By Nishit Navin and Hritam Mukherjee
(Reuters) -Life Insurance Corporation of India reported higher second-quarter profit and wider margins on Thursday, buoyed by an improved product mix, and said it anticipates strong insurance demand in the second half of the fiscal year.
Profit after tax for the country’s largest insurer rose to 100.53 billion rupees ($1.14 billion) for the quarter ended September 30, from 76.21 billion rupees a year earlier.
Its net premium income rose 5.5% to 1.26 trillion rupees.
Analysts said LIC had sped up its sales before October 2024 to head off new regulations that reduced the charges levied on policyholders when closing their policies before maturity, leading to slower growth in premiums for the insurer in the last few quarters.
However, LIC expects robust growth for the second half of fiscal year 2026, its CEO and MD R Doraiswamy said in an earnings call, pinning it on healthy policy demand expectations after India cut the Goods and Services Tax on insurance from September 22.
The revision also raised concerns about the loss of a tax credit for insurers, which analysts said could squeeze their margins.
However, the company said it did not see a significant impact from the non-availability of input tax credits in the quarter ended September 30, adding it was closely monitoring the situation.
Its value of new business, which measures expected profit from new premiums, rose 8% year-over-year in the reported quarter, according to Reuters calculations.
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.
Smaller peers ICICI Prudential Life Insurance and SBI Life Insurance also reported strong margins in the quarter.
“While we expand our overall profitability through (a) diversified product mix and channel mix, we are also working towards optimising costs,” Doraiswamy said.
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, Janane Venkatraman and Pooja Desai)
