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Shares of LIC rose nearly 6% after July-September quarter earnings
November 14,2022 21:06
Shares of Life Insurance Corporation (LIC) rose 5.85 per cent on Monday following its July-September quarter (Q2FY23) earnings, which reported a multiple jump in net profit due to a change in its accounting policy, which transferred Rs 14,271.80 crore to shareholders' account from non-participating account.

Shares of the insurance behemoth rose 8.7 per cent to Rs 682.7 intraday on the BSE and finally closed at Rs 664.80 each. Similarly, the shares rose 9.11 per cent to Rs 684.9 intraday on the NSE and rose 5.81 per cent to Rs 664.2 each.

The corporation's net profit stood at Rs 15,952.49 crore in Q2, up 11 times from Rs 1,433.71 crore in the previous year. In the previous quarter, the insurer posted a net profit of Rs 682.88 crore.

Having said that, its embedded value (EV) was flat at Rs 5.44 trillion as of July-September quarter, despite Rs 10,000 crore increase in value of new business in the past one year. In the year-ago period, the corporation reported an EV of Rs 5.4 trillion.

“The ten-fold profit increase in Q2 is just a mere transfer from VIF (value in force) to ANW (adjusted net-worth) and doesn't change the EV dynamics. Management has clarified that market movements have affected EV growth,” said Suresh Ganapathy, associate director, Macquarie Capital.

With a 10 per cent fall in equity markets, the EV of LIC declines by 7 per cent.

The corporation reported the value of new business (VNB) for H1 at Rs 4,836 crore, with gross VNB of the individual business at Rs 2,974 crore and group business at Rs 1,862 crore.

Within the individual business, the par business, non-par business (including linked business) had gross VNB margins of 14.5 per cent and 79.5 per cent, respectively.

The VNB margins for the half year ended September 30, 2022 was at 14.6 per cent as compared to 9.3 per cent for the half year ended September 30, 2021.

“The VNB margin expansion was driven by better margins on the group business where share of annuities has increased along with higher risk-free rate in general,” Ganapathy said.

The insurance behemoth reported a net premium income of Rs 1.32 trillion in Q2, up 27 per cent year-on-year (YoY) from Rs 1.04 trillion in Q2. Its first-year premium income rose 11 per cent YoY to Rs 9,125 crore while renewal premium was up 2 per cent to Rs 56,156 crore, and single premium income increased by 62 per cent YoY to Rs 66,901 crore.
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