LIC Q1 Results Review - Higher Target Multiple Needs Healthier RoEV Level: Yes Securities

Yes Securities Report

Value of new business margin has improved on YoY basis but the desired improvement is not entirely satisfactory in the context of Life Insurance Corporation of India’s medium-term target:

The VNB margin for Q1 FY25 amounts to 13.9% compared with 13.7% in Q1 FY24. There has been a positive impact of business mix change amounting to 370 basis points.

The share of Individual Non-Par business in total annual premium equivalent has risen 759 bps YoY to 14.0%. There has been a negative impact of 120 bps and 230 bps due to product benefits and assumptions, respectively.

Of the impact due to assumptions, the major negative impact on VNB margin has been due to decline in risk-free rate. It has been seen that margin improves from Q1 to Q4 and that is what is expected this year as well.

The intention is to move to a VNB margin of 20% plus in the medium-term. It may be noted that product bucket margin has declined on YoY basis for each of the broad product buckets.

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