Q1 2027 Life Insurance Corp Of India Earnings Call
Speaker #1: Ladies and gentlemen, good evening and welcome to the LIC's Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.
Speaker #1: Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
Speaker #1: We have the Senior Management of LIC, led by Mr. R. Doraiswamy, CEO and MD on this call. I now hand the conference over to Mr. R.
Speaker #1: Doraiswamy, thank you, and over to you, sir.
Speaker #2: Thank you. Good evening, everyone. I'm R. Doraiswamy, Chief Executive Officer and Managing Director, LIC of India. I would like to welcome all of you to the Results and Performance Update call for the quarter-ended 30th June 2026.
Speaker #2: The results declared today have been uploaded along with the press release and investor presentation on our website as well as the websites of both the exchanges, BSE and NSE.
Speaker #2: Along with me on this call are three managing directors, Mr. Dinesh Panth, Mr. Ratnakar Patnaik, and Mr. R. Chander. Senior officials of the corporation present on this call are Mr. A.
Speaker #2: K. Srivastav, appointed actuary and executive director actuarial from the actuarial team; Mr. Satmanu Srivastav, Chief Financial Officer and Executive Director F&A; from the finance team, Mr. Arindam Dasgupta, Chief Investment Officer and Executive Director Investment Front Office; Mr. S.
Speaker #2: K. Srivastav, Executive Director Investment Back Office from the investment team; from the marketing team, we have Mr. Uthub Joseph, Executive Director Marketing and Product Development; Mr. Heman Bhuj, Executive Director Marketing in charge of bank assurance and alternate channels; and Mr. Seshagiri Der, Executive Director Pension and Group Schemes.
Speaker #2: Also, we have Ms. Vandana Sinna, Executive Director CRM Claims; Ms. Shobha Sulochana, Executive Director CRM Policy Servicing; and Mr. Sanjay Bajaj, Head Investor Relations on this call.
Speaker #2: Let me now present the key business operational and financial highlights for the quarter-ended 30th June 2026. Market share: our market share by first-year premium income for 3 months ending 30th June 2026 is 60.10% as per IRDI, as compared to 63.51% for the similar period ended 30th June 2025.
Speaker #2: We continue to maintain our leadership in the Indian life insurance market across both individual and group business segments. Now, if we bifurcate this overall market share of 60.10% into segment-wise share of individual and group business, we would have a market share of 38.89% in individual business and 70.90% in the group business for the current quarter ending 30th June 2026 on a comparable basis for the 3 months ending June 30th, 2025, the respective market share for individual and group business were 38.76% and 60.76.54% respectively.
Speaker #2: For the quarter-ended 30th June 2026, we have reported a total premium income of 1,27,250 crore rupees, as compared to total premium income of 1,19,200 crore for the quarter-ended 30th June 2025, registering a growth of 6.75% on a year-on-year basis.
Speaker #2: The individual new business premium income for quarter-ended 30th June 2026 was 14,351 crore rupees, as compared to 12,536 crore rupees for the corresponding period last year.
Speaker #2: Thereby registering a growth of 14.48% on a year-on-year basis. Further, the renewal premium income for the quarter-ended 30th June 2026 was 61,065 crore rupees, as compared to 58,938 crore rupees for the previous year first quarter.
Speaker #2: Thereby registering a growth of 3.61% on year-on-year basis. Therefore, for the quarter-ended 30th June 2026, our total premium income total individual premium income, including renewals, was 75,416 crore rupees, as compared to 71,474 crore rupees for the quarter-ended 30th June 2025, registering a growth of 5.52% on year-on-year basis.
Speaker #2: The group business total premium income for the quarter-ended 30th June 2026 was 51,834 crore rupees, comprising a new business premium of 51,229 crore rupees.
Speaker #2: In comparison, for the quarter-ended 30th June 2025, the group business total premium income was 47,726 crore rupees, and comprised a new business premium of 46,907 crore rupees.
Speaker #2: Therefore, for this quarter-ended 30th June 2026, the total group premium has increased by 8.61%, as compared to the similar period of previous year. Total annualized premium equivalent for the quarter-ended 30th June 2026 is 13,692 crore rupees, which comprises individual APE of 7,532 crore rupees and group APE of 6,160 crore rupees.
Speaker #2: Therefore, on an APE basis, the individual business accounts accounts for 55.01% and group business accounts for 44.99%. Further, of the individual APE, the per-business accounts for 5,085 crore rupees and the non-par amounts to 2,447 crore rupees.
Speaker #2: Therefore, our non-par share of individual APE is 32.49% and par is 67.51% for the quarter-ended 30th June 2026. As you may recall, for the quarter-ended 30th June 2025, our non-par share of total individual business, based on APE, stood at 30.34%.
Speaker #2: The profit after tax for the quarter-ended 30th June 2026 was 13,492 crore rupees, as compared to 10,986 crore rupees for the quarter-ended 30th June 2025, registering a growth of 22.81% on a year-on-year basis.
Speaker #2: The net VNB margin has improved by 750 basis points on a year-on-year basis from 15.4% for the quarter-ended 30th June 2025 to 22.9% for the first quarter of the current year.
Speaker #2: Further, the net VNB has registered a growth of 61.32% on a year-on-year basis from 1,944 crore rupees for the quarter-ended 30th June 2025 to 3,136 crore rupees for the quarter-ended 30th June 2026.
Speaker #2: The solvency ratio, as on 30th June 2026, improved to 2.42, as against 2.17 on 30th June 2025. Our assets under management has registered a growth of 4.1% on a year-on-year basis from 57,005,341.44 crore rupees as on 30th June 2025 to 59,039,384.39 crore rupees as on 30th June 2026.
