Latest news with #Doraiswamy
Economic Times
5 hours ago
- Business
- Economic Times
LIC's goal is 'Insurance for All' by 2047, policy numbers should grow from Q2: R Doraiswamy, MD & CEO
LIC's new chief aims to boost profitability through diversified products, particularly non-PAR plans, targeting 40% of APE. R Doraiswamy plans to increase bancassurance sales beyond 10% and strategically invest in debt and equity markets. LIC is exploring health insurance ventures and addressing regulatory challenges regarding its stake in IDBI Bank. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads is betting on a diversified product mix and higher sales through bancassurance channels to keep the state behemoth ahead of private rivals. In his first interview since taking over, Doraiswamy discusses with ET his plans on increasing the share of non-participating products to 40% of annual premium equivalent-a switch that is key to boosting profitability. Edited excerpts:The broader goal is "Insurance for All" by 2047. The industry saw a drop in volumes after last year's product rule changes, but our sales have stabilised. We expect growth in policy numbers to turn positive from the second quarter onwards, with stronger momentum in the third and fourth quarter. Market share being a by-product of growth, when LIC grows at a rate higher than the rest of the industry, my market share is going to go factors drove our margin expansion-higher non-PAR contribution, expense optimisation, and revised commission structures following the October 1, 2024 norms on products. There were some changes in some products, we had to be compliant with the surrender value norms, tweak the agency commission from being totally front-ended to introducing some deferred payments of margins also follow a seasonal pattern, rising from the first quarter to the fourth because PAR profits are booked in the last quarter. We have consciously shifted from a 7% share in non-participating (non-PAR) annual premium equivalent (APE) at the time of listing to around 30% now. This could rise further to 35-40% in the near term, before we balance the mix back towards participating (PAR) preferences vary. Younger buyers lean towards guaranteed non-par protection products, while others prefer savings-oriented participating or non-participating plans. ULIPs see strong demand in rising markets and a slowdown when markets dip. This year, we expect ULIPs to grow alongside non-PAR savings and protection try to fill product gaps and cater to all segments from micro-insurance to high-ticket savings. Our recent launch, Jeevan Utsav, has already set a trend in the market. Over the next few months, we will bring out three to four innovative products across is a major financial institution player in the country, and they are playing a major role in developing India's economy for the last 69 years. If you look at what we have to do, our objectives are very clear, extend insurance coverage across the country at affordable prices, and mobilise savings for the welfare of policyholders while delivering decent returns. Globally, we are already the fourth-largest life insurer, and see whether we can still grow individual agency network is the backbone of LIC. It is a distribution strength we will continue to nurture. That said, we are changing in other channels, bancassurance and corporate. Our bank assurance premium share has risen from less than 3% two years ago to 6.77% today. We expect it to cross 10% in the near you have such large investable funds to be invested, you are looking at various options which are giving you a decent return. We need to look at both debt as well as equity in the proportion that we are supposed to invest. But at many times you find that you will do more on one side or the other based on availability. We have to have a clear rating of those instruments, paying certain dividends and stuff like has already started doing FRA (forward rate agreements), and now we are actively looking at bond forwards. Once we have enough tie-ups on that, we will be moving to bond forwards to hedge our interest rate risk only in perspective of our guaranteed protection. On the equity front, we are still weighing the decision will be taken by the vision of LIC is to be a transnationally competitive financial conglomerate. That is a vision, if you look at this. So, when you are looking at a financial conglomerate, you would like to have a bank as a major partner, a housing finance company, or a mutual fund. But the Act and regulations do not permit LIC to have a bank of its own. Whereas a bank can have an insurance company, an insurance company can't promote a bank. That is what the problem is. RBI has already made their position have the options in front of us. We are doing due diligence into existing SAHI (standalone health insurance) companies, which we can have a stake at. Only thing is, we are not fixing a particular time limit. We are examining those options.
