By Nishit Navin and Siddhi Nayak
BENGALURU/MUMBAI (Reuters) -India’s No.1 insurer Life Insurance Corporation of India said it expected a recovery in net premium income in the current quarter, after taking a hit on that front due to a recent regulation change.
The country’s insurance regulator had slashed the cost for policy-holders to surrender policies before maturity, effective October, hurting insurers.
“We will come out of it, we expect to gradually start seeing some recovery Q4 onwards,” LIC Chairman Siddhartha Mohanty said on a conference call on Friday.
State-run LIC’s net premium income in the latest third quarter dropped 9% to 1.07 trillion rupees, driven by a 24% fall in single-premium collection and a 14% decline in first-year premium collection.
LIC still posted a 17% rise in profit after tax of 110.56 billion rupees ($1.26 billion) as employee compensation and welfare expenses dropped by nearly a third in the December quarter.
The company also said it needed more time to enter the health insurance space by taking a stake in a health insurer due to lengthy regulatory processes. It had earlier expected to complete the deal before the current fiscal year ended.
LIC’s value of new business (VNB), which measures the expected profit from new premiums, fell 27% year-over-year to 19.26 billion rupees for the reported quarter, Reuters calculation showed.
For the nine months until December-end, VNB rose 9% to 64.77 billion rupees, and VNB margin rose to 17.1% from 16.6% a year earlier.
LIC has been focusing on increasing the share of high-margin policies. The share of such policies sold by the insurer rose to 27.7% at December-end from 26.3% three months earlier.
($1 = 87.4790 Indian rupees)
(Reporting by Nishit Navin; Editing by Mrigank Dhaniwala, Dhanya Skariachan and Shailesh Kuber)