Speaker #2: As on June 30th, 2026, we had a comprehensive beat of 59 products excluding Pradhan Mantri Jeevan Jyoti Bima Yojana, available for new business, including 37 exclusive individual products, 13 exclusive group products, and 1 common product for group and individual business, 7 individual riders, and 1 group rider.
Speaker #2: Since April 2026, 2 new products have been launched, namely LIC's new Jeevan Sathi single premium and LIC's new Jeevan Sathi limited premium, and 1 product has been withdrawn, namely LIC's Nav Jeevan Shree single premium.
Speaker #2: Which was a close-ended plan. During the quarter-ended 30th June 2026, we sold 31,002,281 new policies as compared to 30,039,709 new policies in the first quarter of the last year, registering an increase of 2.06% on a year-on-year basis.
Speaker #2: As on June 30th, 2026, the total number of agents was 14,045,692 as compared to 14,086,222 as on June 30th, 2025, registering a decrease of 2.73% year-on-year basis.
Speaker #2: The market share by the number of agents as on June 30th, 2026 stands at 43.69% as against 47.11% for 30th June 2025. On a number of policies sold basis, the agency foresold 30,055,909 policies during the quarter-ended 30th June 2026 as compared to 29,099,433 policies during the corresponding period last year.
Speaker #2: Further, 98.51% of our policies in the quarter-ended 30th June 2026 were sold by our agency force, when seen on a premium basis, 93.07% of new business premium came from our agency channel in the quarter-ended June 30th, 2026.
Speaker #2: Bank assurance and alternate channels including micro insurance collected new business premium income of 907.14 crore rupees for the quarter-ended 30th June 2026 as compared to 861.92 crore rupees for the quarter-ended June 30th, 2025, registering a growth of 5.25% on a year-on-year basis.
Speaker #2: The new business premium income collected through banks was 483.39 crore rupees for the quarter-ended June 30th, 2026, and for the corresponding period last year, it was 528.97 crore rupees.
Speaker #2: Thereby registering a decrease of 8.62% on a year-on-year basis. Further, the alternate channels collected new business premium of 423.75 crore rupees for the quarter-ended 30th June 2026 as compared to 332.94 crore rupees for the quarter-ended 30th June 2025, registering a significant growth of 27.27% on a year-on-year basis.
Speaker #2: Our bank assurance and alternate channels account for 6.34% of the individual new business premium for the quarter-ended 30th June 2026 as compared to 6.89% for the same period last year.
Speaker #2: For the quarter-ended 30th June 2026, the overall expense ratio was 10.63% as compared to 10.47% for the same period last year. Therefore, an increase of 16 basis points in our overall expense ratio on year-on-year basis.
Speaker #2: On premium basis, the persistency for the 13th, 25th, 37th, 49th, and 61st month up to the quarter-ended 30th June 2026 stands at 75.33%, 69.84%, 67.50%, 64.04%, and 61.12% respectively, as compared to 75.63%, 71.53%, 67.17%, 63.45%, and 63.85% respectively, up to the quarter-ended June 30th, 2025.
Speaker #2: On a number of policies basis, the persistency for 13th, 25th, 37th, 49th, and 61st month up to the quarter-ended 30th June 2026 stands at 66.45%, 58.07%, 56.14%, 51.27%, and 48.74% respectively, as compared to 64.35%, 60.15%, 54.23%, 50.79%, and 51.12% respectively, up to the quarter-ended 30th June 2025.
Speaker #2: In our digital initiative through the agent-assisted Ananda application, we have completed 4,36,925 policies during the quarter-ended 30th June 2026 as compared to 3,047,958 policies for the period ended 30th June 2025.
Speaker #2: Thereby, registering a growth of 25.56% on a year-on-year basis. There is a growth of 16.29% in the number of active agents in the application for 3 months ended 30th June 2026 on a year-on-year basis.
Speaker #2: The launch of MyLIC and Super Sale Sathi mobile applications in April 2026 marked a significant milestone in LIC's digital transformation journey. Introduced under LIC's digital innovation value enhancement initiative, DIVE, these applications are designed to enhance customer experience, improve operational efficiency, and strengthen digital accessibility.
Speaker #2: The MyLIC app provides one-stop shop for all insurance and servicing needs of the customers and provides a comprehensive digital servicing experience. The Super Sale Sathi app empowers LIC's agents and intermediaries with a comprehensive digital workspace by offering real-time access to customer information, commission details, business performance, renewal tracking, and intelligence sales insights.
Speaker #2: Together, these applications reduce paperwork, streamline service delivery, promote transparency, and enable faster technology-driven interactions between LIC, its customers, and its sales force. This initiative reflects LIC's commitment to becoming a modern customer-centric and digitally-enabled insurance organization.
Speaker #2: While supporting India's broadened mission, broader vision of digital financial inclusion. On the individual claims front, during the quarter-ended 30th June 2026, we have processed 37,027,812 number of claims which includes 35,35,876 claims due to maturity and survival benefits, on an amount of on the on an amount basis during the first quarter-ended 30th June 2026, the total maturity claims were 57,099 crore rupees and the total debt claims were 5,934 crore rupees.
Speaker #2: On a comparable basis for quarter-ended 30th June 2025, the maturity claims were 50,584 crore rupees and debt claims were 5,877 crore rupees. Therefore, the maturity claims are higher by 12.88% and the debt claims are higher by 0.97% on a year-on-year basis.
Speaker #2: On number of claims basis, the maturity claims have decreased by 10.94% and the debt claims have decreased by 3.09% on a year-on-year basis. As of June 2030 June 30th, 2026, a total of 2.87 lakh women have been designated as Bima Sakis successfully selling 4.52 lakh insurance policies and generating a new business premium income of 656.91 crore rupees.
