LIC Q3 profit rises on expense reduction 

State-owned Life Insurance Corporation (LIC) reported a 17 per cent year-on-year increase in net profit to ₹11,056.5 crore for the third quarter of fiscal year 2025, driven primarily by significant expense reductions.

The insurer’s expenses dropped 20.76 per cent year-on-year to ₹14,415.80 crore, with employee-related expenses declining nearly 30 per cent. This helped improve the management expenses ratio to 13.47 per cent from 15.5 per cent in the previous year.

However, the company experienced challenges in new business metrics. The value of new business (VNB) premium fell 26.87 per cent to ₹1,926 crore, and the annualized premium equivalent (APE) decreased 24 per cent to ₹9,950 crore. 

LIC’s management highlighted strategic adaptations to recent regulatory changes effective October 2024. The company revised product pricing, increased policy ticket sizes, and realigned commission structures without implementing clawbacks. The 13th-month persistency ratio slightly declined to 68.6 per cent from 70.89 per cent in the corresponding quarter.

Despite market challenges, LIC maintained its market leadership with a 57.42 per cent market share in first-year premium income. The company’s assets under management grew 10.3 per cent to ₹54.77 trillion as of December 31, 2024.

Managing Director Siddhartha Mohanty emphasized the company’s consistent focus on adapting product and channel mix to serve customer needs in a dynamic environment. The insurer is also exploring stake acquisition in a standalone health insurance company, though no finalization is expected in the current financial year. 

For the nine months of FY25 it reported an 8.27 per cent increase in PAT of ₹29,138 crore . Its total premium income grew 5.51 per cent to ₹3,40,563 crore during the nine-month period compared to ₹3,22,776 crore in the same period last year. However, the number of individual policies sold declined 6.73 per cent to 1.17 crore policies.

Lost in transition

Individual policy sales dipped 6.73 per cent year-on-year. Senior LIC officials attributed the drop in policy sales to the transition period needed for agents to adapt to new product regulations and changes. “As a legacy organization, we have to take time to adapt to the transition. Our agents are mass-based agents, so they have to align to new products, new product regulations,” Siddhartha Mohanty, CEO MD, LIC said, adding that they expect improvements in the coming quarters based on recent feedback.

LIC’s market share in terms of first-year premium income stood at 57.42 per cent for the nine-month period, slightly lower than 58.90 per cent in the corresponding period last year. The company held a 37.21 per cent market share in individual business and 71.70 per cent in group business.

The insurer 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 per cent from 14.04 per cent a year ago.

New business soars

The Value of New Business (VNB), a measure of profitability of new business, grew 9.08 per cent to ₹6,477 crore, while VNB margin improved by 50 basis points to 17.1 per cent. The company’s expense ratio decreased by 231 basis points to 12.97 per cent.

Mohanty also said the company’s digital transformation initiatives will show results in the coming months. He also highlighted the success of Bima Sakhi Yojana, launched by the Prime Minister in December 2024, which has registered over 1.25 lakh women and appointed more than 70,000 as insurance agents.

The insurer’s assets under management (AUM) grew 10.29 per cent to ₹54,77,651 crore, while its solvency ratio improved to 2.02 from 1.93 a year ago. The company reported that yield on investments on policyholders’ funds, excluding unrealized gains, was 8.82 per cent compared to 9.14 per cent in the previous year.