Life Insurance Corporation of India reported a 17% rise in third-quarter profit on Thursday, aided by higher premium collections on tax cut-spurred retail demand for insurance products.
The insurer’s net profit rose to 129.58 billion rupees ($1.43 billion) for the three months ended December 31, up from 110.56 billion rupees a year earlier.
Indian insurers reported higher demand for products in the third quarter, as the government’s decision to eliminate the 18% tax on individual life insurance products made policies more affordable.
LIC premium income grows
LIC’s net premium income grew 17.5% to 1.26 trillion rupees. One-time premiums rose 30.5%, while first-year premiums jumped 46%.
Annualised premium equivalent sales, a key metric that conveys the annualised total value of all single and recurring premium policies, rose 50.5% to 149.73 billion rupees for the quarter, according to Reuters’ calculations.
LIC benefits from strong sales through its extensive agency network across the country.
The insurer’s value of new business, or expected profit from new policies, increased 65% to 31.77 billion rupees for the quarter, per Reuters’ calculation.
LIC’s has also been focusing on increasing its share of high-margin policies to cushion its margins.
An increase in the ticket sizes across multiple products over the last few quarters has helped shore up the company’s margins.
Its VNB margins from new business expanded to 18.8% for the nine months ended December from 17.6% as of September-end and 17.1% a year earlier.
Solvency ratio, the measure of an insurer’s ability to meet its long-term financial obligations, rose to 2.19 during the quarter from 2.02 a year earlier and 2.13 in the prior quarter.