Speaker #2: Our objective is to appoint at least one Bima Saki in every gram panchayat and we would like to inform that out of 2,44,876 gram panchayats in India, we have covered 62% gram panchayats by recruiting Bima Sakis in 1,51,620 gram panchayats up to 30th June 2026.
Speaker #2: Before concluding, I would like to highlight significant achievements during the first quarter of 2026-2027. New business premium income of individual business has grown by 14.48% year-on-year basis to 14,351 crore rupees for the quarter-ended June 30th, 2026.
Speaker #2: The profit after tax has grown by 22.81% to 13,492 crore rupees on a year-on-year basis. VNB has increased by 61.32% on a year-on-year basis for the quarter-ended 30th June 2026.
Speaker #2: VNB margin has increased by 750 basis points to 22.9% for the quarter-ended 30th June 2026. AUM has increased by increased to 59,39,384.39 lakh crores registering a growth of 4.10% on a year-on-year basis.
Speaker #2: The total APE has grown by 8.22% to 13,692 crore rupees on a year-on-year basis. Our non-far AP non-far share of individual APE has grown to 32.49% for the quarter-ended 30th June 2026 as compared to 30.34% in the same period for the previous year.
Speaker #2: The bank assurance and alternate channels registered a growth of 5.25% on a year-on-year basis to 907.14 crore rupees. Our solvency has increased from 2.17 last year at the end of first quarter to 2.42 for the quarter-ended 30th June 2026.
Speaker #2: Before I close, I would like to mention that recently the Government of India has sold 6.5% stake in LIC via an offer for sale which has been well received by the markets.
Speaker #2: With this 6.5% YFS, our public float rises to 10% and we are now compliant with the currently applicable minimum public shareholding norms. I want to welcome the new shareholders through the OFS into LIC's shareholder family and also thank the existing shareholders who have participated in the OFS for their continued faith in LIC.
Speaker #2: This year, on the 1st of September 2026, LIC shall complete 70 years of existence and we hope to bring many occasions of joy to our customers through innovative product launches and other initiatives.
Speaker #2: We sincerely thank all our stakeholders for their continued confidence in our strategy and its execution. I now hand over the call to the moderator, to begin the question and answer session.
Speaker #2: Thank you so much.
Speaker #1: Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on the touchstone telephone.
Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions.
Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from Swarna Mukherji from 361 Capital.
Speaker #1: Please go ahead.
Speaker #2: Hi, sir. Thank you for the opportunity and congratulations on a great set of numbers. so, sir, three questions from my side. first of all, if you could highlight, you know, what are the assumption changes, in the VNB walk that you have provided, you know, what are those assumption changes and, also the cost impact is this, GST exclusion led or anything else to read into that?
Speaker #2: that is one question. Second is, our ULIP, reduced basically year-on-year basis. Our ULIP, premium. is this a deliberate, decision or was it a function of the markets and we should see some recovery back in ULIP, in two queue or if you could highlight the trends of ULIP sales in two queue so far?
Speaker #2: That would be helpful. thirdly, sir, also wanted to understand, that, you know, what is the reason for the difference between the RWRP data in the IIDA monthly release and the individual AP that we have disclosed.
Speaker #2: If you could give some color on that so that we can understand, an estimate better, from the coming quarters. And, so these are my three primary questions.
Speaker #2: One, another small, thing wanted to I just noticed that our number of agents at the urban geographies, the absolute number has come up slightly.
Speaker #2: So is this a conscious choice of basically focusing primarily on the rural site? Yeah, these will be my questions, sir. Thanks.
Speaker #3: thank you, Swarna. I'll come to the assumption changes I'll ask a part actually to explain it further, after I reply to others. yes, there has been an impact of, the GST, exemption on the individual lines of life insurance business while the GST has gone, on the individual lines when the premium, the non-availability of input tax credit has had an impact on the overall expenses ratio and this, comparison with the corresponding, first quarter of last year when we had the ITC available, is something which has resulted in a 16 basis points increase.
Speaker #3: in the overall expense ratio, that's one of the reasons as you mentioned. ULIP premium reduction, is naturally a function of the, market scenario when confidence, in the market, gets affected due to the high volatility in the in the market functioning and naturally that's also one.
Speaker #3: I will put it the other way that we have been focusing on, the, marginal accretive, business lines and we have shown a good growth as you would have seen.
Speaker #3: in both non-far savings as well as non-far protection. yeah, ULIP, we do expect to come back when the markets, situation normalizes. And then, the difference in RWP and AP, yes, they are two they have two different components.
Speaker #3: APE does not take into account the actual first-year premium received subsequent to the new business completion. whereas it takes into account the new business premium received where the, premium is multiplied by the frequency to arrive at the annual premium equivalent.
Speaker #3: So APE and WRP cannot be equal cannot be equal. We have a substantial growth in the first-year renewal premium. the premium that comes out of the policies sold in the previous year, is a component.
Speaker #3: So there will be that that difference has to be accounted for. On the agents front, yes, the number of agents, reduction has been, because of a good number of, candidates who have taken up Bima Saki, without fully understanding the, the requirement.
Speaker #3: so some of them who had taken up just thinking that it's going to be a, a stipendary position without having a need to perform, after having realized that they had to perform had, had, had quit.
Speaker #3: So we have a focus on weeding out non-serious candidates from the agency folds and that is with something which will continue to happen. on the rural front, yes, we are able to register a good growth, where we have a, the thing on the urban front, we are trying to get back, to the number of agents as, and retain the numbers as efficiently as possible.
Speaker #3: a part actually can talk about, the assumption changes.
Speaker #2: Yeah, good afternoon. I am Ajay Kumar Srivastu, appointed actually in the executive director actuarial. so VNB margin as it, 30th June 2026 was, 15.4%, which as at, 30th June 2026 is 22.9%.
