India’s LIC posts higher first-quarter profit on transfer of money to shareholder fund

By Sethuraman N R and Nikunj Ohri

BENGALURU (Reuters) – Life Insurance Corporation of India reported a surge in first-quarter profit on Thursday as the company moved money to a shareholders’ fund and income from its investments jumped.

The life insurer posted a profit after tax of 95.44 billion Indian rupees ($1.16 billion) for the quarter ended June 30, compared with 6.83 billion rupees a year earlier.

State-owned Life Insurance Corporation (LIC) has been transferring money from its non-participating fund to a shareholders’ fund to boost its profitability.

Reuters reported last year that the life insurer was planning to transfer 1.8 trillion rupees from policyholders’ funds into a fund earmarked to pay dividends or issue bonus shares.

LIC’s income from investments jumped nearly 30% to 903.1 billion rupees in the first quarter.

The company’s value of new business (VNB), which measures expected profit from new premiums and is a key gauge for growth, fell 6.8% to 13.02 billion rupees. VNB margins increased slightly to 13.7% from 13.6%.

LIC’s net premium income was mostly flat in the first quarter at 983.63 billion rupees, the company said in an exchange filing.

The company’s annualised premium equivalent for non-participating products, where the insurer does not share profits or surplus with the policy holder, rose 21.6%.

LIC, largely reliant on an army of sales agents, said policy sales dropped 12.6% in the quarter.

The life insurer raised the minimum ticket size of policies and focused more on margin oriented non-participating products, Chairperson Siddhartha Mohanty said on a media call.

LIC’s solvency ratio, the measure of an insurer’s ability to meet its long-term debt obligations, improved marginally to 1.89 compared with 1.88 last year.

The company’s shares closed down 0.4% ahead of the results, and have been down 6% so far this year.

($1 = 82.6110 Indian rupees)

(Reporting by Sethuraman NR, Nikunj Ohri and Siddhi Nayak; Editing by Varun H K, Janane Venkatraman and Shounak Dasgupta)