LIC's VNB Margin At 20% Is Sustainable, Says Chairman Siddhartha Mohanty

Life Insurance Corp. of India Ltd.'s third-quarter value of new business margin stood at 20%, which is sustainable, according to Chairman Siddhartha Mohanty.

The insurer's market capitalisation crossed the Rs 7 lakh crore mark on Thursday, as its standalone profit after tax rose 49% year-on-year to Rs 9,444 crore in Q3 FY24, according to an exchange filing on Thursday.

• The value of new business, on a net basis, rose 46% to Rs 2,634 crore vs Rs 1,801 crore.

• Net VNB margin stood at 20% versus 14.6%.

• Revenue rose 8% to Rs 2.1 lakh crore.

• Total annual premium equivalent rose 7% to Rs 13,163 crore.

• The 13th month persistency ratio—or customer retention—on a premium basis improved to 78% from 77.61%. For the 61st month, it fell to 62.40% from 62.73%.

• The solvency ratio, which measures the extent to which assets cover commitments for future liabilities, rose to 193% from 185%. It's above the minimum requirement of 150%.

LIC is in line with achieving the commitments it made after listing and delivering much more, Mohanty told NDTV Profit's Sajeet Manghat.

"Whatever we achieve is going to be sustainable... In my sense, it will further improve," he said.

While earlier the state-owned insurers were par dominated, now they have good non-par products as well, the chairman said. He also expects the non-par share to go over 15% in the fourth quarter of FY24, as it has already reached 14% in the third quarter.

The company has had a directional change in its approach to business. A good product mix and non-par products that not only give margin but also take care of customers have helped in the steady growth of the company, Mohanty said.

The digitisation process has already started and the company has identified gaps and milestones, he said. The results will soon be visible in a few months. Digitisation over the next two years will help improve the expense ratio, increase customer acquisition through technology and grow agent business, he said.

The next 10 years are India's and LIC will play a significant role in its growth story, he said.