Speaker #2: the significant impact is of business mix where we have, shown a significant growth in individual non-far, savings particularly to the extent of 59.24% and the protection business, the growth is around 43.59%.
Speaker #2: so, this along with if, you recall in our earlier, earlier meetings, that we had, in the year 2024 come out with, products with a higher, ticket size.
Speaker #2: so those, also have impacted. the business mix and the business growth which I have just told you these two have contributed to, 6.5% positively to the VNB growth.
Speaker #2: as regards assumptions, we have shown, 2.9% of positive, growth on this which is, the combined impact of, RFR, during the year. and, the experience on persistency on both, individual and group has been aligned with the current experience.
Speaker #2: and also across the durations where we see, that the variations in persistency differ. So those, have been aligned and apart from that there are other deductions, such as, CRNHR, TVOG, etc.
Speaker #2: So, all, all these put together have contributed to 2.9% positively. If you look at the expense assumptions, expense assumptions along with the, impact of input tax credit, that has, contributed to a negative of minus 1.9%.
Speaker #2: So if you add to all those things, that works out to be, 22.9% as a end of, 30th June 2026. I hope I have answered.
Speaker #1: Yeah, thank you, sir, for those, detailed responses. If I may ask a couple of follow-ups. One was that, sir, this coming quarter if ULIP has come back, should we expect that, you know, non-far, run rate would, you know, continue in a similar step up like we have seen in one Q or is there a possibility that ULIP can cannibalize some of the volume, like, you know, which was absent this quarter?
Speaker #1: And, second is in, sir, in this operating assumption changes and the GST, impact, how much will continue over subsequent quarters and how much will be you know, normalized?
Speaker #1: If you could give some sense, that would be helpful. Thank you.
Speaker #3: see, the, ULIP coming back in Q2, is something which will depend on, the market, improvement also. That may not come cannibalize because see, we are, focusing see, the growth in total AP itself, was, slightly muted because of ULIP's not having been grow, showing the growth that we were showing in the previous quarter.
Speaker #3: So I don't think any cannibalization is going to happen. We would like to see that the non-far growth continues the way it has been growing from Q1 to Q4 over the previous years.
Speaker #3: That will continue, in the current year as well. but regarding so,
Speaker #2: the impact of expenses, I, said, there are two things of it. One, the input tax credit loss, which is also taken as a part of the expense and the impact is inclusive of that.
Speaker #2: the second, important thing is the increase in, in, in volume of business because of, you know, the removal of, GST. on, on, premium itself.
Speaker #2: So, we have seen, the traction now taking for, increase in the volumes. and, and the combined effect of, you know, the expense rationalization and this, the GST, input loss credit that, that, has impacted, minus 2%, with regard to assumptions.
Speaker #1: Right, sir. So would we think that this minus 2 will continue for, say, next one, two quarters? Or would we, would it, would it come off or normalize?
Speaker #3: So once the assumption change has been incorporated, I don't think it should have much of an impact in the subsequent quarters. Of course, when you compare quarter to quarter also, last year, quarter three, this impact has already, started having its, the change has already started having its impact.
Speaker #3: So if at all it's a comparison between current year and last year, Q1 and Q2 will be compared with no GST, ITC for the current year vis-à-vis ITC available last year.
Speaker #3: That will be for Q1 and Q2. Q1 is already over.
Speaker #1: Understood, sir. Understood. Very clear. Thank you so much and all the best for, FY27. Thank you.
Speaker #3: Thank you very much.
Speaker #4: Thank you. The next question is from Supratim who's an individual investor. Please go ahead.
Speaker #2: Okay. hi everyone. Thanks for the opportunity. So my, you know, first question is again, you know, on the VNB walk that you have given.
Speaker #2: Just wanted to understand that, you know, the mix improvement and, you know, the impact from mix improvement that we are seeing, is the in you know, the individual, or, you know, the products that the individual level also seeing an increase in margin because of the yield movement, is there a positive impact from, you know, the product level margins because of that?
Speaker #2: That's one. Secondly, you know, on the 290 basis point, you know, assumption, in positive impact that you called out and you said that, you know, RFR and persistency has contributed to that.
Speaker #2: Just wanted to understand what proportion would be RFR and persistency and, you know, is persistency a positive impact from, you know, just to clarify that.
Speaker #2: So that's the second, you know, then moving to the unwind part, just wanted to understand what is the, you know, equity return and the, debt return that you are building, you know, in unwind this year for, for this year.
Speaker #2: And what proportion of the unwind is typically related to equity and debt if, if you could clarify that as well. That would be helpful.
Speaker #2: Lastly, you know, on the IDBI stake, just wanted to understand where does this IDBI stake really sit? Does it sit in the policy holders accounts or the shareholders account?
Speaker #2: Yeah, those are my four questions. Thank you.
Speaker #3: Yeah, I'll start on the IDBI stake. It has already been clarified, quite a number of times that LIC had a unified fund, before, the IPO.
Speaker #3: And, IDBI investment was before that and hence, it continues to be in policy holders funds, for the, awaiting the stake sale. So that's, that is as of things as it stands today.
Speaker #3: VNB walk, I think, again, I request actually to take it further.
Speaker #2: Yeah. So with regard to the margins, as you said in far business and, otherwise non-far business, so both have, contributed positively. the, contribution is more positive with regard to, individual non-far, business, particularly, individual non-far savings.
Speaker #2: And, the term assurance, with regard to, far also, it is positive, but, lower than that. the group line of business also has contributed positively to the VNB margin.
Speaker #2: that's with regard to, you know, the lines of business. on assumptions, RFR, the impact if I can, separately give it to you, is, is a positive contribution.
Speaker #2: to the extent of, 5% plus, in case of withdrawal, because the withdrawal experience in different places, have been, corrected in, in the assumptions, the impact is, negative to that extent.
