LIC shares climb 4%, cut gains as insurance company clarifies on rumours

Shares of Life Insurance Corporation of India Ltd (LIC) climbed 4 per cent in Thursday's trade on reports the life insurer is in talks with ManipalCigna Health Insurance for a 50 per cent stake. Clarifying on the news reports, LIC told stock exchanges that it evaluates and explores various strategic opportunities on an ongoing basis in various sectors including health insurance segment, for growth, diversification of its business and investment opportunities.

"At this stage, there is no material information / event that require disclosure under Regulation 30 of the Listing Regulations. The Corporation will make appropriate disclosure in compliance with applicable laws, as and when required," it said.

Shares of LIC jumped 3.95 per cent to hit a high of Rs 952.50 on BSE. The stock was later trading at Rs 931.55, still up 1.67 per cent. Earlier a report in The Economic Times suggested that LIC was looking to enter healthcare insurance segment with the stake purchase and expand its footprint into the market for medical expense coverage.

Analysts noted that LIC is the only life insurer, which has witnessed VNB margin expansion in Q2, up 257 bps YoY. Other listed peers saw a decline in VNB margin on YoY basis. Share of LIC's low-margin Par business in total APE stood at 50.1 per cent in Q2FY25 for LIC compared with 5.9-12.7 per cent for listed peers.

"We think LIC can reduce this share materially going forward and this process is already underway, with share of Par declining 8.8 per cent YoY. Share of high-margin Non-Par has risen 7 per cent YoY, while share of low-margin ULIP has risen by a relatively small 4.2 per cent, with listed peers seeing a greater rise in the share of ULIP," YES Securities said.

LIC, the brokerage said, is now displaying healthy revenue growth outcome with APE growth at 25.7 per cent YoY in Q2FY25, which has outpaced SBI Life and ICICI Prudential Life Insurance. Coupled with VNB margin expansion, LIC has displayed the highest VNB growth on YoY basis, which has amounted to 46.9% per cent YoY for LIC in Q2, which is far higher than other listed peers, it said.

"We are happy to recommend LIC as well in our BUY list since we think that the pace of enhancement in metrics is improved and the RoEV expansion augurs well. This report also contains a comparison of life insurers across a variety of parameters," YES Securities said. The brokerage suggested a target price of Rs 1,175 on the stock.