Life Insurance Corporation Of India — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Life Insurance Corporation of India reported a robust Q3 FY25, demonstrating strong growth across key financial metrics. Total Premium Income, Individual New Business Premium, PAT, and Net VNB all saw significant year-on-year increases. The company's strategic shift towards Non-Par products led to a substantial rise in its share of Individual APE, contributing to an improved VNB margin and a lower expense ratio. Management expressed cautious optimism for continued growth, driven by product innovation and an expanding distribution network.

Highlights

  • Total Premium Income reached INR 3,40,563 Crore, marking a 5.51% YoY growth.

  • Individual New Business Premium Income grew by 9.73% YoY to INR 42,441 Crore.

  • Profit After Tax (PAT) increased by 8.27% YoY to INR 29,138 Crore.

  • Net Value of New Business (VNB) grew by 9.08% YoY to INR 6,477 Crore.

  • Net VNB Margin improved by 50 basis points to 17.1%.

  • Assets Under Management (AUM) expanded by 10.29% YoY to INR 54,77,651 Crore.

  • Overall Expense Ratio decreased by 231 basis points to 12.97%.

  • Non-Par share of Individual Annualized Premium Equivalent (APE) significantly increased by 106.52% to 27.68%.

What they filed

Q1 FY27: revenue up 6.8%, net profit up 22.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,30,331 2,02,823 2,42,479 2,23,917 2,40,690 +4%2,35,467 +16%2,76,206 +14%2,39,145 +7%
EBITDA7,977 11,985 21,492 11,857 10,546 +32%14,080 +17%11,200 −48%13,936 +18%
Net profit7,621 11,056 19,013 10,987 10,053 +32%12,958 +17%23,420 +23%13,492 +23%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Hedging

  • Initiation of FRA (Forward Rate Agreement) Hedging · within this financial year · High confidence Started
    And this month, we have already started the journey of entering into FRA. And we expect to start this in a good manner within this financial year and definitely going forward.

    — Dinesh Pant

Growth

  • APE Growth Trajectory Growth · soon, very soon · Medium confidence Even better than earlier
    We expect that the trajectory of growth which was there earlier, and in fact, even better will come back soon very soon.

    — Dinesh Pant

Profitability

  • VNB Margin Profitability · going forward · Medium confidence Better than this
    So definitely, going forward, it is going to be better than this. So there's an uptick in the VNB margin itself.

    — Dinesh Pant

Product Mix

  • Adding more products Product Mix · going forward · High confidence More variety of products
    going forward, I think we are looking forward to adding more products to the available basket.

    — Dinesh Pant

Sales Performance

  • Q4 Performance Sales Performance · Q4 · Medium confidence Do well
    So hopefully, we should continue to do well in Q4 as well and close the year in fact on a positive note.

    — Hemant Buch

Commission Rates

  • Renewal Commission Rates Commission Rates · going forward · Medium confidence Slightly higher
    so renewal commission rates going forward will be slightly higher than what we are seeing now.

    — Dinesh Pant

2 min read

Detailed narrative

Life Insurance Corporation of India (LIC) reported a strong performance for the nine months ended December 31, 2024 (Q3 FY25). The company's Total Premium Income grew by 5.51% year-on-year to INR 3,40,563 Crore, with Individual New Business Premium Income increasing by 9.73% to INR 42,441 Crore. Total Individual Premium Income, including renewals, stood at INR 2,21,416 Crore, reflecting a 5.58% growth. Group Business also contributed positively, with total premium income rising by 5.39% to INR 1,19,147 Crore. Profit After Tax (PAT) saw an 8.27% increase, reaching INR 29,138 Crore, while Net Value of New Business (VNB) grew by 9.08% to INR 6,477 Crore, accompanied by a 50 basis point improvement in Net VNB Margin to 17.1%. Assets Under Management (AUM) demonstrated robust growth of 10.29% YoY, reaching INR 54,77,651 Crore. The company also successfully reduced its Overall Expense Ratio by 231 basis points to 12.97%.

A significant strategic shift was observed in the product mix, with the Non-Par share of Individual Annualized Premium Equivalent (APE) surging by 106.52% to 27.68% from 14.04% in the prior year. This shift, along with revisions in premium rates and minimum ticket sizes for certain products post-October 2024 regulations, was instrumental in protecting and improving margins despite softening bond yields. The Solvency Ratio improved to 2.02 from 1.93. The agency workforce expanded by 3.33% to 14,19,480 agents, contributing approximately 95% of New Business Premium. The Banca and Alternate Channels also showed strong growth in New Business Premium, increasing by 31.06% YoY.

Management highlighted ongoing digital transformation initiatives like DIVE and Jeevan Samarth, and the success of the Agent-assisted ANANDA app, which processed 9,72,504 policies, a 23.91% growth. New marketing initiatives, such as the Bima Sakhi Yojana, aimed at empowering women, have also seen significant traction with over 70,000 Bima Sakhis appointed. The company launched a comprehensive suite of 38 products, including 24 individual products and 8 group products, fully compliant with new IRDAI regulations.

During the Q&A session, management addressed concerns regarding a slight dip in persistency, attributing it to product mix changes and lower ticket sizes in some older products, which have since been revised. They confirmed the initiation of Forward Rate Agreement (FRA) for hedging interest rate risk within the current financial year. While acknowledging a temporary decline in APE due to product revisions, they expressed confidence in a quick recovery and continued growth trajectory. They also clarified that Embedded Value (EV) is disclosed on a half-yearly basis, not quarterly. The overall tone was cautiously optimistic, with management emphasizing resilience, adaptability, and a strong position to leverage industry growth through its brand, distribution network, and innovative products.

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