Life Insurance Corporation of India (LIC), is planning to enter the health insurance market and is exploring potential acquisitions to facilitate this expansion. This initiative comes after a proposal to introduce composite insurance companies.
This year, LIC proposed a record-breaking final dividend of Rs 6 per share for the fiscal year 2023–24, with the payout record date set for July 19. This marks the highest dividend payout in LIC’s history, doubling last year’s Rs 3 per share.
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According to a report by The Times of India, in February, a parliamentary panel recommended the creation of a composite insurance licence to reduce costs and ease the compliance burden for insurers. Currently, life insurance companies are restricted to offering only long-term health benefits. An amendment to the Insurance Act would be required to enable them to provide hospitalisation and indemnity coverage.
India’s insurance market remains significantly under-penetrated. By the end of the 2022-23 fiscal year, fewer than 23 million health insurance policies had been issued, covering 550 million individuals. Of these, nearly 300 million were under government-sponsored programs, and around 200 million were through group insurance.
Reportedly, the government and regulatory authorities are keen to expand health coverage, and LIC’s potential entry into the health insurance sector is expected to bolster this effort.
LIC Q4 Result
LIC posted a marginal 2 per cent increase in net profit at Rs 13,763 crore in the fourth quarter that ended March 2024 as the corporation made provisions for a wage hike.
The insurer had earned a profit of Rs 13,428 crore in the corresponding quarter a year earlier.
The total income of the insurer during the reporting quarter rose to Rs 2,50,923 crore from Rs 2,00,185 crore in the same period of the preceding fiscal, LIC said in a regulatory filing.
LIC’s income from first-year premium also improved to Rs 13,810 crore in the latest January-March quarter against Rs 12,811 crore in the same period of the preceding fiscal.
The income from renewal premiums in the reporting period rose to Rs 77,368 crore compared to Rs 76,009 crore a year ago.
During the entire financial year ended March 2024, the insurer earned a profit of Rs 40,676 crore as compared to Rs 36,397 crore in the previous fiscal.
The total premium income for the year ended March 2024 was Rs 4,75,070 crore as compared to Rs 4,74,005 crore in the year ended March 2023.
A total of 2,03,92,973 policies were sold in the individual segment in FY24 as compared to 2,04,28,937 policies sold in the previous fiscal.
The board recommended a final dividend of Rs 6 per share for 2023-24 subject to approval of shareholders, LIC Chairman Siddhartha Mohanty said.
Earlier, during the year an interim dividend of Rs 4 was declared and paid to shareholders of the corporation.
Therefore, he said, the total interim and recommended final dividend aggregates to Rs 10 per share.
In terms of market share measured by First Year Premium Income (FYPI) (as per IRDAI), LIC continues to be the market leader by market share in the Indian life insurance business with overall market share of 58.87 per cent.
“We have more than doubled our share of non-par business within our business. Now we intend to focus our strategic interventions to maximise our market share across categories. At the same time, our sharp focus on various parameters that create superior value for all stakeholders shall continue, as demonstrated,” Mohanty said.
There are key initiatives related to the distribution channel and digital transformation underway, he said, adding top-line growth trajectory will be back in focus during the current financial year.
Topline is expected to grow at double digits during the current financial year on the back of new product launches and agency force transformation projects.
The Value of New Business (VNB) was Rs 9,583 crore in FY24 as compared to Rs 9,156 crore in the year ended March 31st, 2023, registering a growth of 4.66 per cent.
The net VNB margin for the year ended March 2024 increased by 60 basis points to 16.80 per cent as compared to 16.20 per cent for the previous year.
The solvency ratio increased to 1.98 as against 1.87 on March 31, 2023.
The Assets Under Management (AUM) increased to Rs 51,21,887 crore as of March 31, 2024 as compared to Rs 43,97,205 crore at the end of previous fiscal, registering an increase of 16.48 per cent year on year.
The amount of bonus allocated to participating policyholders was Rs 52,955.87 crore for FY24 as against Rs 49,439.56 crore for the preceding financial year.
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