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Life Insurance Corporation (LIC), India's largest life insurer, has announced a significant upswing in its financial performance for the fourth quarter of fiscal year 2025. The standalone net profit surged by an impressive 38% year-on-year, reaching Rs 19,012.79 crore. This substantial growth was primarily attributed to a combination of strategic cost management measures, including reduced commission payouts to agents and a notable decline in overall management expenses. However, despite this positive bottom-line performance, LIC experienced a 3% year-on-year decrease in its net premium income, totaling Rs 1.48 lakh crore during the same quarter. This decline in premium income was primarily driven by a 14% drop in group insurance premium, which amounted to Rs 49,965 crore, compared to Rs 58,245 crore in the corresponding quarter of the previous fiscal year. While the group insurance segment faced headwinds, the total individual premium (including both new business and renewal premiums) exhibited a positive growth trajectory, increasing by 4% to Rs 97,620 crore. This divergence in performance between the group and individual segments highlights the evolving dynamics of the Indian insurance market and LIC's strategic focus on diversifying its revenue streams.
Siddhartha Mohanty, the chairman of LIC, addressed the decline in premium income, attributing it to the implementation of new surrender value guidelines by the Insurance Regulatory and Development Authority of India (Irdai). These new regulations, which came into effect in October 2024, mandate insurers to offer higher payouts to policyholders surrendering their existing policies before maturity. Mohanty acknowledged that the implementation of these guidelines presented challenges during the third and fourth quarters of fiscal year 2025, as LIC's agency force adapted to the new rules. He noted that the revised surrender value norms had a direct impact on first-year premium collections, as policyholders became more aware of the potential benefits of surrendering their existing policies. However, Mohanty expressed optimism about the future, stating that LIC had begun to see positive growth in premium collections from March 2025 onwards, suggesting that the agency force was successfully adapting to the new regulatory environment and effectively communicating the value proposition of LIC's products to potential customers. The company's ability to navigate these regulatory changes and maintain its market leadership position will be crucial for its long-term success.
Beyond the challenges posed by the new surrender value norms, LIC's profitability in the March quarter was further bolstered by a significant 33% decline in management expenses, which fell to Rs 16,495.08 crore. This reduction in expenses reflects LIC's commitment to operational efficiency and its ability to leverage its scale to optimize costs. In addition, net commission expenditure also decreased to Rs 7,711.47 crore from Rs 8,245.71 crore in the same period last year, indicating a more efficient and targeted approach to agent compensation. For the full fiscal year 2025, LIC's net interest income rose by 2.75% to Rs 4.88 lakh crore. Within this, individual premium income increased by 5% to Rs 3.19 lakh crore, while group business premium fell by 1.28% to Rs 1.69 lakh crore. The company's profit after tax for the full fiscal year stood at Rs 48,151 crore, up from Rs 40,676 crore in the previous year, demonstrating its strong overall financial performance despite the challenges in the group insurance segment.
On an annualized premium equivalent (APE) basis, LIC's total premium for fiscal year 2025 was Rs 56,828 crore. The individual business contributed 67.25% (Rs 38,218 crore) to this total, while the group business accounted for the remaining 32.75% (Rs 18,610 crore). This breakdown highlights the importance of the individual business segment to LIC's overall premium income and its continued focus on expanding its reach in this market. Looking ahead, Mohanty announced that LIC's proposed entry into the health insurance space through the acquisition of a controlling stake in a standalone health insurer is at an "advanced stage." He stated that the discussions are in the final stage and that the company will seek board approval for the acquisition within the next two to three months. This strategic move into the health insurance market represents a significant diversification opportunity for LIC, allowing it to tap into the growing demand for health insurance products in India and further expand its customer base. The company's entry into the health insurance space is expected to create synergies with its existing life insurance business and provide customers with a more comprehensive suite of financial protection products.
While LIC reported strong financial results, the number of new policies sold fell by 13% to 17.78 million in fiscal year 2025, compared to 20.39 million in the previous year. The management attributed this decline to an increase in the minimum sum assured on some of its key products following the implementation of the new surrender value norms. The higher minimum sum assured may have made these policies less affordable for some customers, leading to a decrease in the number of new policies sold. The management acknowledged that this "tapering effect" could persist until September 2025. Despite the decline in new policies sold, LIC retained its position as the market leader in terms of First Year Premium Income, with a 57.05% overall market share in the Indian life insurance sector. For the year ended March 2025, the corporation held a 37.46% share in the individual business and a 71.19% share in the group business, demonstrating its continued dominance in both segments of the market. According to the management, LIC invested Rs 80,000 crore in corporate bonds in fiscal year 2025. The company is also exploring investments in bond forwards, with discussions underway to finalize approvals and put in place the necessary logistics. The board of directors has recommended a final dividend of Rs 12 per share for fiscal year 2025, subject to shareholder approval. LIC shares closed flat at Rs 870.70 on the NSE on Tuesday, reflecting the market's mixed reaction to the company's financial results and strategic initiatives.