LIC eyes higher non-par product mix to boost margins post Q4 surge

Life Insurance Corporation sees strong profit growth in Q4FY25 and plans to increase focus on high-margin non-par products while expanding its agent base and channel mix

State-owned Life Insurance Corporation (LIC) will continue to focus on increasing the share of non-participating products in its product mix to grow its margin further.

 

Shares of the state-owned insurer gained over 8 per cent on Wednesday on the BSE after the insurer reported a good set of numbers for the fourth quarter of the financial year 2024-25 (Q4FY25). The shares closed 8.21 per cent at ₹942.55.

 

Brokerage houses also maintained a bullish stance, owing to the insurer’s plans to improve their margins.

 

According to analysts at Motilal Oswal, LIC continues to maintain its industry-leading position and is focused on achieving growth recovery through wider product offerings, higher ticket size, a shift in the product mix toward non-par. Expansion of the agency channel, and a higher contribution from bancassurance and alternate channels will also aid recovery. Further, improvement in rider attachment, along with an increase in contribution from higher margin products, will boost VNB margin for the insurer. The analysts have reiterated a ‘buy’ stance on the stock. 

 

The total number of agents of LIC stood at nearly 1.49 million. The insurer logged net addition of over 72,000 agents during FY25, leading to market share of 47.6 per cent based on the number of agents.

 

Analysts at Emkay Global Financial Services also noted the management’s plans to expand the share of non-par, and value of new business (VNB) margin, which could be offset by the company's annualised premium equivalent (APE) growth. “To bake in the Q4 developments, we tweak our FY26-27 estimates which leads to about 1- 2 per cent cut in APE and around 10bps increase in VNB margin, resulting in around 1-2 per cent cut in VNB,” analysts said.

 

During the quarter, the profitability margin, VNB margin, improved to 18.7 per cent in Q4FY25 from 17.21 per cent in Q4 FY24. The net profit of the life insurer rose 38 per cent to ₹19,013 crore. The net premium income slipped 3 per cent to ₹1.48 trillion. The APE was down 10.98 per cent Y-o-Y to ₹18,953 crore, which was partially attributed to the change in product regulations introduced on October 1, 2024. The company's gross non-performing assets (NPAs) improved, dropping 55 basis points to 1.46 percent during the quarter.