The Life Insurance Corp of India (LIC), a prominent government-owned entity, has stunned the financial world with an extraordinary surge in net profit during the first quarter of FY24, soaring a remarkable 14 times to a staggering ₹9,543.7 crore. This meteoric rise in net profit is the result of a synergy between foundational factors and strategic adjustments in accounting practices. A crucial accounting modification, involving the reallocation of funds from non-participating policies to shareholders’ accounts to strengthen the available solvency margin, played a pivotal role in driving this significant upswing, as evidenced by official filings.
In stark contrast, during the corresponding quarter of the previous fiscal year, LIC had reported a rather modest net profit of ₹682.9 crore. However, this upward trajectory was followed by a subsequent 29% sequential downturn in profitability, with the net profit for the March 2023 quarter settling at a substantial ₹13,427.8 crore.
Over the first quarter, LIC’s net premium income experienced a dramatic surge, catapulting to ₹98,362.7 crore from the previous figure of ₹9,8351.7 crore during the same period in the preceding fiscal year. It is noteworthy that LIC concurrently experienced a 25% decline in net premiums, compared to the ₹1.3 trillion reported in the March quarter of FY23.
In addition, the overall premium income for the June quarter reached a substantial ₹98,363 crore, presenting a marginal yet significant year-on-year increase. On the stock market front, LIC’s shares experienced a minor dip of 0.29%, concluding at ₹642.10 apiece on the Bombay Stock Exchange (BSE) on a Thursday.
Commenting on the financial performance, Siddhartha Mohanty, the esteemed chairperson of LIC, highlighted, “Our comprehensive expense ratio has exhibited a marked improvement, and our profit margins remain consistently stable on a year-on-year basis.”
Mohanty elaborated, “Throughout the initial quarter of this fiscal year, we have successfully expanded our Non-Par product mix, which has gained prominence within the broader landscape of individual business. Furthermore, our resolute efforts to bolster customer persistency across various segments are beginning to yield promising outcomes. Simultaneously, we are dedicated to shaping strategies that foster diversification across our distribution channels.”
Throughout the quarter culminating in June, LIC’s total individual business premium witnessed an upward trend, escalating to ₹62,773 crore from the previous figure of ₹60,007 crore, reflecting an impressive growth rate of 4.61%.
Moreover, LIC’s assets under management (AUM) witnessed a substantial increment of ₹5.09 trillion, surging to a substantial ₹46.11 trillion as of June 30, 2023. This robust increase stands in stark contrast to the figure of ₹41.02 trillion recorded on the same date in the previous year.
According to an exhaustive report published on July 27th, LIC achieved unprecedented financial gains in the first quarter of the fiscal year, amassing a staggering sum of approximately $3.16 billion or ₹25,900 crore. This remarkable feat was achieved through a meticulously executed divestment strategy, involving the sale of shares from 87 leading Indian companies. This quantum leap represents a historic high for LIC during the inaugural quarter of a financial year.
The strategic sale of shares propelled LIC’s profits to an astounding ₹30,000 crore solely within the first quarter, surpassing all prior records for the initial fiscal quarter. This remarkable achievement has been confirmed by a reliable source well-versed in the matter.
The research further unveiled that LIC garnered maximum gains through the sale of substantial shares in various blue-chip giants, including renowned entities like Hindustan Unilever Ltd (₹1,893.27 crore), Mukesh Ambani-led Reliance Industries Ltd (₹1,469 crore), Maruti Suzuki India Ltd (₹1,053 crore), Ultratech Cement Ltd (₹1,312 crore), Larsen & Toubro Ltd (₹1,260 crore), Britannia Industries Ltd (₹996 crore), and Bajaj Auto Ltd (₹2,025.8 crore).
Leveraging the steady growth in stock prices of numerous leading listed companies during the quarter, LIC strategically sold shares of Nestle India Ltd (₹981 crore), NTPC Ltd (₹958.8 crore), Titan Co. Ltd (₹877.9 crore), and Power Grid Corp. Ltd (₹762.5 crore).
Despite these remarkable financial accomplishments, LIC’s market share in terms of new business premium during the April-July period experienced a marginal contraction, diminishing from the previous year’s 68.57% to a still substantial 59.70%.