Speaker #2: and, and, there are, interactions in, in, in, assumptions which we take in the direction which we take. so, combined effect of all these things have been shown, in one place, which is, 2.9% positive.
Speaker #1: And unwind?
Speaker #5: Unwind.
Speaker #1: sorry.
Speaker #2: On unwind, unwind, there was, you know, a question on the unwind bit as well if you could clarify that.
Speaker #5: As well, Saturday, truly around closing the equity value. However, the unwind rate will be, based on the assumptions that we expect to have, around 31st March figure.
Speaker #5: So we it will be around half yearly basis. And while we do so, the analytical movement is however on an annual basis.
Speaker #1: Okay. Okay.
Speaker #2: And, you know, just one, you know, clarification, sir.
Speaker #5: I think today at the same level as last year.
Speaker #1: Okay.
Speaker #2: just.
Speaker #6: Yeah, they also here.
Speaker #2: Yeah, yeah.
Speaker #3: So if you look at March, March 2026, IV, the unwind which was given at that time in the IV walk, was 74,748 crores, that's what it was, provided at that time.
Speaker #3: now, because, there is no, separate calculation of IV, at the end of, this quarter, and therefore, no numbers have been provided at this stage.
Speaker #1: Okay. Okay.
Speaker #2: And, so just one clarification on the far non-far and, you know, group, you said has contributed positively. So that should be taken as, you know, the all of the products have seen an improvement in margins, right, in the product level.
Speaker #2: Just wanted to clarify that I get this correctly.
Speaker #3: Yes, that's correct.
Speaker #2: Okay. Thank you.
Speaker #4: Thank you. The next question is from Mana Sagarwar from Sanford Bernstein. Please go ahead.
Speaker #6: Hi. Am I audible?
Speaker #3: Yeah, please go ahead.
Speaker #6: Thank you for the opportunity. I actually had one request, and one question. The request is, this time we've seen a big gap in terms of the rated premium and the AP.
Speaker #6: another insurer also has this, and they report monthly AP whenever LI council numbers come. I think this will give investors confidence in monthly trajectory.
Speaker #6: So that is the request. The question is essentially, is the Q3, Q4 growth was good on a weekday? Q1 AP growth, and I'm restricting myself to AP, the VNB growth is good.
Speaker #6: The AP growth is soft, in some shape or form, at least on a not so high base. Second half, your base also becomes unfavorable in both AP and margin expansion terms.
Speaker #6: So how should one think about A, just cross cycle, medium term, three years, let's say? What is the aspiration for growth on top line, bottom line, new sales?
Speaker #3: APE and WRP as I explained, they take a slightly different component into place. APE does not take into account the renewal premium or the subsequent premiums after the policy gets completed during the first year.
Speaker #3: Whereas the WRP takes actually what has been received. So if a monthly premium is taken as at the beginning, only one month premium is taken into credit, and, in AP it gets multiplied by 12.
Speaker #3: So last year, we had, last few quarters, we have been slowly shifting our focus and a contribution from non-single premium or regular premium had increased in the last year.
Speaker #3: Thereby, the APE growth was in compared to the previous year was high, but this year we are comparing with a similar situation last year.
Speaker #3: So the current first quarter APE growth has not been that high, though WRP has been good because we have got a very good, first year renewal premium also coming in.
Speaker #3: We expect that this will get, more pronounced than this, the growth in APE will also increase for the subsequent quarters, as our focus on new business also increases as the year passes on.
Speaker #3: I, I, I think that is something which we look at. yes, we are request we'll get it, we'll get, we'll get it examined and how best we can do that, we'll see.
Speaker #3: as I, as I go forward, I think there should not be much of a impact on the profitability because we are focusing continuously on, value of creating, policies in a bigger way, where you have seen a good growth, in both, non-far savings as well as non-far, protection.
Speaker #3: that focus will continue. So we expect the margins to improve. Of course, the, the component from the RFR is not in our hands. Other components will be continuously under our focus.
Speaker #3: We'll try to improve our efficiency in all the areas that we can do.
Speaker #1: Got it. Thank you, sir.
Speaker #3: Thank you.
Speaker #4: Thank you. The next question is from Gaurav Jain from ICSF. Credential Mutual Fund. Please go ahead.
Speaker #6: I said thank you for the opportunity, and, congratulations on a great set of numbers. just one question on, individual protection, sir. We are seeing, good growth continuing, and, this quarter again it is 40% plus kind of year-on-year growth, that we are seeing.
Speaker #6: If you can help us understand what channels are majorly contributing it, and while it is on a small base, but what steps have we taken and, do we expect it to continue growing further?
Speaker #6: And something of that will be helpful, sir.
Speaker #3: thank you, Gaurav. Actually, we, we are a very strong savings player. Our, contribution from savings used to be very high, followed by annuities. And then we started, improving our performance in ULIPS.
Speaker #3: The, the one bucket which, we were not very strong was, as you said, the protection. So we wanted to have that also added. And so we are seeing a good growth, in, in the first quarter this year, over the corresponding period last year.
Speaker #3: The channel which is contributing, no doubt, because in terms of number of policies, biggest contributors are individual agents and individual agents have contributed substantially in this.
Speaker #3: whereas in bank assurance, the focus is much more, on annuity sales and, ULIPS, there again, we will be trying to get something from the, the, protection bucket as well.
Speaker #3: we can confidently hope to increase, the this, this increase in, protection, performance to continue for some more quarters, certainly, because our focus is to increase protection also in the as part of our, business line.
Speaker #6: That was very helpful, sir. Thank you. And, all the best, sir.
Speaker #3: Thank you, Gaurav.
Speaker #4: Thank you. The next question is from Prayesh Jain from Motila Loswal Financial Services. Please go ahead.
