LIC flags pressure on customer incomes even as Q1 profit rises 23%
Life Insurance Corp. of India Ltd (LIC) delivered stronger profitability in the June quarter, but the country's largest insurer warned that shrinking household disposable incomes
Life Insurance Corp. of India Ltd (LIC) delivered stronger profitability in the June quarter, but the country's largest insurer warned that shrinking household disposable incomes continue to weigh on premium growth. “We depend on the disposable income of the customers, and when that income gets impacted, there will be an impact certainly on the way people save,” chief executive and managing director R. Doraiswamy said at a post-earnings briefing on Thursday. He said the impact was already visible in LIC's growth numbers, with businesses linked to interest rates and financial markets, including unit-linked plans and annuities, remaining the most exposed to the fallout from the West Asia conflict. “Though the numbers are good this quarter, if you look at the growth in premium or the APE, it is not that high what you would have expected,” he said, adding that it was too early to say whether the worst had passed. Total premium income for the April-June quarter (Q1FY27) rose 6.75% to ₹1.27 trillion. Individual business premium increased 5.52% to ₹75,416 crore, while group business premium rose 8.61% to ₹51,834 crore. Individual policies sold grew 2.06% to 3.10 million, annualized premium equivalent (APE) rose 8.22% to ₹13,692 crore, and profit after tax climbed 22.81% to ₹13,492 crore.
Also Read | GIC Re builds AI brain to save underwriting knowledge: CMD Joshi Savings under strain Management said the pressure is concentrated in LIC's savings business, where persistency has remained broadly range-bound for several quarters despite repeated renewal efforts. The longer-tenure cohorts continue to face the greatest pressure. “We have been a strong savings player, and hence any pressure that we feel is on the savings portfolio only,” Doraiswamy said. He added that customers buying micro-insurance products, many of whom have seasonal incomes, had also been affected, while market volatility since late February had disrupted timely premium payments. LIC is following up with policyholders whose policies have lapsed to revive their cover. Asked about a parliamentary reply showing industry surrender and withdrawal ratios rising from 32% in FY22 to 39% in FY26, Doraiswamy said the trend was industry-wide and that LIC's own surrenders had declined. Data accompanying the reply also showed LIC's policy surrender and withdrawal payouts rose to ₹1.57 trillion in FY26 from ₹1.31 trillion a year earlier, although the insurer did not disclose its surrender ratio for the quarter. Margins improve Even as premium growth remained modest, profitability improved sharply as LIC continued to shift towards higher-margin products.
The BriefWire