LICI Q1 FY25 earnings call.
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Revenue
₹2,11,952 Cr
verified against source
Revenue YoY
15.66%
reported change
EBITDA
Pending
latest reported figure
Source
screener in
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
LIC reported total premium income of INR 1,13,770 crore for Q1 FY25, up 15.66% YoY, with PAT of INR 10,461 crore growing 9.61% YoY. Market share surged to 64.02% from 61.42% YoY, driven by 30.87% growth in group premium and 165.6% surge in individual non-par APE. VNB grew 23.66% to INR 1,610 crore with margin improving 20bps to 13.9%. Expense ratio improved 98bps to 11.87%. The sharp non-par mix shift (non-par share rose from 10.22% to 23.94% of individual APE) is a deliberate strategic pivot but has compressed margins—management targets gradual improvement toward higher VNB margins over the medium term. Key headwinds include IRDAI's surrender value regulations requiring higher payouts to lapsing policyholders from October, which could pressure persistency and require product/commission restructuring. Par business faces margin pressure from rising risk-free rates affecting discount rate assumptions. Agents grew 6% to 14.25 lakh, while bancassurance grew 22% but remains just 3.46% of new business premium.
Colored figures show movement against the previous available record.
Guidance to track
- Management indicated working towards VNB margin of 20% plus over the near-to-medium term, building on the 13.9% achieved in Q1 FY25 and the 16.8% at FY24 end.
- Non-par APE growth of 165.6% YoY demonstrates intentional strategy shift. Management stated exponential growth can come from non-par at this point versus participating business.
- LIC is exploring acquiring a stake in a standalone health insurance company (SAHI) rather than building an internal health vertical, expecting to finalize within the current fiscal year.
- Management targets systematic growth in banca and alternate channels (brokers, IMFs, corporate agents) without compromising agency channel, with banca already showing 22.27% YoY growth.
Risks flagged
- IRDAI's revised surrender value regulations effective October 2024 require higher payouts to lapsing policyholders. Analysts raised concerns about impact on 13th month lapsation (approximately 22% on premium basis) and potential need to restructure commission (clawback discussions) or reduce benefits for persistent policyholders to offset costs. Management deflected by stating multiple solutions possible but no specific action plan disclosed.
- VNB margins on par business declined materially due to rising risk-free rates affecting discount rate assumptions. Management attributed most of the VNB margin movement to RFR impact rather than product benefits, acknowledging that par margins are sensitive to interest rate environment.
- 13th month persistency on premium basis declined marginally (78.37% to 78.23% YoY). Management acknowledged some par products with lower ticket sizes showing persistency pressure, requiring ongoing product review. Micro insurance products are included in persistency calculations unlike some peers.
- Suresh Ganapathy (Macquarie) pointed out that non-par margins have compressed from 72% (Q1 FY23) to 39.8% (Q1 FY25)—a 30 percentage point drop over two years—questioning whether growth is coming at the expense of sustainability. Management defended this as strategic trade-off for VNB growth.
Key quotes
- We have seen our trajectory changes from first quarter towards the fourth quarter, and that is what directionally we are expecting and working for. The strategy is to gradually move upwards in this business margin overall... We are very confident that over some period of time, our business mix, as it is changing and changing sharply, actually, in the right direction, will be the standard benchmark for the entire industry also.
- Exponential growth can come from non-par at this point of time, as compared to the participating. It's not that we want to reduce our business and grow into non-par business. Our ultimate aim is that we want to offer all the product solutions to the customer.
- We are in constant interaction within our teams, marketing teams. Whenever product review or product redesign has to be considered, we have to consider all the aspects. Everything is possible. Clawback is an option, but not a necessary option. At this stage, we'll not like to preempt and say, this is going to be everything.
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