency rates for the 37th, 49th, and 61st months showed a decline on a year-on-year basis.
- The agency workforce market share decreased to 48.64% from 50.94% year-on-year.
Q & A Highlights
Q: How will the new surrender regulation, which increases payouts to policyholders, impact LIC's strategy and margins?
A: Siddhartha Mohanty, CEO and MD, explained that the regulation aims to balance payouts for exiting and continuing policyholders. LIC will consider various strategies, including reviewing ticket sizes, payment modes, and distribution costs, to mitigate any adverse impacts. The focus will be on maintaining policy persistency and ensuring smooth implementation of the regulation.
Q: What factors are driving the margin drop in the participating (par) segment?
A: Mohanty noted that the margin drop in the par segment is influenced by the business mix and risk-free rates used for valuation. The increase in risk-free rates during the period significantly impacted the VNB margin in the participating line of business.
Q: Will the current commission structure remain viable under the new surrender regulation?
A: Mohanty stated that while clawback is an option, it is not a necessary provision. LIC will explore various solutions, including reviewing ticket sizes and product designs, to ensure the commission structure remains viable without adversely impacting stakeholders.
Q: How is LIC's equity investment spread across the par and non-par books, and what are the fair value gains?
A: Mohanty explained that for participating business, LIC maintains an equity backing ratio of around 15% to 25%. For non-par business, due to guarantees and asset-liability matching requirements, the equity backing is minimal. The ASM fund, however, has substantial equity backing.
Q: What is driving the growth in LIC's market share and VNB margins?
A: Mohanty highlighted that strategic decisions to adjust benefits and focus on non-par products have driven growth. LIC's market share increased to 64.02%, and VNB margins improved by 20 basis points to 13.9% for Q1 FY25. The overall APE growth was 21.28% year-on-year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