Speaker #6: And yeah, hi, sir. since I didn't understand, again, on the consumption changes, operating assumptions, in your in your March 26 also there was a negative hit.
Speaker #6: So it is still that impact that is going on or in one QFI 27 also there are some assumption changes which is impacting, impacting this?
Speaker #3: So, yeah, in, in the month of March, if you look at the, impact of operating assumption and changes in GST was, that was provided was minus 2.8%.
Speaker #3: Now we have shown it separately. Yeah. Now we have shown it separately. The impact of assumption, which constitutes all three, RFR, withdrawals, and other, deductions like, CRNHR, TVOG, and fictional costs, etc., so they are put together, they are contributing 2.9%.
Speaker #3: But as I said, impact of expense, that has come down to minus, 1.9%, which includes, the loss of, the impact of loss of input tax, credit.
Speaker #6: So basically, this should kind of keep reducing, with time, and probably second half of FI 27, this should not, a bulk of it should not be there largely because first of all, GST input tax credit should not have any implication.
Speaker #6: And, the unless there is some more assumption changes that we do towards the end of FI 27, this should kind of reduce going ahead.
Speaker #3: As I, explained earlier, sir, the impact, is two ways. One, the input tax credit, which is taken as the expense, and, there is again the positive impact of growth in the volume itself.
Speaker #3: So you would appreciate that once the volume grows, and, it exceeds the growth in the expenses put together, the other expenses and, the, the cost, of, input tax credit, so the whole policy expenses, the way it goes into, assumptions, will, definitely reduce.
Speaker #3: once the volume also increases.
Speaker #6: Got that. Sir, and if I look at your P&L and, you know, last part of our profits or surplus, comes from the non-far book, in spite of the fact that we have such a relatively smaller non-far book versus the par book.
Speaker #6: still the surplus comes in from the, from the non-far book. Maximum of the surplus, last part of the surplus. What explains that?
Speaker #3: No, see, the non-far business valuation, happens on a quarter-to-quarter basis. Whereas the surplus emanating from par business is done only once in a year when it comes to transferring it to the shareholders.
Speaker #3: Ultimately, 90-10 share has to happen. So that happens only when the valuation gets completed at the end of the year. So you will see the you will see the impact of par business surplus only in the quarter four.
Speaker #3: First three quarters will have only, the non-far surplus coming in.
Speaker #6: So, but even in FI 26, if you look at the numbers, the large part of the surplus was from non-far book.
Speaker #3: See, as the, nature of business itself, par 90% of the surplus goes to the policyholders. Only only 10% gets transferred. So, the, the idea of a directional change in the, proportion of business between par and non-far, is started only after we started getting into, we, we went into by a public limit, a public, organization after the IPO.
Speaker #3: So this will contribute. And also, we have, the, funds earmarked for available solvency margin, which is ringfenced and kept. The accretions on that also contributes to the improvement to the shareholders' profits.
Speaker #6: Okay. What would be that number today?
Speaker #3: the may the ASM funds ringfenced is at 1,80,000 crores, 1,86,000 crores.
Speaker #6: That is the 1,80,000 crore will be the book value, right?
Speaker #3: Exactly. Yeah, book value. Yeah. It's the book value.
Speaker #6: What would be the market value of it?
Speaker #3: It varies. It varies. It fluctuates.
Speaker #6: Okay. Last question. for the full year, what would be your outlook for the VNB margin? You know, we have given a 21.2 we have given such a strong margin in this quarter.
Speaker #6: What should we think about the full year VNB margin for, for LIC?
Speaker #3: We don't normally give a guidance, but we expect it to improve over the next few quarters as well. Of course, keeping, the, the, one uncertain factor of the RFR.
Speaker #3: Otherwise, the bar the margins should keep improving as we continue to focus on improved efficiency in terms of operations. Which will result in overall expense ratio coming down.
Speaker #3: And also, the, the business coming out of value accretive, lines of business improving in the, in the, in the subsequent quarters.
Speaker #6: So from this Q1 base, also, you expect the margins to improve further.
Speaker #3: Yes. Yes, yes.
Speaker #6: Okay. Thank you so much. Wish you all the best.
Speaker #3: Thank you very much.
Speaker #1: Thank you. The next question is from Harshil from AMSEC. Please go ahead.
Speaker #7: Hi, sir. Thank you for the opportunity. Yes, sir. One question on the margins. We have seen a 650 weeks improvement due to product mix change.
Speaker #7: And that what we are doing is due to better product mix and improvement product margins. If you can just, you know, share how much is due to better product mix and how much is due to improvement product margins, that was one.
Speaker #7: And secondly, we have seen a sharp improvement in non-far sales in the same category. So if you can highlight which are the products which are driving that growth.
Speaker #7: And, which are the initiatives from our end which are improving product margins across segments, like ULIP, par, intelligent non-far segment, par, and group, which are the key initiatives, you know, which are driving product margin improvement across the categories.
Speaker #7: Thanks.
Speaker #3: So we have, if you see post IPO, we have, focused, and we have come out with, the non-far products, and particularly in all, segments, we have, increased and we have shown the growth.
Speaker #3: as we, had informed you earlier that, in, in, we are very, strong in, par business. And, we would like to continue, to grow on, par side.
Speaker #3: but we also, want to outgrow on, non-far side. where, the margins are higher than, par itself. so, the product, introduction, modification, and withdrawal, etc., they are all, the natural, phenomena for any insurance company based on, user needs of the customers.
Speaker #3: And, you know, the experience, which the insurers have. so the product, you know, the mix, will keep on, changing based on the needs of the customers.
Speaker #3: And the way they are, purchased and, going forward, that will define how the margins, they come up, for the corporation.
Speaker #7: Anything in terms of, how much you would be able to mix and, how much you would improve product margins? Can you break it up as 650 weeks?
