LIC Shares Rise on Strong Q4 FY24 Results
Life Insurance Corporation of India (LIC) shares gained prominence on Tuesday, May 28, following the state-run insurer’s announcement of its March quarter results. LIC shares rose by as much as 2.5% to a high of Rs 1,062.45 on the NSE during morning deals, trading at Rs 1,041.9 at 9:44 AM.
Q4 FY24 Financial Performance
LIC reported a standalone net profit of Rs 13,762.6 crore for the quarter ending March 31, marking a 2.5% increase compared to the same period last year. The insurer’s net premium income for Q4 FY24 was Rs 1,52,293.1 crore, up 15.6% year-on-year. Income from first-year premiums improved to Rs 13,810 crore from Rs 12,811 crore in the previous year, while renewal premiums rose to Rs 77,368 crore from Rs 76,009 crore. For the entire FY24, LIC recorded a net profit of Rs 40,676 crore, up from Rs 36,397 crore in FY23.
Dividend Announcement
LIC has recommended a final dividend of Rs 6 per share for the financial year ended March 31, with July 19, 2024, set as the record date to determine shareholder eligibility for this payout.
Annual Performance Highlights
Despite selling fewer policies, LIC achieved higher net profits for FY24. The company sold 20.39 million policies, slightly fewer than the 20.43 million in FY23. Total premium income from group businesses fell by 5.48% year-on-year to Rs 1.71 trillion, and new business premium income in the individual segment decreased by 1.77% to Rs 57,716 crore.
The insurer’s net value of new business (VNB), representing the present value of future profits from new policies, grew by 4.66% to Rs 9,583 crore. LIC’s VNB margin increased by 60 basis points to 16.8%. The total premium income for FY24 rose marginally by 0.22% year-on-year to Rs 4.75 trillion.
Market Share and Strategic Focus
LIC’s market share dropped to 58.87% from 62.58% at the end of FY23, due to increased competition from private insurers who saw a 12.11% rise in new business during the same period. Chairman Siddhartha Mohanty emphasized strategic interventions to regain market share and enhance margins. LIC has doubled its share of non-participating business within the individual segment, which offers higher VNB margins.
Operational Metrics and Solvency
The company transferred Rs 29,518.75 crore from the available solvency margin from non-participating policyholders’ accounts to shareholders’ accounts. LIC’s solvency ratio improved to 1.98 from 1.87, surpassing regulatory requirements. However, net cash flow from operating activities dropped to Rs 26,121.65 crore from Rs 54,518.51 crore, primarily due to increased claims and benefits payments.
LIC paid a bonus of Rs 52,956 crore to participating policyholders in FY24. Cash and cash equivalents decreased to Rs 42,013.83 crore from Rs 45,588.14 crore in FY23.
Outlook
LIC’s embedded value rose by 24.9% to Rs 7.27 trillion at the end of FY24 from Rs 5.82 trillion at the end of FY23. Chairman Mohanty expressed optimism for FY25, focusing on topline growth and increasing the VNB margin with a strategic product mix.
Before the earnings announcement, LIC shares closed up 0.58% at Rs 1,035.80 on the BSE amid a flat equity market.
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