India's LIC posts higher profit as tax cuts boost insurance demand
Life Insurance Corporation of India's posted a 17% jump in third-quarter profit on Thursday, benefiting from tax cut-driven retail demand, and said it has not yet decided on a stake sale in the NSE public offering.
The insurer's net profit rose to 129.58 billion rupees ($1.43 billion) for the three months ended December 31, up from 110.56 billion rupees a year ago.
Indian insurers reported higher demand for products in the third quarter, as policies became more affordable after the government eliminated the 18% tax on individual life insurance products.
LIC's net premium income grew 17.5% to 1.26 trillion rupees.
Annualised premium equivalent sales, the total value of all single and recurring premium policies, rose 50.5%, while value of new business, or expected profit from new policies, surged 65%, according to a Reuters calculation.
LIC has also been focusing on increasing its share of high-margin policies to cushion its margins. Its margins from new business expanded to 18.8% for the nine months ended December from 17.6% as of September end and 17.1% a year ago.
The share of high margin non-par products in its product mix increased to 36.5% as of Dec-end from 27.7% a year ago.
The insurer expects the share of high-margin products to stabilise around current levels, CEO and MD R. Doraiswamy said.
He said the company, which has a sizeable real-estate portfolio in its investments, will look to better leverage the assets to improve returns. NSE IPO
The chairman said the insurer, one of NSE's largest institutional shareholders, has not yet decided whether or how much stake it will offload in the exchange's impending IPO.
"It (NSE IPO) is going to take at least six to seven months from now, so we have enough time to think of it," R. Doraiswamy said.
In January, NSE received regulatory approval to proceed with its long-awaited initial public offering
($1 = 90.3050 Indian rupees)
