LIC shares shrug off fall in premium, trade 4% higher on surge in Q1 profit

LIC shares rose 4% on August 11 after the insurer reported multiple increases in net profit for the quarter to June 2023 of INR 954.3 billion, up from INR 682 million in the same period last year. did. Investors calmly accepted the decline in premiums and the number of policies sold.
At 9:20 am, LIC was trading at Rs 666.65 on the NSE, up 3.9% from the previous close. At the time, 1.4 million shares were traded, just above the 20-day moving average.
India’s largest life insurer saw profit growth while total annual premium equivalent (APE) fell 7% year-on-year to 9.532 billion. Participatory policy APE fell by 10.2%, while non-parity policy APE increased by 21%. Group insurance, on the other hand, fell 6.2%.
Participating products guarantee a minimum return and policyholders share the profit of the insurance. The company reported that a total of 3,216,301 policies were sold for the quarter ended June 30, 2023 in its Singles segment, compared with 3,681,764 policies in the previous year.
LIC has been aggressively promoting non-participating products with high margins over the last few years. A nonpar is a guaranteed product in which payment is fully guaranteed at the inception of the policy and not guaranteed to the policyholder. Distribute the benefits of the policy.
The increase in non-par products also led to a change in accounting policy in September 2022, and LIC posted multiple earnings increases in the past two quarters.
“The company changed its accounting policy in September 2022 regarding the transfer of amounts (after tax) related to the increase in available solvency margin from the accounts of nonparticipating policyholders to the accounts of shareholders,” the company said. said.
Therefore, the profit for the quarter ending June 2023 cannot be compared with the corresponding figures for the quarter ending June 2022, as LIC transferred a total of Rs 2,724 billion in fiscal year 2023. According to the company, premium-based retention rates for the quarter ended June were 78.37% and 62.73% for the 13th and 61st months, respectively, an improvement of 52 basis points and 30 basis points, respectively.
Persistence is a measure of the number of valid (non-expired) policies compared to issued policies within a specific period of time.
LIC went public on the stock exchange in May 2022, but has fallen more than 20% since listing. The issue price of LIC is 949 rupees.