By Nishit Navin
(Reuters) -Life Insurance Corporation of India, the country’s biggest insurer, reported a 38% rise in fourth-quarter profit on Tuesday, helped by lower employee-related expenses even as its premiums fell, weighed by a regulation change.
The Mumbai-based insurer saw its profit after tax rise to 190.13 billion rupees ($2.23 billion) for the quarter ended March 31 up from 137.63 billion rupees a year earlier.
LIC said that employee costs declined primarily due to a reduction in salary expenses, which had been elevated in the same quarter last year due to the impact of a wage revision. Costs fell to 59.28 billion rupees from 137.50 billion rupees a year earlier.
However, net premium income dropped 3% to 1.48 trillion rupees.
Policy sales in the quarter were under pressure due to new regulations implemented earlier in the fiscal year, which made it more affordable for customers to close their policies before maturity. The insurer had boosted sales prior to the change in norms from October.
The value of new business (VNB), which measures expected profit from new premiums, fell 3% year-over-year for the quarter period, according to Reuters’ calculation.
For the full year, VNB rose 4.5% to 100.11 billion rupees. VNB margin for the fiscal rose to 17.6% from 16.8% earlier.
The insurer has been focusing on increasing its share of non-participating high-margin policies to cushion its margins, whose share in LIC’s product mix rose to 27.69% at March-end from 18.32% a year earlier.
LIC is in advanced stages of acquiring a stake in a health insurance company, Chairman Siddhartha Mohanty said in a press conference. “Discussion is in the final stage. I think within two to three months, some decision will be taken by the board.”
LIC’s solvency ratio, the measure of an insurer’s ability to meet its long-term financial obligations, rose to 2.11 during the quarter from 1.98 a year earlier.
($1 = 85.3610 Indian rupees)
(Reporting by Nishit Navin; Editing by Mrigank Dhaniwala and Tasim Zahid)
