Insurance News Details

Life Insurance Corporation forecasts higher new business margin in FY25

(08-Aug-24   21:40)

The Life Insurance Corporation of India (LIC), the largest insurer in the country, has projected an increase of 2% to 3% in its new-business margin for the fiscal year 2025. Additionally, the corporation is considering acquiring a majority stake in a health insurance company.
Siddhartha Mohanty, the CEO of LIC, mentioned during a media briefing that Work is going on to buy a majority stake in a standalone health insurer, although he did not disclosing details.

In May, LIC had said that its exploring inorganic growth opportunities within the health insurance sector.

For the June quarter, LIC reported a 23.7% year-on-year increase in its value of new business (VNB), which reflects the anticipated profit from new premiums. The net VNB margin for this period improved to 13.9%, up from 13.7% in the previous year.

On Thursday, LIC announced a 9.6% rise in its first-quarter profit, reaching 104.61 billion rupees, driven by a surge in sales of high-margin non-participating policies and robust growth in its group business.

The company also transferred 94.70 billion rupees (approximately $1.13 billion) from its non-participating fund to shareholders' funds during the quarter, compared to a transfer of 74 billion rupees in the same period last year.

The premiums collected from non-participating policies are allocated to a non-participating fund. Since 2022, LIC has been transferring a portion of these premiums to a shareholders' fund each quarter, which has contributed to profit enhancement and improved its solvency ratio.

The solvency ratio, which indicates an insurer's capacity to fulfill its long-term debt obligations, increased to 1.99 from 1.89 a year prior.

Furthermore, the total premium income from the group business rose by 30.9% year-on-year during the quarter, as reported by LIC in an exchange filing.

Group insurance typically covers individuals under a single plan and is often utilized by companies to provide insurance coverage for their employees. The insurer has been concentrating on boosting the proportion of higher-margin non-participating policies within its overall sales.

Its net premium income increased nearly 16%, reaching 1.14 trillion rupees.

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