LIC Q2 Net Profit Multiplies Zooms to Rs 15,952 Crore on Gains from Increased Sales and Investments

A 27% rise in premium income and massive gains from changes in its accounting policy along with investment income helped national insurer LIC on Friday report a multiple increase in net income to Rs 15,952 crore in the second quarter from Rs 1,434 crore a year ago. More than 40% of net income comes from investment profits which reached Rs 6,798.61 crore but down from the prior year period when it recorded Rs 6,961.14 crore.

Net income was also boosted by gains from changes in its accounting policy, the country’s financial powerhouse said in the exchange documents.

In the June quarter, which was its first profit after its May IPO with an IPO of over Rs 20,530 crore, the insurer had reported a net profit of just Rs 682.9 crore.

Other reasons for the massive increase in profits were significantly lower commissions for agents and a sharp drop in labor costs.

During the reporting quarter, while he said the agency’s commissions had almost halved to Rs 5,844 crore from Rs 10,896 crore a year ago, his employee costs were well below Rs 16,474.76 crore vs. Rs 24,157.5 crore.

The statement attributed no reason for this. It can be noted that its more than 15 lakh agents bring the majority of its business.

Changes in actuarial liability led to a decline in revenue to Rs 96,088.03 crore in the quarter under review from Rs 1,74,277.93 crore. Similarly, the company’s surplus fell to Rs 16,171.14 crore from Rs 18,356.42 crore The first year bonus, which is an indication of the company’s growth, fell to Rs 9,124, 7 crore for the quarter, up 11% from Rs 8,198.30 crore a year ago, the country’s largest life insurer said.

Net premium income was Rs 1.32 lakh crore from Rs 1.04 lakh crore in the prior year quarter, while total income rose to Rs 2.22 lakh crore from Rs 1.87 lakh crore.

Of this amount, first year premium income increased to Rs 9,175.89 crore from Rs 8,270.91 crore a year ago and renewal premium increased to Rs 56,514.63 crore from Rs 55,342 .62 crore and single premium income rose to Rs 67,021.9 crore from Rs 41,428.7 crore, the company said.

As earnings approached, a section of the media had reported, based on sources, that the state-owned company planned to pay dividends or issue free shares, leading to a surge in share prices. But the company remained silent on such a decision. The LIC counter closed Friday at Rs 628 on the BSE, nearly 1.17% higher but down more than 30% from its listing price of Rs 940.

The solvency ratio, which measures an insurer’s cash flow relative to the amount it owes on total life cover, was 1.88%, similar to the June quarter.

Gross non-performing assets stood at Rs 26,111 crore, down from Rs 26,619 crore a quarter ago and Rs 28,929 crore a year ago. Gross NPAs fell to 5.60% from 5.84% in the June quarter and 6.57% a year ago.

LIC’s 13th month persistence ratio, which measures a customer’s loyalty to the insurer, improved to 70.52% in the reporting quarter from 68.81% a year ago.

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