Insurance giant Life Insurance Corporation of India (LIC) reported an 18% drop in standalone net profit in the FY22 January-March quarter on Monday. The insurance giant’s net profit s amounted to Rs 2,372 crore in Q4FY22 from Rs 2,893.48 crore a year ago. However, the company’s net profit for the full year (FY22) increased by 39.4% to Rs 4,043.12 crore from Rs 2,900.56 crore during FY21.
These are the first quarterly financial results reported by the insurer after its IPO earlier this month. The insurer’s board has also recommended a dividend of Rs 1.50 per share with a par value of Rs 10 each for the financial year ending March 31, 2022, which is subject to shareholder approval at of the annual general meeting.
On a consolidated basis, the insurer’s net profit declined by 17% year-on-year (YoY) to Rs 2,409 in Q4FY22 from Rs 2,917 crore a year ago.
LIC had a single “life fund” before Section 24 of the LIC Act was amended by the government to bring its surplus distribution mechanism to the same level as private life insurers. Now, the life insurance fund is divided into two funds: the participating policyholders’ fund and the non-participating policyholders’ fund. As a result, the distribution of surplus in the participating policyholders fund has been changed to 90:10 on a phased basis, where 90% will go to policyholders and 10% to shareholders. In addition, 100 percent of the surplus generated by the non-participating business will be available for distribution to all shareholders.
This change, said Mr. Kumar, Chairman of LIC, will help LIC increase its profitability, a move that will be closely watched by market investors. “If you look at the distribution of surpluses or the total surplus generated two years ago at around Rs 53,000 crore, 5% went to the government, the rest to policyholders. This will become 90:10. On the other hand, if we sell more products with no face value, it will be 100:0. If we look at 100:0 from this perspective, let’s say out of the Rs 53,000 crore, 20% comes from non-par, then all of that part is profit. We have to go towards that. We have products with no face value, but maybe the percentage is low. Once we start growing that base, profits will come,” Kumar said in an interview with Business Standard earlier this month.
The life insurance giant earned a net premium of Rs 1.43 trillion in Q4FY22, up 18% from Rs 1.21 trillion in the corresponding period a year ago. In FY22, the insurer’s net premium was Rs 4.27 trillion, up 6.21% from FY21’s Rs 4.02 trillion. Investment income of LIC, which is one of the largest asset managers, was stable at Rs 67,498.15 crore in Q4FY22 and for the full year, it earned Rs 2.92 trillion from its investments, up 5% year-on-year.
“The figures for the quarter ended March 31, 2022 and the corresponding quarter ended the previous year, as reported in these financial results, are the balance figures between the audited figures for the full financial year and the audited/unaudited annual figures. audited published to date. the end of the third quarter of the relevant financial year,” LIC said in a stock exchange filing.
The insurer’s gross non-performing asset (NPA) ratio in its debt portfolio improved 29 basis points sequentially to 6.03% and net NPA was 0.04%.
The insurer’s thirteen-month persistence rate fell to 69.24% in Q4FY22 from 73.94% in the corresponding period a year ago. But the persistence rate at month 61 improved to 55.62% in the March quarter from 54.43% a year ago. For the full year, LIC month 13 persistence was 75.59% compared to 78.78% in FY21. in FY22 was 61% compared to 58.79% in FY21.
The persistence ratio is the ratio of life insurance policies receiving one-time premiums during the year to the number of net active policies. The ratio indicates how many policyholders regularly pay the premiums due on the policies with the insurer.
LIC reported a solvency ratio of 1.85 compared to the regulatory requirement of 1.50.
LIC shares made their quiet debut on the stock market earlier this month. It debuted on BSE at Rs 875.45 apiece against the issue price of Rs 949. LIC’s Rs 20,557 crore IPO, India’s largest ever, failed to collect only 2.95 times the subscription. Institutional investors subscribed for shares worth less than Rs 9,400 crore in the IPO, with foreign portfolio investors (REITs) submitting offers worth less than Rs 1,800 crore.
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