Speaker #6: Product mix?
Speaker #3: see, what I can tell you, broadly, lines of business, we were talking about. so, if you look at the proportion of, par business, which is 37.1%, which gives, VNB margin of 19.4%, the, proportion of, non-far, individual is, 1,678 crores.
Speaker #3: which gives, margin of, 49.3%. and the group business is the third group, which is, which is, 45% on APE. which gives, VNB margin of 29.4%.
Speaker #6: So just to make the last part of, what was the group margin you said?
Speaker #3: 29.4% for 45% APE. This is on the proportion. I'm talking about the proportion of APE and the proportion of VNB margin.
Speaker #7: Thanks, sir. Thanks. And all the best.
Speaker #1: Thank you. The next question is from Nishant from Kotak. Please go ahead.
Speaker #6: Sorry, just a clarification. you know, the data points that you shared right now, 19.5 sorry, 19.4 for par, 49.3 for non-far, and 29.4 for group, these are this is essentially the segmental VNB margin.
Speaker #3: So this is the proportion of VNB coming from different, segments.
Speaker #6: okay. Got it. Got it. Thanks for this clarification. you know, just curious, you know, when you when you mentioned that, RFR and persistency both, you know, kind of, are reflected in the assumption change, you know, did we say that persistency impact is negative and RFR is, you know, higher to the extent of 5%?
Speaker #3: So that's what you said. Okay. This is, based on the experience on both, individual side and, the group side. group side, the persistency, has contributed to the, to, negatively.
Speaker #3: And, the individual side also, for various durations, which is positive. Some for some durations, this is neg. So put together, the persistency is marginally neg negative.
Speaker #3: And the impact of, RFR is positive, which is something which is, not, something which we fixed as an assumption, but it is something, which is already there to be used by everybody else.
Speaker #6: got it. got it. and just one last one is, you know, on the bank assurance side, there seems to be some weakness. If you could comment on that.
Speaker #6: I think you're doing quite well today. Maybe one or two quarters back.
Speaker #3: I mean, we continue to do, focus more on that. In the first quarter, we did not we had not finalized a few, marketing plans of some of our bank partners.
Speaker #3: So naturally, the starting was a bit delayed. we expect it to be covered up in the subsequent quarters. We will be doing much better than what we did last year.
Speaker #6: Got it. Thank you very much and all the best.
Speaker #3: Thank you, sir. Thank you very much.
Speaker #1: Thank you. The next question is from Srihari Venugopalan from a vendor spark. Please go ahead.
Speaker #6: can you hear me?
Speaker #3: Yeah, Srihari.
Speaker #6: Yeah. So just to understand the VNB box, sorry for pushing on it again. just so that it's clear, in our sense, you are saying that the impact of assumption is positive to 90 bits, of which positive economic variance or positive RFR is 500 bits.
Speaker #6: The remaining negative portion is largely on persistency and mortality. and, the impact of expenses is 190 bits negative. It's both, GST, ITC, as well as, other expenses.
Speaker #6: The total expense ratio is slightly gone up. is that the right way to understand it?
Speaker #3: Yeah, that's right. the, the I as you understood right, but, it's, it's on the assumption change, the assumptions getting aligned to some experience. of the last two quarters.
Speaker #6: Okay. Okay. So, okay. This is a permanent assumption change. It's not an operating variance, basically, in that sense. Negative operating variance. the negative portion in terms, within that 90 bits positive.
Speaker #3: If, if, if it's not, something which, see, that's, that's if you are right, if, if, if you look at the IEV walk, then all those, operating variances and, you know, the numbers would be given in details.
Speaker #3: But, this is the VNB walk, where, what we have shown is the impact of, changes in assumption.
Speaker #6: Got it, sir. And this, impact of volume, because GST is obviously resultant in incrementing volume, that positive, that is noted off in the impact of expenses.
Speaker #3: So as I explained earlier, that, the, loss of, input tax credit, it forms an, expense. And it gets added to, the operating expenses. And, once the volume goes up, then, that has an, sort of impact on the portfolio's expenses.
Speaker #3: So as long as the volume is likely to go up because of, the positive impact of GST, removal from premium, that's, going to have impact on the police expenses going forward.
Speaker #6: Thank you, sir. Yeah, that's it from my side. That's clear.
Speaker #1: Thank you. Next question. Is from Mohit Mangal from Centrum. Please go ahead.
Speaker #6: Yeah, yeah, sir. Good evening, and thanks for the opportunity. my first question is towards the solvency ratio. So I, I think, maybe I have kind of maintained, you know, higher solvency margins, solvency ratio, basically.
Speaker #6: And, so, so should we expect protection business to, you know, increase significantly or, or do you think, you know, that, that higher solvency ratio would, would be our strategy going forward?
Speaker #3: So it's not a strategy as such. One, this is pre-dividend distribution. the dividend, once it is paid, it will take away some, some part of the, solvency.
Speaker #3: But of course, as we get, additional, profits getting added to the, shareholder's funds, there can be a, slightly higher risking also. Now, this still support increase in protection business or the increase in liability that we can underwrite.
Speaker #3: That's no doubt, po-poss a factor that is, kept in mind. But we'll be also looking at the regulatory changes before we finally take a call where, we should have, the solvency taken forward too.
Speaker #3: But as of now, the, this is 2.35, 2.42, if you take away the, amount of, dividend that was paid subsequent to this quarter, it will come down to 2.32.
Speaker #3: we would like to see how the, changes, makes the capital requirement fit, as well as the growth in, protection and other business. And that also can be supported.
Speaker #3: We'll take a call as we go forward.
Speaker #6: Right. That's clear. so my second question is basically, you know, I was just looking at your number of policies sold through, bank assurance and alternate channels.
