LIC Q1 net profit rises 5% to nearly ₹11K cr due to tepid premium growth

Business Standard

5 days ago

State-owned Life Insurance Corporation (LIC) of India reported a modest 5 per cent year-on-year (Y-o-Y) growth in net profit at ₹10,986 crore in the first quarter of 2025-26 (Q1FY26) due to tepid growth in premiums.
Its total premium income grew 4.77 per cent Y-o-Y in Q1FY26 to ₹1.19 trillion, with premiums in the individual segment growing 6.4 per cent Y-o-Y to ₹71, 474 crore, and group business premium growing tepidly by 2.5 per cent to ₹47,726 crore.
Value of new business (VNB) of the insurer grew 21 per cent Y-o-Y in Q1FY26 to ₹1,944 crore. VNB margin, a measure of profitability of life insurers, of LIC in the quarter stood at 15.4 per cent, up 150 basis points (bps) from Q1FY25.
The share of non-par products in LIC's portfolio has increased to 30 per cent in Q1FY26 as compared to 24 per cent in Q1FY25.
However, the number of policies sold by the insurer declined 15 per cent to a little over 3 trillion in Q1FY26. LIC's assets under management (AUM) at the end of the quarter increased to ₹57 trillion, up 6 per cent from ₹53.5 trillion in Q1FY25.
The expense of management (EoM) of the insurer dropped around 7.56 per cent from the year-ago period to ₹12,498.57 crore, as net commissions paid by the insurer dropped 2.76 per cent Y-o-Y to ₹4,949.57 crore.
The EoM ratio of the company stood at 10.4 per cent as compared to 11.8 per cent in Q1FY25.
In Q1FY26, LIC's persistency ratios for the 13th month and 61st month were 75.6 per cent and 63.85 per cent, respectively, on a premium basis.
In the same period last year, 13th month and 61st month persistency of the insurer stood at 78.23 per cent and 61.62 per cent, respectively.
'Sometimes the policies lapse, but they are renewed a little later. In the long term, 61st month persistency has gone up. The effect of the interventions and modifications we made in the products is likely to come up after one year, which is a few months from now. So, whatever numbers we are seeing with regard to persistency are for those policies which were sold a year back. Going forward, within a few months from now, we will be able to see the result of the interventions as far as persistency is concerned,' LIC management said during their post-earnings media call.
R Doraiswamy, managing director and chief executive officer (MD&CEO) of LIC, said: 'We normally find that policies with lower ticket size are the ones which tend to have a lower persistency. So, since the cohort of policies that is being measured for the current quarter belongs to the earlier regime of policies, the persistency of 13th month has come down a bit, though we will be taking all our efforts to… increase the persistency as the policy term goes ahead.'
In terms of market share, measured by first-year premium income, LIC continues to be the market leader in Indian life insurance business, with overall share of 63.51 per cent. For Q1FY26, LIC had a market share of 38.76 per cent in individual business and 76.54 per cent in group business.
Doraiswamy also said: 'Key elements of our strategy like increase in the non-par share in individual business, increase in VNB margin, increase in bancassurance share are fully on track… our channel mix diversification strategy is visible with the increased share of bancassurance and alternative channels.'