We are very thankful for the recognition that our respected PM has given us by mentioning our growing strength. We are committed to fulfilling the ‘insurance for all by 2047’ objective for the nation
State-run Life Insurance Corporation of India (LIC) will keep on increasing the ticket size of policies by keeping all risk factors under control, says its chairman Siddhartha Mohanty. In an interview with Mithun Dasgupta, Mohanty says the insurer’s strategy will be to keep improving the product mix and the channel mix as well as transform itself on technology in parallel in order to clock higher growth rate going forward. Excerpts.
LIC on Thursday reported a close to 14-fold year-on-year jump in net profit on a standalone basis for Q1FY24. Prime Minister Narendra Modi praised LIC’s performance. On Friday, the company’s scrip ended the day at Rs 659.95 a share, up 2.78%. You must be happy.
We are very thankful for the recognition that our respected PM has given us by mentioning our growing strength. We are committed to fulfilling the ‘insurance for all by 2047’ objective for the nation. As you can see, the profit growth is there and it appears that the market participants have taken note of the same.
After the results, you said the company’s objective is to have industry growth rate or better. What are your strategies for this as the company faces steep competition from private sector peers?
If you look at FY23 and the Irdai data for that period you will see that LIC grew at a pace of more than 16% year on year. This was one of the highest growth rates in the industry. Given our size and high base, it should be seen as even more significant. In 2023-24, we of course intend to do better for the full year. Strategy will be to keep improving the product mix and the channel mix as well as transform ourselves on technology in parallel.
Read More: Planning to Buy Insurance? Here Are 5 Key Insurance Policies for Sustainable Financial Life
During Q1FY24, LIC’s net premium income growth was almost flat when compared with the same period of FY23. First year premium fell year on year. What are the reasons for this?
There are always multiple reasons that come into play in a business environment like ours where customer preference for products goes up and down, sometimes tax changes impact, sometimes we redesign our products etc. So a mix of all factors.
You are expecting the company to register growth in the second quarter. To ensure it, what are the company’s focus areas in terms of products, channels and ticket size?
In products, we intend on increasing share of non-par, and in channels we would like to increase our share of bancassurance. We will keep on increasing the ticket size as much as we can by keeping all risk factors under control.
Read More: Bank FD update: Interest rates dip as 5 banks slash fixed deposit returns by 1%
The value of new business (VNB) margin stood at 13.7% for Q1FY24 against 13.6% for Q1FY23. What is the full-year guidance?
One can’t give future guidance, but you know last full year we were at 16.2%. This first quarter we are also on track on y-o-y basis. So you can well make a reasonable assumption of how much better we can do.
The first quarter profit was boosted by a transfer of of Rs 7,491.54 crore from non- participating policyholders’ accounts to shareholders’ accounts. Will the transfer continue every quarter going forward?
Even after removing this accretion, also, profit is Rs 2,052 crore, ie 300% growth over same period last year. Now you have a history of six quarters of seeing this number in front of you. While I won’t put any numbers here but subject to many other factors at work historical data may serve as a basis to understand the future.
