LIC (Life Insurance Corp) is expected to report a mixed performance for the fourth quarter, with growth in profitability and margins, but pressure on premium growth, particularly in new business.
According to a report by Motilal Oswal, the insurer’s value of new business (VNB) margins are likely to improve even as annualised premium equivalent (APE) growth remains weak due to changes in agent commissions.
For Q4, net premium income is projected at Rs 1,483 crore, down 3% year-on-year. This decline comes despite a sequential recovery, aided by a stable renewal premium and higher single premium income. Renewal premiums are estimated to grow 7% YoY to Rs 829 crore, while single premiums may fall 10% YoY to Rs 549 crore. PAT growth for the period is estimated at 7% to Rs 14,800 crore.
First-year premium, a key driver of new business, is expected to drop 22% YoY to Rs 108 crore, reflecting the impact of commission changes rolled out in October 2024.
Motilal Oswal expects APE for Q4 to decline 17% YoY to Rs 175 crore, which will drag full-year APE down by 3% to Rs 555 crore. However, VNB margins are expected to expand to 20.1%, supported by a favourable shift in product mix and improved scale benefits. Full-year VNB margin is likely to improve to 18% from 16.8% in FY24.
The brokerage maintains a ‘Buy’ rating on the stock with a target price of Rs 1,050. It believes LIC’s shift toward non-par products will gradually improve its profitability metrics, with the full benefits of product launches expected to reflect from H1FY26.
YES Securities, meanwhile, expects LIC to report 10% new business premium (NBP) growth and 19% APE growth for the first two months of Q4, based on available data till February 2025. However, they estimate a 30 basis point sequential contraction in VNB margin due to changes in product mix.
Another key area to watch will be LIC’s management commentary on future growth strategy, product pipeline, and plans to acquire a health insurance company. Analysts will also monitor trends in assets under management (AUM), which are expected to rise to Rs 62 lakh crore, up 21% YoY.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
According to a report by Motilal Oswal, the insurer’s value of new business (VNB) margins are likely to improve even as annualised premium equivalent (APE) growth remains weak due to changes in agent commissions.
For Q4, net premium income is projected at Rs 1,483 crore, down 3% year-on-year. This decline comes despite a sequential recovery, aided by a stable renewal premium and higher single premium income. Renewal premiums are estimated to grow 7% YoY to Rs 829 crore, while single premiums may fall 10% YoY to Rs 549 crore. PAT growth for the period is estimated at 7% to Rs 14,800 crore.
First-year premium, a key driver of new business, is expected to drop 22% YoY to Rs 108 crore, reflecting the impact of commission changes rolled out in October 2024.
Motilal Oswal expects APE for Q4 to decline 17% YoY to Rs 175 crore, which will drag full-year APE down by 3% to Rs 555 crore. However, VNB margins are expected to expand to 20.1%, supported by a favourable shift in product mix and improved scale benefits. Full-year VNB margin is likely to improve to 18% from 16.8% in FY24.
The brokerage maintains a ‘Buy’ rating on the stock with a target price of Rs 1,050. It believes LIC’s shift toward non-par products will gradually improve its profitability metrics, with the full benefits of product launches expected to reflect from H1FY26.
YES Securities, meanwhile, expects LIC to report 10% new business premium (NBP) growth and 19% APE growth for the first two months of Q4, based on available data till February 2025. However, they estimate a 30 basis point sequential contraction in VNB margin due to changes in product mix.
Another key area to watch will be LIC’s management commentary on future growth strategy, product pipeline, and plans to acquire a health insurance company. Analysts will also monitor trends in assets under management (AUM), which are expected to rise to Rs 62 lakh crore, up 21% YoY.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
