EXCLUSIVE: LIC Chairman M R Kumar says VNB margins to rise up to 25 per cent in 4-5 years, asks shareholders to remain patient

LIC Chairman on Zee Business: In an exclusive interview with Zee Business Managing Editor Anil Singhvi, Life Insurance Corporation of India (LIC) Chairman, M R Kumar said that LIC’s market share has increased and the Value of New Business (VNB) margin will increase up to 25 per cent in next 4-5 years.

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Talking about the Q2 result, Kumar said, “In this quarter ending September, our market share increased to 68.25 per cent against 65.42 per cent. We also had good revenue premium growth of Rs 56,156 crores against Rs 50,258 crores. Through embedded value, our profits were at a valuation of 90 per cent which is now 100 per cent, according to this there was bifurcation during the listing which has led to the profitability growth of almost Rs 16,000 crore and we are optimistic that the growth will continue.”

LIC chairman further said that they have launched new non-par products to increase the VNB margins. “After the listing we are working on VNB margins, and we are bringing more non-participative (non-par) products. In the past six months, we have only launched non-par products, now we have 20 non-par products, VNB margins are getting regularised in the 14-15 range, we are confident to take it up to 25 per cent in 4-5 years,” he stated.

In the interview he said that in the upcoming 2-3 years new business premium growth will be stronger, and added, “We believe that new business premium growth will be high as penetration inference growth is low in India. We have 13 lakh agents, our bank insurance tie up is getting stronger and in the coming 2-3 years there should be a growth of 15- 20 per cent.”

Kumar said that the new products that will be launched will be profitable to all stakeholders. He believes that Indian markets are on strong footing, and said, “Our assessment is that the strain and pressure in the global markets in the past one year are have been overcome by the Indian markets and it will continue to do well.” 

LIC chairman also said that the insurance provider will churn its portfolio to increase profitability. “In the last 2-3 years, we have seen a growth in the profit in our portfolio and we continue to churn the portfolio to increase the profitability," he added. 

Describing the post-pandemic scenario, Kumar said that post pandemic, people are opting for term covers. “Post pandemic people are looking for term cover. In the six months ending September 2021, the death claim was around Rs 21,314 crore, against Rs 11,665 crore in six months ending September 2022. The death claim strain has gone away and many people are opting for term cover. Our 40 per cent agents who are millennials are thus pushing this product,” he opined.

Further speaking on the LIC stock value, Kumar said that people need to have patience. “We have been working for 67 years and since the past 20-25 years we are facing competition, still our market share is good — all this means that there is trust. Our focus on products, business in the coming days will bring portability and we are focused on ensuring stakeholder value. People have to be patient; they have to wait and we will continue to do well in terms of new business,” he summed up. 

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LIC Q2 results:

LIC recorded a Net Premium Income of Rs 1.32 lakh crore which was up by 26.9 per cent against Rs 1.04 Lakh crore YoY. 

The Profit was up by 1012.67 per cent to Rs 15952.4 crore against Rs 1433.7 crore recorded in the corresponding quarter of previous year.

The VNB was up 59.8 per cent and stood at Rs 2975 crore against Rs 1861 crore YoY. VNB Margins were 14.6 per cent as compared to 13.6 per cent YoY. 

LIC Vs HDFC Life Insurance Vs SBI Life Insurance Vs ICICI Prudential Life Insurance

Comparing the second quarter result month ending September of the four major insurance companies in India on the basis of Profit After Tax (PAT), Value of New Business (VNB) and Net Premium Income (NPI).

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