Aided by robust equity profits booked in bourses and strong operational performance, insurance behemoth Life Insurance Corporation of India (LIC) on Thursday reported a 49 per cent jump in the standalone net profit for the quarter ended December 31, 2023 at ₹ 9,444.41 crore (₹6,334.19 crore).

The bottomline performance was bolstered by 7 per cent year-on-year increase in equity profits booked in stock exchanges, riding on the bull run in the Indian equity markets in the October-December 2023 period. 

The absolute gains from stock market equity sales for the quarter under review was however not disclosed. 

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LIC’s net investment income (including capital gains on equity sales) for the quarter under review surged 12 per cent to ₹95,267 crore (₹84,869 crore), latest stock exchange filing showed.

For the nine months period ended December 31, 2023, LIC recorded a net profit of ₹26,913 crore. In the same period, in previous fiscal, the net profit recorded stood at ₹22,970 crore. 

‘Just the beginning’

Commenting on the latest financial performance, Siddhartha Mohanty, Chairperson, LIC said, “This is just the beginning. Lot of scope for improvement are still there in certain areas. We are working hard on it and definitely this performance will be sustainable in the coming days.”

Going forward, LIC will make continuous improvement in three areas of product mix, channel mix and technology, he added.

The Board of LIC on Thursday declared an interim dividend of ₹4 per share for the financial year 2023-24. The record date for the dividend has been fixed on February 21.

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The total dividend outgo for LIC will be  ₹2,529 crore. The government will get ₹2,440 crore on the back of its 96.5 per cent ownership in the insurance behemoth. 

LIC, however, made it clear that the nine months profits are not comparable y-o-y as it included an amount of ₹4,542 crore (net of tax) pertaining to the accretions on the available solvency margin for the last quarter of FY 2021-22, which was transferred from non par fund to shareholders account on September 30, 2022.

Mohanty said that LIC’s consistent and focused approach towards diversifying and changing its product mix is now yielding results at a faster pace. The same is evident in the rise in the share of non par business on APE basis to 14.04 per cent of the total individual business for the first nine months of FY 2024. 

“The fact that this is also accompanied by 200 bps increase in the VNB margin levels to 16.6 per cent is an indicator that our strategic interventions are delivering in the manner that we envisaged. We want to make sure that every action of ours is value accretive to all stakeholders,” Mohanty said. 

LIC Chairman highlighted that LIC’s digital transformation project is underway and the corporation is confident of making significant improvements in its business processes.

Value of new business

The value of new business (VNB) for the nine months ended December 31, 2023, grew 8.4 per cent at ₹5,938 crore (₹ 5,478 crore) for the nine months ended December 31, 2022.

The net VNB margin for the nine months ended December 31, 2023, was 16.6 per cent compared with 14.6 per cent for the nine months ended December 31, 2022. The solvency ratio as of December 31, 2023, improved to 1.93 against 1.85 on December 31, 2022.

Mohanty expressed optimism over further improvement in VNB margin in coming quarters. 

Shares shine

LIC on Thursday became India’s fourth largest stock with its market capitalisation for the first time crossing the ₹7-lakh crore-mark, beating the market cap of Infosys and ICICI Bank. 

LIC’s shares hit an all-time high of ₹1,145 at NSE before closing the day at ₹1,112, up 6.47 per cent over previous day’s close. 

This came a day after the Prime Minister Narendra Modi in Rajya Sabha highlighted the success of LIC and came down heavily on the Opposition for spreading false narratives/fake news on financial health of LIC.

Modi said that he can now say with his head held high that today (Wednesday) LIC shares are at a record high.

Shares of LIC have been on a tear in the last three months, scaling up to new highs. 

In December last year, the Finance Ministry granted time to the PSU insurer to comply with 25 per cent minimum public shareholder till 2032. The stock has been rallying since then as the exemption reduces the possibility of an offer for sale (OFS) by the government.