Mint
5 hours ago
- Business
- Mint
LIC deserves a better valuation from markets, says MD Doraiswamy
Mumbai: The country's largest insurer Life Insurance Corp (LIC) of India deserves a better valuation from the market on the back of an improved customer service and the stronger product portfolio it is building, said R. Doraiswamy, the newly-appointed managing director and chief executive officer. 'If you ask for my personal opinion or our opinion as an organization, we strongly feel that we deserve a better valuation than what we are currently having in terms of EV (enterprise value) multiple," Doraiswamy told Mint in an interview. Doraiswamy, who took charge as the head of the state-run company on 14 July, said LIC was valued 'lesser" than some of its private-sector peers, and expressed hope that the changes being undertaken to make it digital-savvy, improve customer service and strengthen the product portfolio will help improve its valuation. 'Surely this will address a perception change, and hopefully the market will have a better valuation in the days to come. That is what we are looking for," he said. Read more: LIC gets a ULIP fillip in Q1, still it has lot of catching-up to do LIC had undertaken a digital transformation initiative around two years ago in a project titled 'DIVE', from which Doraiswamy expects the insurer to soon start rolling out the outcomes. This initiative, combined with an agent transformation project called 'Jeevan Samarth', will be priority areas of the insurer in the near-term to improve the insurer's standing, he said. These initiatives will be key to improving LIC's valuation ahead of the proposed government stake sale in the firm. The government plans to offload around 1.5% of its stake in LIC via a qualified institutional placement (QIP) in FY26, following which it may further bring its stake down, Mint reported. Currently, LIC's public float is around 3.5%, which will touch 5% after the proposed QIP. The life insurer has an exemption to bring the public float to 10% by 2027. The government currently owns a 96.5% stake in LIC. 'That (stake sale) may get a priority, but we do not know. It depends upon how the price moves, and what is the opportune time. I don't think they will be able to do it on a very urgent basis. They have to wait and think of what is the right price, and what is the method of doing it," Doraiswamy said. LIC shares were listed in May 2022 at ₹872, a discount of over 8% to the issue price on the National Stock Exchange. As the country's largest initial public offering then, the issue garnered significant interest and was oversubscribed three times. While it touched a high of ₹918.95 on listing day, the stock traded below the IPO price for much of 2022 and 2023, falling as low was ₹530.05 in March 2023. It then reversed the trend to touch a lifetime high of ₹1,222 in August 2024. This year, the stock has largely been trading ina ₹880-920 range. On Monday, it closed 0.8% lower at ₹905.80 on the NSE. In a post-Q1 earnings note, Motilal Oswal Securities said LIC continues to maintain its industry-leading position and is focused on achieving growth recovery through wider product offerings, higher ticket sizes, a shift in the product mix toward non-par, agency channel expansion, and a higher contribution from bancassurance and alternate channels. "A shift toward higher margin non-par products and improvement in persistency will boost VNB (value of new business) margin, going forward. The company is also working on enhancing its digital capabilities for cost optimization," the brokerage firm said, adding that it is keeping its FY26/FY27 estimates unchanged considering the in-line performance in Q1FY26. The brokerage reiterated a 'buy' on LIC's stock with a target price of ₹1,080, factoring in 0.7x EV for FY27. Stake sale plans Doraiswamy expects the government's other disinvestment plans, such as the proposed privatisation of IDBI Bank and a partial stake sale in five PSU banks, to get priority over the LIC stake sale. 'All these are being taken up on a parallel basis. But from whatever has been announced by the government, IDBI was being talked about in a big way for quite some time," he said, adding that there is a possibility of the IDBI stake sale 'moving faster" because it has reached a higher stage of completion. LIC, which acquired a controlling 51% stake in IDBI Bank in 2019, has since brought its shareholding down to 49.24%. Following the stake sale by the government and LIC, the insurer's stake will fall to 19%—still higher than the regulatory limit of 15% that an insurance firm is permitted to hold in a single company. Read more: Life insurance, pension funds share buys hit five-year high 'We are working closely with the government to see that (stake sale) gets completed. Even after that, we will have a substantial stake in IDBI Bank left. Thereafter, we will look at an opportune time and price discovery at which we will try to bring down the stake to within regulatory permissible limits. We don't have to exit it in full," he said. Enhancing value Efforts to improve the company's valuation include plans for its commercial real estate portfolio to boost the return on investments. LIC is one of the largest real estate owners in the country and while a bulk of it is self-occupied, a part of it is commercial investment. 'We are looking at enhancing the value realised out of those commercial investments. We would like to see that every square foot of our real estate gets properly utilised and optimum returns are received from that," Doraiswamy said, adding that the insurer might also look to exit some investments that are not deemed 'useful", including through a real estate investment trust (ReIT) structure. Another area of strategic investment for the insurer is the proposed stake acquisition in a health insurance company. Earlier planned for FY25, the proposal has seen been delayed, which Doraiswamy said was due to the need for further due diligence and amid headwinds in the health insurance sector that are leading to slower growth. 