LIC's Q3 FY25 results: Net profit rises 17% to Rs 11,056.5 crore

A drop in expenses helped state-owned Life Insurance Corporation of India (LIC) report a 17 per cent year-on-year (Y-o-Y) increase in net profit at Rs 11,056.5 crore in the October-December quarter of FY25 (Q3FY25).

 

Its expenses declined 20.76 per cent Y-o-Y to Rs 14,415.80 crore, aided by a nearly 30 per cent drop in employee-related expenses. The expenses of management ratio stood at 13.47 per cent, against 15.5 per cent in the year-ago period.

 

LIC’s value of new business (VNB) premium stood at Rs 1,926 crore in Q3FY25, down 26.87 per cent Y-o-Y. Its VNB margin, a measure of profitability for life insurers, stood at 19.35 per cent.

 

According to LIC management, the state-run insurer did not face a major impact from the surrender value norms and has adopted a mix of changes in commissions based on persistency and revisions in ticket size to mitigate the impact of regulations effective from October 1, 2024.

 

“We have taken conscious measures in response to regulatory changes and to cater to our business strategy. We revisited and increased the ticket size of policies based on their persistency. However, we continue to provide for customer needs with a Rs 1 lakh sum insured,” the management said in its post-earnings media call.

 

“Based on expected expenses, we have revised the premium rates in some products, considering the likely impact of customer behaviour going forward,” it added. “In the commission structure, since we value our agents, we have not implemented clawbacks. Instead, we have realigned commission rates to ensure alignment between persistency experience and rewards.” 

 

The 13th-month persistency ratio declined to 68.6 per cent in Q3 from 70.89 per cent in the corresponding quarter, while the 61st-month persistency dropped to 59.69 per cent from 56.16 per cent in the same period. The solvency ratio of the insurer rose to 202 per cent in Q3FY25 from 193 per cent last year. 

 

LIC’s annualised premium equivalent (APE) fell 24 per cent Y-o-Y to Rs 9,950 crore in Q3 FY25. Net premium income declined 8.6 per cent Y-o-Y to Rs 1.06 trillion. Net income from investments also slipped 0.97 per cent Y-o-Y to Rs 94,335.72 crore in Q3FY25. Assets under management (AUM) stood at Rs 54.77 trillion as of December 31, 2024, up 10.3 per cent Y-o-Y.

 

Siddhartha Mohanty, managing director and chief executive officer of LIC, said: “Our focus and strategy remain consistent towards changing our product and channel mix to serve the needs of our customers in a dynamic environment.”

 

The insurer also said it had started the bond forward rate agreement (FRA) on a pilot basis with three counterparties and had two more counterparties in the panel.