State-owned Life Insurance Corporation (LIC) has recently announced a 17% year-on-year increase in net profit, reaching ₹11,056.5 crore during the third quarter of the fiscal year 2025. This significant growth was primarily fueled by a considerable reduction in expenses, with overall expenses decreasing by 20.76% to ₹14,415.80 crore. Notably, employee-related expenses saw a nearly 30% decline, leading to an improved management expenses ratio from 15.5% to 13.47% compared to the previous year.
Challenges in New Business Metrics
Despite the positive financial outcomes, LIC faced challenges in certain new business metrics. The value of new business (VNB) premium experienced a notable decline of 26.87% to ₹1,926 crore, while the annualized premium equivalent (APE) saw a 24% decrease to ₹9,950 crore. These fluctuations were attributed to strategic adaptations made by the company in response to regulatory changes that came into effect in October 2024.
Market Leadership and Strategic Adjustments
Amidst these changes, LIC maintained its market leadership position with a 57.42% market share in first-year premium income. The insurer’s assets under management also grew by 10.3% to ₹54.77 trillion as of December 31, 2024. Managing Director Siddhartha Mohanty emphasized the company’s commitment to adjusting its product and channel mix to meet evolving customer needs in a dynamic market environment.
A Focus on Non-Par Business Strategy
LIC made significant progress in its non-par business strategy, with individual non-par annualized premium equivalent (APE) more than doubling to ₹6,813 crore. The share of non-par products within individual business increased to 27.68% from 14.04% a year ago, showcasing the company’s strategic diversification efforts.
Optimism Amid Transition Period
Despite a 6.73% decline in individual policy sales, senior LIC officials remain optimistic about the future. They attribute this drop to the transition period required for agents to adapt to new product regulations and changes. Siddhartha Mohanty, CEO MD of LIC, acknowledged the challenges faced by mass-based agents in aligning with new products and regulations. However, he expressed confidence in improvements in the coming quarters based on recent feedback and ongoing efforts to enhance operational efficiency.
Looking Ahead
As LIC continues its digital transformation initiatives, Mohanty anticipates positive results in the near future. Additionally, the success of the Bima Sakhi Yojana, launched by the Prime Minister in December 2024, has been a notable achievement for the company. The initiative has already registered over 1.25 lakh women and appointed more than 70,000 as insurance agents, contributing to LIC’s broader outreach and impact.
In conclusion, LIC’s latest financial report reflects a mix of challenges and successes, showcasing the company’s resilience and adaptability in a rapidly changing landscape. With a strong focus on strategic adjustments, market leadership, and innovative initiatives, LIC remains poised for continued growth and impact in the insurance sector.