'We were looking at a strategic investment in a standalone health insurance in order to get some learnings about the health insurance market. Like IDBI Bank, it was going to be a strategic stake," Doraiswamy said, adding that LIC had examined proposals from all five standalone health insurance companies but found that the investment needed a much 'deeper analysis and due diligence process" in terms of identifying the company, also depending on which insurer needed capital and the price of the acquisition. 'We have decided to not go ahead with the decision within the timeframe. We are still keeping those options open because those companies are still looking at expansion," Doraiswamy said, adding that while the investment did not go ahead at the speed envisaged earlier, the insurer continues to examine multiple options. It will only look to acquire a strategic or minority stake of around 15-30%, depending on the capital required by the company, he added. Rising assets Asked about LIC's assets under management nearing the $1-trillion mark, Doraiswamy said while he does not want to put pressure on the company by targeting a certain number, especially during volatile market conditions, he is hopeful it will soon touch that level, depending on the market trajectory. As of 30 June, LIC's assets under management were at over ₹57 trillion (around $650 billion). Read more: LIC says health insurance foray delayed on likely policy change; open to 'all options' 'I would like to continue to focus on enhancing our assets under management. Actually, enhancing our business, through which—as a by-product—the assets under management should grow," he said. From the perspective of LIC's investments in the Indian markets, Doraiswamy said some counters are overpriced as of now, in part owing to the geopolitical tensions. Even so, he expects value opportunities to remain available for LIC to invest in as a long-term investor. LIC was one of the major investors in State Bank of India's recent ₹25,000-crore QIP, through which the insurer increased its stake in the lender to 9.49% from 9.21%. 'The kind of assets that we have to manage is such that we need to look at such big opportunities as well. SBI is expected to be a major part of the Indian economy's growth story. So, when it presented an opportunity for us to invest, we have to take a major stake in it," he said, adding that LIC will continue to look at such similar opportunities in other sectors as well. 'We don't mind being anchor investors or being a major investor in any such big issue, provided the institution that is coming up has value over a period of time, not just short-term."
Time of India
4 days ago
- Business
- Time of India
LIC profit grows 5% despite lower equity gains in a volatile Q1
Mumbai: Life Insurance Corp (LIC), the second largest government asset by market value, reported a 5% increase in its net profit to ₹10,986 crore, as moderating capital gains from equity sales through a volatile June quarter offset a robust core operating performance. Fiscal Q1 net trailed Bloomberg estimates of ₹11,100 crore. "The slowdown in net profit growth is mainly due to lower capital gains from equity markets. However, the core insurance operating profit remains strong," LIC MD & CEO R Doraiswamy said in a post-earnings call. LIC did not offer growth guidance for FY26 but said it is aiming for double-digit profit expansion for full year. Productivity Tool Zero to Hero in Microsoft Excel: Complete Excel guide By Metla Sudha Sekhar View Program Finance Introduction to Technical Analysis & Candlestick Theory By Dinesh Nagpal View Program Finance Financial Literacy i e Lets Crack the Billionaire Code By CA Rahul Gupta View Program Digital Marketing Digital Marketing Masterclass by Neil Patel By Neil Patel View Program Finance Technical Analysis Demystified- A Complete Guide to Trading By Kunal Patel View Program Productivity Tool Excel Essentials to Expert: Your Complete Guide By Study at home View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program "That is the level we consider respectable and we are targeting that," Doraiswamy added. The yield on policyholders' funds (excluding unrealized gains) declined to 8.45% in Q1 FY26 from 8.54% in Q1 FY25. LIC booked 15% growth in equity market profits on quarter. Its total equity market sales were upwards of ₹50,000 crore. The value of new business (VNB) rose 20.75% to ₹1,944 crore, while the VNB margin went up by 150 basis points to 15.4%. Doraiswamy attributed the margin boost to product changes and other initiatives. "Our margin improved to 15.4% in Q1, up from 13.9%, primarily due to a rise in non-par business, which now stands at 30.34%," said Doraiswamy. "Several interventions contributed including product modifications, changes in margin structures, and revisions in minimum ticket sizes and premiums to improve persistence." Annualised premium equivalent (APE) rose 9.45% year-on-year to ₹12,652 crore. The share of non-participating (non-par) APE within individual business jumped to 30.34%, up from 23.94% in the same period last year, as the insurer continued to boost non-par business post-IPO. Live Events "Since the IPO, the focus has been on scaling up non-par," said LIC Managing Director Dinesh Pant. "Non-par share has climbed from just 7% at the time of listing to 30% now." The company has not introduced new participating products since the IPO but now plans to develop the segment with an expected growth rate of 5-10%, he said. Pant said that while LIC is operating within a 40-60% non-par to non-par directional mix, this will continue to evolve based on market conditions and profitability. Persistency ratios, a key metric of policy renewals, dropped to 75.63% for the 13th month against 78.23% and rose to 63.85% from 61.62% for the 61st month on a premium basis. Short-term persistence saw some decline, largely driven by lapses in lower ticket-size policies sold under the earlier regulatory regime. "Many of these are revived later," an LIC executive said. On health insurance front, LIC said it is still exploring options for its proposed health insurance joint venture. "We are evaluating multiple possibilities and awaiting clarity on changes in the insurance Act and other regulatory developments," said Doraiswamy. ETMarkets WhatsApp channel )
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Business Standard
4 days ago
- Business
- Business Standard
LIC Q1 net profit rises 5% to nearly ₹11K cr due to tepid premium growth
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.'
