(Reuters) -Life Insurance Corporation of India, the country’s largest insurer, reported a 32% rise in second-quarter profit on Thursday, driven by higher premiums, while its margins expanded due to an improvement in its product mix.
LIC’s profit after tax rose to 100.53 billion rupees ($1.14 billion) for the quarter ended September 30, from 76.21 billion rupees a year earlier.
Analysts said LIC had sped up its sales prior to October 2024 to head off new regulations that reduced the charges levied on policyholders when closing their policies before maturity.
While the company’s first-year premium dropped 3% year-on-year due to the regulation change, it posted an 8% rise in its single premiums and 5% rise in renewals.
As a result, its net premium income rose 5.5% to 1.26 trillion rupees.
Its value of new business (VNB), which measures expected profit from new premiums, rose 8% year-over-year, according to Reuters’ calculation.
The VNB margin improved to 17.6% at the end of September from 16.2% a year ago, with some of it coming from a rise in the minimum ticket sizes across multiple products, according to analysts.
Additionally, the share of high-margin non-participating policies in LIC’s product mix in the half year ended September 30 also rose to 36.3% from 26.3% a year earlier.
Its smaller peers ICICI Prudential Life Insurance and SBI Life Insurance, which struggled to keep margins intact last year, reported strong margins in the quarter as demand for low-margin market-linked policies slowed amid volatility in the equity markets.
“While we expand our overall profitability through diversified product mix and channel mix, we are also working towards optimising costs,” CEO and Managing Director R Doraiswamy said in a statement.
LIC’s operating expenses and commissions paid dropped 6.5% to 152.34 billion rupees in the quarter.
($1 = 87.8950 Indian rupees)
(Reporting by Nishit Navin; Editing by Savio D’Souza, Krishna Chandra Eluri and Janane Venkatraman)
