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Published: August 11, 2023
Updated: August 11, 2023

LIC Reports Staggering 14x Profit Surge in Q1: Investment Gains Propel Earnings

Profit Skyrockets 1400%, Reaching Rs 9,543 Crore:

Life Insurance Corporation of India (LIC) has astounded the market with a remarkable 14- fold increase in net profit for the first quarter of the fiscal year 2023-24 (Q1FY24). The net profit soared to an impressive Rs 9,543.71 crore, compared to the previous year's Q1 profit of Rs 4,831.65 crore. This exponential growth can be attributed to a substantial surge in investment income, which has significantly bolstered LIC's financial performance.

Unveiling the Profit Composition:

The remarkable Q1FY24 profit figure included a substantial infusion of Rs 7,491.53 crore arising from the accretion on the available solvency margin, which was transferred from the non-par fund to shareholders' accounts. This intricate profit structure underscores LIC's strategic financial management and its efforts to optimize returns for stakeholders.

Steady Premium Income Amidst Policy Sales Dip:

While LIC managed to maintain a steady premium income, the highlight was the flat premium income of Rs 98,363 crore for Q1FY24, closely mirroring the Rs 98,352 crore recorded in the same period of the previous year. Individual new business premium income for Q1FY24 amounted to Rs 10,462 crore, a slight dip from the Rs 10,938 crore recorded in Q1FY23. Similarly, individual renewal premium income stood at Rs 52,311 crore for Q1FY24, compared to Rs 49,069 crore in Q1FY23. Interestingly, LIC experienced a decline in the number of individual policies sold, dropping from 3.68 million in Q1FY23 to 3.21 million in Q1FY24.

Group Business Premiums and Diversification:

LIC's group business premium income amounted to Rs 35,590 crore in Q1FY24, showcasing a modest decline from the Rs 38,345 crore recorded in Q1FY23. This dynamic demonstrates the company's efforts to diversify its revenue streams and engage in a broader range of business operations.

Key Role of Annualised Premium Equivalent (APE):

LIC's focus on individual and group business can be assessed through the lens of the annualised premium equivalent (APE). For the quarter ending on June 30, the total premium on an APE basis was Rs 9,532 crore. A significant share of this total, 62.42%, was attributed to individual business (Rs 5,950 crore), while the remaining 37.58% was generated by the group business (Rs 3,582 crore). This distribution underscores LIC's commitment to maintaining a balanced portfolio.

Steadfast Value of New Business (VNB):

The value of new business (VNB) for Q1FY24 was reported at Rs 1,302 crore, a modest decrease from the Rs 1,397 crore recorded in the corresponding period of the previous year. Despite this slight decline, LIC managed to maintain healthy VNB margins of 13.7% for Q1FY24, compared to 13.6% for Q1FY23, reflecting its ability to create sustainable value.

Investment Income's Integral Role:

A notable driver of LIC's remarkable Q1FY24 performance was its investment income, which surged by an impressive 29.8% year-on-year. The investment income soared to Rs 90,309.37 crore, a substantial leap from Rs 69,570.81 crore in Q1FY23. This underscores LIC's adeptness in capitalizing on market opportunities and managing its investment portfolio effectively.

Robust Asset Growth:

LIC's assets under management (AUM) witnessed a robust year-on-year increase of 12.41%, reaching a staggering Rs 46.11 trillion as of June 30. This growth, compared to the Rs 41.02 trillion recorded a year earlier, highlights LIC's prowess in effectively managing and expanding its asset base.

LIC's phenomenal profit surge in Q1FY24, driven by exceptional investment gains, showcases its resilience and strategic prowess in navigating complex financial landscapes. The company's steady premium income, despite a dip in individual policies sold, highlights its adaptability and commitment to maintaining a diversified revenue stream. As LIC continues to optimize its investment strategies and capitalize on market dynamics, its robust asset growth further solidifies its position as a leader in the insurance industry.