Mint
4 days ago
- Business
- Mint
LIC says health insurance foray delayed on likely policy change; open to ‘all options'
Mumbai: Life Insurance Corporation of India's (LIC) foray into health insurance is delayed due to likely regulatory and policy changes in the broader sector and due to the weak growth environment in the segment, its newly-appointed managing director R. Doraiswamy said on Thursday. As such, the country's largest insurer remains interested in the health insurance segment and has kept 'all options' open, including waiting for the rollout of the composite licence provisions, Doraiswamy said. The public sector behemoth may mull picking up a strategic stake in a health insurer till the time composite licences are given, he added. 'We are making further examination of the various options available to us. We are also awaiting the changes to the regulations as well as the statutes, which I think is currently being delayed. We would like to look at all the options and then take it forward,' Doraiswamy said in the insurer's Q1FY26 earnings conference. He added that the industry is 'undergoing some changes' and is also expecting some more to be announced. These changes include the expected reforms under the Insurance Amendment Bill, which is pending with Parliament. If allowed, LIC is open to getting a composite licence, which will enable it to directly sell health insurance products. The Insurance Regulatory and Development Authority of India (IRDAI) has proposed rolling out a composite licence that will allow insurers to sell all life, general and health insurance policies. As such, even if composite insurers are allowed, LIC will continue to focus on its core strength of life insurance as of now, he said adding that picking up a significant stake in a health insurer could be an option. 'What is in public domain is that composite insurance may be allowed as a concept. If that comes and if LIC decides to become a composite company, then we can start marketing our own products. Till such a time, having a strategic stake in a health insurance company is very much an option available to us. That was what we were examining and that option is still open to us,' he said. Doraiswamy took charge as the managing director and chief executive officer of LIC on 14 July. LIC has not zeroed in on a target health insurance company and is expanding its options in terms of choosing the right company. The insurer, under former MD Siddharth Mohanty, had said it will acquire a strategic stake in a health insurance company in FY25, an option that still appears to be open. 'For us to look for a foray into health insurance, we need not directly sell health insurance products. We were looking at having a strategic stake in a health insurance company that we are very much allowed as an investor…the only question is the IRDAI regulations,' Doraiswamy said, adding that this will involve getting the regulator's nod to acquire a stake higher than what is allowed under insurance regulations. As the largest state-owned insurer, LIC is governed by both the LIC Act as well as the Insurance Act. 'We are closer to seeing what are the changes that are expected to come. That is one of the cases. Also, the health insurance market itself is undergoing a lot of changes at a difficult time. So, we would like to watch how it goes forward before taking a final call,' he said. Asked about the government's plan to offload about 6.5% of its stake in LIC by 2027 through an offer for sale, Doraiswamy said this is a call that will have to be taken by the department of investment and public asset management (DIPAM) and LIC has not heard anything on the issue so far. The government plans to dilute its shareholding in LIC to around 90% from the current 96.5%. The life insurer posted a 5% year-on-year rise in its net profit for the June quarter to ₹ 10.986 crore, largely led by steady growth in premium income and a strong rise in the value of new business margins. Total premium income rose 4.8% on year to ₹ 1.2 trillion, led by 6.4% growth in individual premium to ₹ 71.474 crore and 2.5% rise in group premium to ₹ 47,726 crore.
