LIC Q4 Results: Profit Declined By 18% YoY To Rs 2,371.55 crore

Net Profit Decline: LIC reported a net profit of Rs 2,371.55 crore for Q4FY22. The profit declined by 18% YoY from Rs 2,893 crore from the year ago period. The company has said that the results should not be compared YoY. LIC’s Q4FY21 profit of Rs 2,893 crore pertains to the full year since LIC was conducting actuarial valuation once a year until that year.

Revenue: LIC's total revenue in Q4FY22 came in at Rs 2,11,471 crore, which was 11.64% higher as compared to Rs 1,89,176 crore revenue reported in Q1FY21.

Net Premiums: The company's net premiums were increased by 18% and stood at Rs 1.44 lakh crore. In the same period last year, the net premium collected was Rs 1.22 lakh crore. Income on investments of LIC, which is one of the largest asset managers, is flat at Rs 67,498.15 crore.

Its income from first-year premium rose to Rs 14,663.19 crore, marking a 32.65% YoY surge. From renewal premium, the income rose 5.37% to Rs 71,472.74.05 crore, and through single premium, it increased by 33.70% to Rs 58,250.91 crore.

NPA: The gross non-performing assets (NPA) ratio of the insurer in its debt portfolio improved by 29 basis points sequentially to 6.03% and net NPAs stood at 0.04%.

Persistency ratio: The persistency ratio is the ratio of life insurance policies receiving timely premiums in the year and the number of net active policies. The ratio indicates how many policyholders are paying the due premiums regularly on the policies with the insurer. The thirteenth-month persistency ratio of the insurer dropped to 69.24% in Q4FY22 as against 73.94% in Q4FY21. The 61st-month persistency ratio improved to 55.62% in the same period as against 54.43% in the year-ago period.

Solvency Ratio: It is a measure of an insurer's ability to meet its long-term debt obligations. It increased to 1.85 from 1.76 a year earlier.

Possibility of profit increase: LIC had a single 'life fund' before Section 24 of the LIC Act was amended by the government to bring its surplus distribution mechanism at par with private life insurers. Post the amendment, the life fund has been segregated into two funds - participating policyholders fund and the non-participating policyholders’ fund. Consequently, the surplus distribution in the participating policyholders’ fund has been modified to 90:10 in a phased manner, wherein 90% will go to policyholders and 10% to shareholders. Further, 100% of the surplus generated out of the non-participating business will be available for distribution to all shareholders. This change will help LIC increase its profitability.

Dividend: The company has declared a dividend of Rs 1.50 per equity share with a face value of Rs 10 for the year ended March 31, 2022. This works out to a dividend of Rs 916 crore that the insurance behemoth will pay to the government for FY22.

On Wednesday morning, LIC share was trading flat at Rs 811.80.