Aided by a sharp increase in net investment income, insurance behemoth Life Insurance Corporation of India (LIC) on Thursday reported a multifold increase in net profit for the first quarter ended June 30, 2023 at ₹9,544 crore (₹683 crore).
The latest bottomline was also bolstered by amount of ₹7,491.53 crore (net of tax) pertaining to the accretion on the available solvency margin (ASM) transferred from non-par fund to shareholders account. However for the same quarter last fiscal, the PAT of ₹682.88 crore did not include any comparable amount pertaining to the accretion on ASM.
Net investment income for the quarter under review surged to ₹90,309 crore (₹69,571 crore). LIC’s assets under management (AUM) increased by 12.41 per cent to ₹46.11-lakh crore
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Commenting on the Q1 performance, Siddhartha Mohanty, Chairperson, LIC asserted that LIC was aspiring to grow at better than industry levels so as to sustain its market share.
“From quarter to quarter, there will always be ups and downs. But our objective is to grow better than industry for entire year to sustain market share”, Mohanty said when asked about tepid performance by LIC on new business premium front.
In the first quarter this fiscal, LIC’s new business premium (individual) was down 4.35 per cent at ₹ 10,462 crore (₹10,938 crore).
“We do realise that there has been de-growth this quarter due to various reasons (tax etc). We are confident of achieving reasonable growth on this front in the subsequent quarters”, he said. Private sector players have been reporting robust growth in new business premium (individuals).
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Equity investments
Asked about the quantum of equity investments made by LIC in the first quarter this fiscal, Mohanty said that total incremental amount of ₹24,000 crore was invested. LIC had in Q1 made profits of over ₹ 14,000 crore from sale of various equity investments held by the Corporation, Mohanty added.
On embedded value (EV), Mohanty said that LIC has now taken a decision of disclosing EV — a key metric to analyse an insurer’s growth and performance—only twice in a fiscal year. “We will disclose it for our September results”, he said.
For the quarter under review, Value of new business (VNB) margin increased marginally to 13.7 per cent (13.6 per cent). Mohanty refrained from giving any specific guidance on VNB margin growth even as he indicated that LIC should be in a position to better last year performance of 16 percent.
Premium income rises
Total premium Income of ₹ 98,363 crore for the quarter ended June 30 comprises individual new business premium income of ₹10,462 crore, individual renewal premium income of ₹52,311 crore and total group business premium income of ₹35,590 crore.
The total individual business premium for the quarter increased to ₹62,773 crore from ₹60,007 crore for the comparable period of previous year, registering a growth of 4.61 per cent.