LIC Q4 Results: How the Insurance Giant Jumped 5 Times in Profit and Declared Rs. 3 Dividend Per Share

Life Insurance Corporation (LIC) is India’s largest and most trusted life insurer, with a market share of over 70% in terms of new business premiums and over 80% in terms of policies sold. The company has recently announced its fourth-quarter results for the financial year 2022-23, which have been nothing short of spectacular. In this blog post, we will look at how LIC achieved a multi-fold growth in its profit and declared a handsome dividend for its shareholders.

LIC’s Profit Jumps 5 Times Year-on-Year

One of the most impressive aspects of LIC’s Q4 results was its consolidated net profit, which rose by a staggering 447.5% or 5.5 times year-on-year to Rs. 13,190.79 crore. This was a huge jump from the Rs. 2,409.39 crore profit that the company reported in the same quarter of the previous fiscal year. The sequential growth in profit was also remarkable, at 107.77%.

The main drivers of LIC’s profit growth were its robust increase in premium income and investment income, as well as it's improved solvency ratio and asset quality. Let’s look at each of these factors in detail.

LIC’s Premium Income Grows by 18%

LIC’s net premium income is the amount of money that the company earns from selling its insurance products to its customers. This is one of the key indicators of the company’s performance and growth potential.

LIC’s net premium income rose by 18% to Rs. 1.44 lakh crore for the quarter, up from Rs. 1.22 lakh crore in the same quarter of the previous year. This shows that the company was able to attract more customers and sell more policies despite the challenges posed by the Covid-19 pandemic.

LIC’s first-year premium income also increased by 12% to Rs. 12,811 crores, compared to Rs. 14,614 crores in the corresponding quarter of the previous year. This means that the company was able to acquire more new customers and expand its market share.

LIC’s Investment Income Grows by 0.5%

LIC’s investment income is the amount of money that the company earns from investing its premium income and other funds in various assets such as government securities, corporate bonds, equities, real estate, etc. This is another important source of revenue and profit for the company.

LIC’s investment income grew by 0.5% to Rs. 67,846 crores for the quarter, from Rs. 67,498 crores in the same quarter of the previous year. This shows that the company was able to generate a decent return on its investments despite the volatility and uncertainty in the financial markets.

LIC’s net commission income also increased by 5% to Rs. 8,428 crores for the quarter, which was higher than the Rs. 7,996 crores in the same quarter of the previous year. This means that the company was able to reward its agents and distributors for their efforts and contributions.

LIC’s Solvency Ratio Improves to 1.87

LIC’s solvency ratio is a measure of how well the company can meet its liabilities and obligations with its assets. A higher solvency ratio indicates a stronger financial position and a lower risk of insolvency.

LIC’s solvency ratio improved from 1.85 in the December quarter and March quarter of the previous year to 1.87 at the end of the March quarter. This indicates that the company has sufficient assets to cover its liabilities and obligations.

The solvency ratio of LIC is also much higher than the regulatory requirement of 1.503, which shows that the company has a comfortable margin of safety and stability.

LIC’s Asset Quality Improves

LIC’s asset quality is a measure of how well the company manages its investments and avoids losses due to defaults or impairments. A lower non-performing assets (NPAs) ratio indicates better asset quality and a lower risk of losses.

LIC’s gross NPAs ratio declined from 8.17% in March 2022 to 7.89% in March 2023. This means that the company was able to reduce its bad loans and recoveries from its borrowers.

LIC’s net NPA ratio also decreased from 0.79% to 0.69% over the same period. This means that the company was able to provision adequately for its bad loans and maintain a healthy net worth.

LIC Declares Rs. 3 Dividend Per Share

LIC’s board has recommended a final dividend of Rs. 3 per equity share with a face value of Rs. 10 each for the year ending March 2023. This is in addition to the interim dividend of Rs. 2 per share paid earlier.

The total dividend payout for the year amounts to Rs. 5 per share, which is higher than the previous year’s dividend of Rs. 4 per share. This shows that the company has been able to reward its shareholders with a generous dividend distribution.

The dividend yield of LIC at its current share price of Rs. 450 is around 1.11%, which is comparable to some of its peers such as HDFC Life (1%) and ICICI Prudential Life (1%).

Conclusion

LIC’s Q4 results have been a remarkable achievement that reflects its commitment to excellence and leadership in the life insurance industry. The company has set new benchmarks for performance and growth that will inspire confidence and trust among its stakeholders and customers.

LIC is also gearing up for its mega IPO, which is expected to be one of the largest in India’s history. The IPO is expected to fetch around Rs. 1 lakh crore for the government, which will help it meet its fiscal deficit target and fund various welfare schemes.

LIC is well-positioned to capitalize on the growing opportunities in the life insurance sector, which is expected to grow at a CAGR of around 12% over the next five years. The company has a diversified product portfolio, a loyal customer base, a strong distribution network, a large investment corpus, and a sound financial position.

LIC is also investing in digital transformation and innovation to enhance its customer service and operational efficiency.

LIC has not only delivered value to its shareholders, but also contributed to the nation’s development and social welfare through various initiatives such as PMVVY, AB-PMJAY, NPS, APY, and CSR activities.

LIC has lived up to its motto of “Yogakshemam Vahamyaham”, which means “Your welfare is our responsibility”.

Disclaimer: 

This blog post is for informational purposes only and does not constitute any financial, legal, or professional advice. The information presented here is based on publicly available sources and may not be accurate, complete, or up-to-date. The author and the publisher are not liable for any errors or omissions, or for any losses or damages that may arise from the use of or reliance on this information. Readers are advised to do their own research and consult their own advisors before making any investment or other decisions based on this information.