Speaker #6: So that increased by 16.3%. but if I look at individual NBP through these channels, grew by only 5.3%. so, so, should we kind of conclude that, you know, that growth, is being driven by, lower ticket size policies or, or there are any other factors affecting the premium growth?
Speaker #3: The growth is not being impacted by the lower ticket policy. Yes, if you can say the lack of availability of low ticket size policy, because of our revision of, the ticket size, to, meet the, the changes brought in by the master circular, did affect because, the minimum sum assured has been increased from 1 lakh to 2 lakh.
Speaker #3: so the, the low ticket size policies have come down, no doubt. but these have helped in increasing the margins as well. But it will take a bit of time, for the market to get adjusted.
Speaker #3: and the show, and, bring back the growth in number of policies.
Speaker #6: All right. No, so, so my doubt was that, you know, that your policies have grown by a higher amount in these channels, but your individual NBP in these channels have grown by a lower amount.
Speaker #6: So, the what, what's the disconnect over there?
Speaker #3: good evening. This is Heman Bujar, executive director of Bank Assurance. Recently, if you see, in fact, out of the two lines of business which constructs the Bank Assurance, it is Bank Pathay which have, in fact, faced some sort of pressure in terms of delivery.
Speaker #3: This is precisely because of the West Asia conflict, which has, affected the remittance side. And some major contributor for us being, annuity and ULIPS.
Speaker #3: Both got impacted because of the remittance. The annuity side got affected and because of the market upheaval, the ULIPS side also got affected. Which precisely took away some sheen out of, in fact, the bank-grown business.
Speaker #3: But as CEO, sir, I rightly pointed out, we have, we are trying to bounce back. Things are in place. And going forward, I think, you will see a balanced kind of a growth and a very robust kind of performance both in terms of number of sale as well as in terms of premium and that will be compared.
Speaker #6: All right. This is very clear. Thanks, and wish you all the best.
Speaker #1: Thank you. The next question is from Shobhit Sharma from Elara Securities. Please go ahead.
Speaker #6: Yeah, hi, sir. Thanks for the opportunity. So I have, two questions. so firstly is on the yield curve-related impact which you have classified. So since this is a meaningful one which has actually bloated your margins and it's, it's likely unsustainable because the current yield curve is significantly very high.
Speaker #6: And since we will continue to grow our nonpar guaranteed book faster than the overall, APE, so, what should be our sustainable VNB margins? on an on an overall basis, if we if we want to talk, think about it.
Speaker #6: And secondly, sir, if we look at ULIP, if the growth picks up in that segment, so should we expect our APE growth to be back into double digits?
Speaker #6: Because your ULIP, APE, has a significant proportion coming in from the monthly mode. And, sir, lastly, your renewal commission on a YOY basis has declined.
Speaker #6: Is there any particular reason for that?
Speaker #3: No, actually, if you look at, the, the thing, ULIP coming back in a bigger numbers certainly can help in our APE growth. Even otherwise, we are looking at increasing our APE growth by, the other product lines as well.
Speaker #3: That certainly happened. the commission year-on-year growth has been a matter of, the amount of premium collected. and, and out of which how much is through, agents and how much is through agents who are no-no longer in the books.
Speaker #3: not eligible to renewal commission. it has nothing to do with, any other thing. and in terms of, VNB margin, we expect the margin to grow something more than where, where we currently are.
Speaker #3: And settle something around the industry average.
Speaker #6: Okay. So, sir, so since last time you mentioned you are targeting mid-20s kind of VNB margin, so should we expect we are on track to, to achieve, those kind of numbers by end of the year?
Speaker #3: Yes, sir. Yes, we are, we are working towards that.
Speaker #6: Okay, sir. So and last question I have is on your average ticket size. We have seen significant jump onto that, during the quarter. So, we'll, we'll be able to sustain that.
Speaker #6: And is this permanent driven by the growth we have seen on the nonpar side and the slowdown on the monthly business side?
Speaker #3: No, no, no. Nonpar is also on the monthly business side. It's, it's both. The par and nonpar does not make a difference in terms of the frequency of premium payment.
Speaker #3: It depends upon the product that gets sold. The annuities, when we sell in big numbers, they come as a single premium. So that is one.
Speaker #3: other, other two immediate annuities, we, we get immediate and, the deferred annuity, both we get on a single premium front. When the annuities grow, the ticket size will grow.
Speaker #3: That is one. Two, on the regular premium side also, because we have increased the minimum ticket of, our major selling policies from 1 lakh to 2 lakh, that has already resulted in uptake in the average ticket size.
Speaker #3: that will continue to be it is quite sustainable, not a problem.
Speaker #6: Sir, this revision in the minimum support sum assured we have done in this current financial year? Because lastly we had done that during the suppose the surrender value guidelines changed.
Speaker #3: Yes, October 24, yes. The proportion of policies sold at higher sum assureds have increased, yeah.
Speaker #6: Okay, sir. got it, sir. That's it from my side. Thank you and all the best.
Speaker #3: Thank you, Maurice.
Speaker #1: Thank you very much. A reminder to participants that you may press star and one to join the question queue. Participants who wish to ask questions may press star and one.
Speaker #1: Well, that was the last question. I would now like to hand the conference over to Mr. Doraiswamy for closing comments.
Speaker #5: thanks everyone for joining our late evening conference call today. As we wrap up, the review of our three-month performance for Q1 FY27, I want to sincerely thank you for your continued trust and partnership with LIC of India.
Speaker #5: Your questions and inputs reflect a strong understanding of our business and strategy. I hope we have been able to address them clearly. If you require any further assistance or wish to continue the dialogue, please feel free to reach out to our investor relations team anytime.
Speaker #5: Wishing you all a pleasant evening and thank you once again and a good night.
Speaker #1: Thank you very much. On behalf of LIC, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.
