Life Insurance Corporation of India (LIC) – Financial Performance Review (FY25)
FY25 Financial Highlights
Overall Performance: LIC demonstrated a resilient performance in FY25, marked by growth in total premium income and significant improvement in profitability and solvency, despite a decline in the number of policies sold. The company’s strategic focus on higher-margin non-participating products appears to be yielding positive results.
Key Financial Highlights:
Better Retention: Persistency Ratios showed overall improvement, reflecting effective customer retention efforts.
Profitability Surge: Profit After Tax (PAT) increased by 18.38% to INR 48,151 Crore.
Strong Solvency: Solvency Ratio improved to 2.11 (from 1.98), indicating robust capital adequacy.
Premium Growth: Total Premium Income grew by 2.75% to INR 4,88,148 Crore, driven by an 8.28% rise in Individual New Business Premium.
Enhanced Efficiency: The Overall Expense Ratio significantly improved by 3.15 percentage points to 12.42%, reflecting better cost management.
Improved Business Quality: Net Value of New Business (VNB) increased by 4.47% to INR 10,011 Crore, with the Net VNB Margin improving to 17.6% (up 0.8% absolute). This is supported by a strategic shift towards higher-margin non-participating products, which now constitute a larger share of the Individual APE.
Asset Growth & Quality: Assets Under Management (AUM) grew by 6.45% to INR 54,52,297 Crore, and the Total Gross NPA Ratio improved to 1.46%, indicating better asset quality.
Rising Embedded Value: Indian Embedded Value (IEV) increased by 6.81% to INR 7,76,876 Crore, reinforcing long-term value creation.
Healthy Claim Management: Claim Settlement Ratio for death claims remained very high at 99.41%, ensuring prompt payouts to policyholders.
More Details
This report provides an overview of the financial performance of Life Insurance Corporation of India (LIC) for the fiscal year ended March 31, 2025 (FY25), compared to the previous fiscal year (FY24). The analysis is based on the key financial indicators crucial for evaluating an insurance firm’s health, including underwriting performance, investment returns, financial position, and solvency.
I. Underwriting Performance (Core Insurance Operations)
LIC’s core insurance operations showed mixed results, with overall premium growth and improved efficiency in certain areas, despite a decline in policies sold.
- Total Premium Income: Increased by 2.75% to INR 4,88,148 Crore in FY25 from INR 4,75,070 Crore in FY24.
- Individual New Business Premium: Grew significantly by 8.28% to INR 62,495 Crore in FY25 from INR 57,716 Crore in FY24, indicating strong growth in new individual policies.
- Renewal Premium (Individual): Saw a healthy increase of 4.26% to INR 2,56,541 Crore in FY25 from INR 2,46,052 Crore in FY24, suggesting good policy retention.
- Total Group Business Premium: Experienced a slight decrease of 1.28%, falling to INR 1,69,112 Crore in FY25 from INR 1,71,302 Crore in FY24.
- Weighted Received Premium: Showed marginal growth of 0.56% to INR 35,294 Crore in FY25 from INR 35,099 Crore in FY24.
Claims Performance:
- Total Death Claim Paid: Increased by 7.93% to INR 24,420 Crore in FY25 from INR 22,625 Crore in FY24. The total number of death claims (individual) also rose by 2.27%.
- Total Maturity Claim Paid: Demonstrated a substantial increase of 14.02% to INR 2,37,313 Crore in FY25 from INR 2,08,136 Crore in FY24.
- Claim Settlement Ratio (Death): Decreased marginally to 99.41% in FY25 from 99.90% in FY24, but remains very high, indicating efficient claim processing.
Efficiency Ratios:
- Overall Expense Ratio: Improved significantly, decreasing by 3.15 percentage points to 12.42% in FY25 from 15.57% in FY24, reflecting enhanced operational efficiency.
- Commission Ratio: Slightly declined to 5.18% in FY25 from 5.46% in FY24.
Business Volume:
- Number of Policies Sold (Individual): Decreased by 12.80% to 1,77,82,975 in FY25 from 2,03,92,973 in FY24. This indicates a focus on higher-value policies or shifts in product mix.
- Market Share in Premium: Decreased by 1.82 percentage points (absolute) to 57.05% in FY25 from 58.87% in FY24.
- Market Share in Policies: Decreased by 4.08 percentage points (absolute) to 65.83% in FY25 from 69.91% in FY24.
- Net Value of New Business (VNB): Increased by 4.47% to INR 10,011 Crore in FY25 from INR 9,583 Crore in FY24.
- Net VNB Margin: Improved by 0.8 percentage points (absolute) to 17.6% in FY25 from 16.8% in FY24. This indicates improved profitability of new business written.
- Breakup of Individual APE (Annualized Premium Equivalent): The share of Non-Participating (Non-Par) products in Individual APE increased to 27.69% in FY25 from 18.32% in FY24, with a corresponding decrease in Participating (Par) products. This highlights a strategic shift towards higher-margin Non-Par products.
II. Investment Performance
Investment income plays a crucial role for life insurers.
- Assets Under Management (AUM): Grew by 6.45% to INR 54,52,297 Crore in FY25 from INR 51,21,887 Crore in FY24.
- Yield on Investment (Policyholders Fund): Slightly decreased to 8.65% in FY25 from 8.93% in FY24.
- Yield on Investment (Shareholders Fund): Decreased to 6.93% in FY25 from 8.02% in FY24.
- Total Gross NPA Ratio (for policyholders fund): Improved to 1.46% in FY25 from 2.01% in FY24, indicating better asset quality.
III. Financial Position & Solvency
- Profit After Tax (PAT): Increased by 18.38% to INR 48,151 Crore in FY25 from INR 40,676 Crore in FY24.
- Solvency Ratio: Strengthened to 2.11 in FY25 from 1.98 in FY24, indicating a robust capital position to meet future obligations.
- Indian Embedded Value (IEV): Increased by 6.81% to INR 7,76,876 Crore in FY25 from INR 7,27,344 Crore in FY24.
- Adjusted Net Worth (ANW): Rose significantly to INR 1,20,258 Crore in FY25 from INR 69,443 Crore in FY24.
- Value of In-Force (VIF) Business: Remained relatively stable at INR 6,56,617 Crore in FY25 compared to INR 6,57,902 Crore in FY24.
IV. Other Key Metrics
- Persistency Ratios: Showed overall improvement across various durations (13th, 25th, 37th, 49th, 61st month) on both number of policies and premium basis, reflecting better customer retention. For example, the 13th-month persistency ratio improved to 66.99% (by # policies) and 77.66% (by # premium) in FY25.
Conclusion: LIC’s FY25 results underscore its financial strength and strategic adaptability. The focus on profitable business segments, coupled with improved operational efficiencies and strong solvency, positions the corporation well for sustained growth, despite a dip in the number of policies sold.
Disclaimers:
- Not Invested
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- Source is results declared on 27 May 2025. https://www.bseindia.com/xml-data/corpfiling/AttachLive/2a35bbcc-a54a-4c43-85e5-15c05265bc61.pdf