LICI - LIFE INSURANCE CORPORATION OF INDIA Share Price

Outlook by Management:
LIC's management expressed cautious optimism for FY25, anticipating continued industry growth driven by rising insurance awareness. They emphasized LIC's strong brand, extensive agency network, and innovative product suite to capitalize on opportunities. The focus remains on balancing growth, profitability, and risk management while enhancing operational efficiency and digital transformation.

Major Points:

1. Premium Growth: Total premium rose 5.51% YoY (Rs.3.41 lakh crore), with individual new business up 9.73% (Rs.42,441 crore).
2. Market Leadership: Maintained 57.42% market share (37.21% individual, 71.70% group).
3. Non-Par Expansion: Non-Par APE surged 106.5% YoY, contributing 27.68% to individual APE.
4. Profitability: PAT grew 8.27% (Rs.29,138 crore); VNB rose 9.08% (Rs.6,477 crore), margin up 50 bps to 17.1%.
5. Solvency & AUM: Solvency ratio improved to 2.02 (vs. 1.93 YoY); AUM grew 10.29% to Rs.54.78 lakh crore.
6. Cost Efficiency: Expense ratio reduced by 231 bps to 12.97%.
7. Product Launches: Introduced 38 IRDAI-compliant products post-October 2024.
8. Digital Progress: Agent-assisted ANANDA app saw 23.91% growth in policies.
9. Agency Strength: Agent count rose 3.33% to 14.19 lakh, contributing 95% of new premiums.
10. Women Empowerment: Launched Bima Sakhi Yojana, appointing 70,000+ women agents.

Key risks include managing surrender value regulations and interest rate hedging. Management remains committed to improving persistency, expanding non-par offerings, and leveraging digital initiatives for sustainable growth.

1. What factors contributed to the margin improvement despite bond yield changes and new surrender regulations?
Answer: Margin improvement stemmed from product revisions, premium rate adjustments, and revised ticket sizes/age bands to enhance persistency. Non-par product growth (27.68% of APE vs. 14.04% YoY) and commission realignment also aided margins. Hedging via FRA agreements began in January 2025.

2. Why did persistency decline despite initiatives, and how does hedging impact VNB margins?
Answer: Persistency dipped due to lower-ticket policies but is expected to improve with revised product designs. Hedging impacts EV sensitivity, not VNB margins directly, as it addresses future interest rate risks rather than current product pricing.

3. What steps are taken to address APE decline, and will EV be disclosed quarterly?
Answer: APE decline is temporary, with recovery expected via new product launches and agent training. EV remains disclosed semi-annually, with no plans for quarterly updates.

4. Were margin assumptions revised for new products, and what is the Fair Value Change Account balance?
Answer: Margin calculations factored in revised premiums and persistency expectations but excluded optimistic surrender assumptions. Fair Value Change Account: Policyholder"”Rs.7,06,449 crore; Shareholder"”Rs.-80.17 crore (Dec 2024).

5. Why did non-par margins drop to 44.3% (from 60%), and is par business being neglected?
Answer: Non-par margin decline reflects higher ULIP/annuity mix and lower rates. Par growth slowed as customers shifted to non-par guarantees. Agents focus on customer needs, not product type.

6. How will hedging costs affect EV, and can non-par sustain high growth?
Answer: Hedging costs impact EV sensitivity, not margins. Non-par growth will continue via innovative products (e.g., Jeevan Utsav), though triple-digit growth may ease as the base expands.

7. Why did BANCA policy sales fall 20%, and how are commission ratios trending?
Answer: BANCA sales dipped due to MFI sector stress and product changes but recovered in Dec 2024. Commissions depend on business mix (single-premium dominance); renewal commissions may rise as policies mature.