LIC Q2 results: Net profit falls 50% to Rs 7,925 cr on lower premium income

Life Insurance Corporation of India on Friday reported second-quarter profit halved to Rs 7,925 crore, hurt by a fall in premium income.

The company posted net profit of Rs 15,952 crore in the year-ago period. Net premium income dropped 19 per cent to Rs 1.07 lakh crore in Q2FY24 as against Rs 1.32 lakh crore in Q2FY23. However, the first-year premium for the reporting quarter increased to Rs 9,988 crore, as against Rs 9,125 crore in the year-ago period, it said.

On Friday, LIC's scrip on BSE closed 0.8 per cent lower at Rs 609.8.

As part of a move to boost its profitability after a change in its accounting policy, LIC transferred Rs 6,277 crore from its non-participating fund to a shareholders' fund for the quarter ended Sept. 30, the company said.

However, that was lower than the Rs 14,272 crore transferred last year in the same period.

Total income of country's biggest insurer declined to Rs 2,01,587 crore in the latest September quarter, compared to Rs 2,22,215 crore in the year-ago period, it said.

LIC in a statement said the latest quarterly numbers are not comparable with the year-ago quarter as it had changed its accounting policy in September last year regarding transfer of amount (net of tax) pertaining to the accretion on the available solvency margin from non-participating policyholder’s account to shareholder’s account.

It accordingly transferred Rs 27,241 crore (net of tax) during 2022-23, which included transfer to shareholder’s account amounting Rs 14,272 crore (net of tax) in the second quarter of the current fiscal.

“An amount of Rs 13,768 crore (net of tax) has been transferred for the six months ended September (Rs 6,277 crore for September quarter and Rs 7,491 crore for the April-June period), due to which the profit for the quarter ended September 30 is not comparable with the corresponding figures for the September quarter,” it said.

Net income from investments during the quarter rose to Rs 93,942 crore in the second quarter of this fiscal, as compared to Rs 84,104 crore in the same period of 2022-23.

The solvency margin of LIC increased to 1.90 per cent in the September quarter this year, as compared to 1.88 per cent in the same quarter a year ago.

On the asset quality front, gross non-performing assets ratio eased to 2.43 per cent, from 5.60 per cent in the same period a year ago.

During the six months ended September, LIC earned the highest-ever half-yearly profit after tax at Rs 17,469 crore, as compared to Rs 16,635 crore a year ago.

“The current VNB (value of new business) margins are an indicator of our initiatives delivering the objective of maintaining profitability as we change direction,” LIC Chairman Siddhartha Mohanty said. LIC is conscious of the market dynamics in certain parts of business and are working towards profit-oriented consolidation, he said.

The distribution mix is also more diversified with an increase in share of Bancassurance and Alternate Channels, he said, adding that LIC is talking to two more banks for the tie up.

There has been directional change in terms of initiatives taken by LIC recently, he added.

With inputs from PTI