(PTI) Driven by a record premium income, Life Insurance Corporation in its maiden earnings after going public has reported a multi-fold jump in net profit at ₹682.89 crore from the paltry ₹2.94 crore a year ago.
The nation's largest financial powerhouse that manages assets in excess of ₹41 lakh crore had gone public in early May with a ₹20,500 crore share sale.
The insurer's profit rose manifold despite lower margins, which the management attributed to changed product mix and booking less than 50 per cent of the profit from equity which plunged to ₹5,076 crore from ₹11,368 crore in June 2021.
However, a record 61 per cent jump in new policy sales buoyed the bottom line, LIC Chairman M R Kumar told reporters during the earnings call on Friday.
Net margins from new business premia slipped nearly 200 basis points to 13.6 per cent in the latest June quarter.
As the pandemic situation normalises, "we are seeing a larger activity on the ground, therefore bringing us back closer to our model of having 'feet on street' and continuous in person engagement with our customers and the robust growth numbers clearly show that," Kumar said.
He was also quick to add that the trajectory is upwards and that LIC is looking at increased business volumes as is evident in its market share since January.
Total new business premium income (individual) rose to ₹10,938 crore from ₹8,040 crore boosting the bottom line.
Renewal premium (individual) increased to ₹49,069 crore from ₹45,048 crore, bolstering the total premium (individual) 13.03 per cent to ₹60,007 crore in the latest June quarter.
Group business premium jumped 33.92 per cent to ₹38,345 crore, increasing the total premium income by 20.35 per cent to ₹98,352 crore.
During the three months ended June 2022, LIC sold 59.56 per cent more polices at 36,81,764.
Kumar said the first-year premium for the reporting quarter came in at ₹7,429 crore as against ₹5,088 crore a year ago, taking the total income to ₹1,68,881 crore.
However, compared with the March 2022 quarter, the performance was down across parameters, he said and attributed the same to the seasonality issues as for life insurance sector December and March quarters are the best while the first two quarters are tepid.
In the March 2022 quarter, the insurance behemoth had booked a net profit of ₹2,371 crore, first year premium of ₹14,614 crore and total income of ₹2,11,451 crore.
LIC Managing Director Raj Kumar said it sold 36.81 lakh new policies in the June quarter as against 23.07 lakh policies in the year-ago quarter, primarily because its over 13 lakh agents are back on their feet.
Marketing activity picked up pace and the overall business momentum has been strong. As a result, the overall market share by first year premium income increased to 65.42 per cent for the June quarter compared to full year market share of 63.25 per cent for FY22, the Chairman said.
On an Annualised Premium Equivalent (APE) basis, total premium rose to ₹10,270 crore. Out of the total amount, 62.80 per cent ( ₹6,450 crore) came from individual business and 37.20 per cent ( ₹3,819 crore) from group business, Chief Financial Officer Sunil Agarwal said.
Chairman Kumar said the persistency ratios on premium basis for the 13th month, and 61st month rose to 75.75 and 58.99, respectively.
The persistency ratios on number of policies basis for the 13th month, and 61st month were 63.85 and 47.51, respectively. Higher persistency ratios indicate the strength of an insurer's business.
The asset under management increased to ₹41.02 lakh crore as of June end compared to over ₹38.13 lakh crore at the end of June 2021.
The net NPAs in the policyholders fund declined massively to ₹9 crore in the quarter from ₹194 crore on-year while the gross NPAs stood at ₹26,620 crore, for which LIC has made a provision of ₹26,611 crore, the Chairman said.
The Value of New Business (VNB) rose to ₹1,861 crore.
During the latest June quarter, LIC made equity investments worth ₹46,444 crore and sold ₹12,000 crore but gained much lower given the volatility in the market as profit declined to a low ₹5,076 crore from ₹11,368 crore.
LIC shares, which have already lost more than a third of its issue price, closed flat at ₹682.15 on BSE on Friday against 0.22 per cent gain on benchmark Sensex.