BENGALURU, Aug 6 (Reuters) - Life Insurance Corporation of India reported a 23% increase in first-quarter profit on Thursday, helped by strong group business and margin expansion from a greater focus on more profitable products, despite heightened competition.
The insurer's net profit rose to 134.92 billion rupees ($1.42 billion) for the quarter ended June 30, from 109.87 billion rupees a year earlier.
Analysts had expected LIC to report a healthy quarter as demand for traditional life insurance remained buoyant after tax changes late last year.
Competition has intensified as private insurers stepped up their focus on more profitable non-participating policies that don't pay policyholders bonuses or dividends. Still, a favourable year-ago base, continued momentum in group insurance and LIC's own greater focus on non-participating products have boosted its earnings.
The state-run insurer's net premium income increased nearly 7% year-on-year to 1.27 trillion rupees in the quarter through June. First year premiums from new policies rose 22.5%, while renewal premiums increased 3%.
LIC is the largest life insurer in the world's most populous country, where rising financial awareness is driving insurance demand. Low insurance penetration leaves significant room for further growth.
India is expected to emerge as the fastest-growing major life insurance market, with life insurance premiums forecast to grow 10.5% annually through 2036, positioning it to challenge Japan as Asia's second-largest market, Allianz said in a research report in May.
LIC's annualised premium equivalent (APE), a key measure of new business, rose 8.22% to 136.92 billion rupees. Group APE rose 10.20% while the individual business grew 6.67%.
Value of new business (VNB), or expected profit from new policies sold, increased 61.32% to 31.36 billion rupees.
Margins from new business stood at 22.9%, compared with 15.4% a year earlier, helped by higher sales of more-profitable policies, including non-participating products.
The Indian government also sold a 6.5% stake in LIC through an offer for sale this week, raising 315.52 billion rupees in its first stake sale in the insurer since its 2022 IPO.
($1 = 95.2200 Indian rupees)
Reporting by Nishit Navin; Editing by Ronojoy Mazumdar
Source: Reuters