LIC Q3 profit surges Rs 6334 Cr
Less than 1% of LIC's total asset under management is at risk due to its investments in the Adani Group (AUM)
New Delhi : The Life Insurance Corporation (LIC) of India announced on February 9 that their net profit for the December quarter of the financial year 2022-23 was Rs 6,334.19 crore, a significant increase from the same period last year due to robust expansion.
For comparison, in the same period last year, the company made a net profit of Rs 234.91 crore. The net profit of the life insurer, however, has dropped significantly from the previous two quarters. During the third quarter of 2018, it posted a net profit of Rs 15,952.49 crore.
The net premium income for the world’s largest life insurer increased by 14.5%, from Rs 97,620 crore to Rs 1.11 lakh crore, compared to the same period in the previous year. New business premium, also known as the first-year premium, increased to Rs 9,724.71 crore in the March quarter from Rs 8,748.55 crore in the same period a year ago.
Measures of profitability, such as new business value and margin, were robust. The total value of new business for the nine months ending in December was Rs 5478 crore. The company did not provide a figure from the previous year to serve as a point of reference. The margin on net new business during the time period was 14.6%.
Management costs for the period totaled Rs 13799 crore, an increase of only 1.6% annually.
For the nine months ending in December, operating expenses accounted for 15.26% of revenue, up from 14.99% in the corresponding period a year earlier.
Continued optimism about growth
Mr. M. R. Kumar, chairman of LIC, expressed confidence in the company’s continued expansion in the coming quarters. In response to a question about how the Budget’s proposed tax changes might affect economic growth, Kumar said they wouldn’t.
Insurance payouts that exceed Rs 5 lakh in premium are proposed to be taxed by the government in the Union Budget. Kumar stated that the majority of LIC’s sales are for medium and small policies, and that the company only sold a small percentage of large policies (less than 1 percent). He also said the business was waiting for official word on how such policies would be taxed.
The government has also made it financially advantageous for Indians to switch to the new tax regime, from which they will receive no exemptions.
The allure of reducing tax liability through the purchase of insurance policies would diminish. Insuring one’s financial well-being is no longer being promoted by LIC as a tax-deductible service, according to Kumar.
“As of this year, we will no longer offer tax-related insurance policies for purchase. Those times have passed. Today, we provide goods and services based on customer demand, “saying it in his post-results press conference press conference interaction.
LIC reported an annualised premium equivalent of Rs 37,545 crore for the nine months ending in December. Sixty-three point eight percent of this came from one-on-one transactions, while the rest came from transactions involving multiple people.
According to Kumar, the final three months of the year typically account for 30–35% of the year’s total revenue. “The proportion from the previous quarter has been decreasing. Spreading it out over the course of a year is what is happening now. As of three years ago, we no longer offer tax-based insurance. A decade ago, 40% of annual sales occurred in March “As he put it.
Due to the annual investment deadline for tax purposes, the final quarter of the fiscal year typically sees robust business growth.
Concerns about Adani
Kumar said the insurer would discuss the firms’ situations with the Adani Group. We’ll be in touch with upper management to discuss the problems and possible solutions, he promised.
Kumar reaffirmed that less than 1% of LIC’s total asset under management is at risk due to its investments in the Adani Group (AUM). In FY2017, LIC’s AUM was Rs 44,34,000,000,000. Kumar went on to explain that this equates to about 4% of the company’s total equity investments as a result of the risk.
In January, short seller Hindenburg Research raised alarm over the corporate governance of the Adani Group, which led to a $66 billion loss in market value for the Adani Group’s listed firms as a whole. Since then, shares have risen as the company has made coupon payments on its offshore bonds and paid $1.1 billion to release pledged shares.