(Reuters) -Life Insurance Corporation of India reported a 5% rise in first-quarter profit on Thursday, helped by higher premiums from renewed policies, while its margins expanded due to an improvement in its product mix.
Profit after tax for the country’s biggest insurer rose to 109.87 billion rupees ($1.26 billion) for the quarter ended June 30 from 104.61 billion rupees a year earlier.
The insurer’s net premium income rose nearly 5% to 1.19 trillion rupees, helped by a 6% rise in its renewal premium collection.
LIC has been focusing on increasing its share of high-margin policies, including launching new policies. The share of high-margin non-participating policies in LIC’s product mix rose to 30.34% from 23.94% a year earlier.
Peers such as ICICI Prudential Life Insurance and SBI Life Insurance have struggled to keep margins intact over the past few quarters, but reported margins rose in the June quarter as demand for low-margin market-linked products slowed.
The value of new business (VNB), which measures expected profit from new premiums, rose 20.75% year-over-year in the reporting quarter.
The VNB margin rose to 15.4% from 13.9% a year ago.
LIC’s new retail policy sales were subdued due to new regulations implemented earlier in October, which reduced the charges policyholders paid if they closed their policies before maturity. However, group business saw strong growth.
Its annualised premium equivalent (APE) sales, which is the annualised total value of all single- and recurring-premium policies, rose 9.45% aided by a 16% rise in group APE.
Solvency ratio, the measure of an insurer’s ability to meet its long-term financial obligations, rose to 2.17 during the quarter from 1.99 a year earlier and 2.11 in the prior quarter.
($1 = 87.5240 Indian rupees)
(Reporting by Nishit Navin and Ashwin Manikandan; Editing by Nivedita Bhattacharjee and Janane Venkatraman)
