LIC is planning a foray into health insurance after paying historic dividend and is looking at acquisitions

The Life Insurance Corporation of India (LIC) is planning to enter the health insurance market and is considering potential acquisitions to facilitate this expansion. This initiative follows the proposal to introduce composite insurance companies.

This year, LIC has proposed a record final dividend of Rs 6 per share for the fiscal year 2023-24, with the payment date fixed as July 19. This marks the highest dividend payout in LIC’s history, doubling last year’s amount of Rs 3 per share. participation.

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According to a report by India timesin February, a parliamentary panel recommended the creation of a composite insurance license to reduce costs and reduce the compliance burden on insurers. Currently, insurance companies are limited to offering only long-term health benefits. To ensure that they can be provided with hospitalization and compensation insurance, an amendment to the Insurance Act would be necessary.

The Indian insurance market remains significantly underpenetrated. By the end of the 2022–2023 fiscal year, less than 23 million health insurance policies were issued, covering 550 million people. Of these, nearly 300 million were covered by government-sponsored programs and approximately 200 million were covered by group insurance.

According to reports, the government and regulators are keen to expand health insurance coverage and LIC’s potential entry into the health insurance sector is expected to strengthen these efforts.

LIC Q4 Result

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In the fourth quarter ended March 2024, LIC reported a marginal 2 per cent rise in net profit at Rs 13,763 crore as the corporation made provisions for salary hike.

A year earlier, the insurer had posted a profit of Rs 13,428 crore in the corresponding quarter.

The insurer’s total income during the reporting quarter increased to Rs 2,50,923 crore from Rs 2,00,185 crore in the same period of the previous financial year, LIC said in its regulatory filing.

LIC’s first-year premium income also increased to Rs 13,810 crore in the last January-March quarter as against Rs 12,811 crore in the same period of the previous fiscal.

Renewal premium income during the reporting period increased to Rs 77,368 crore as against Rs 76,009 crore a year ago.

For the full financial year ended March 2024, the insurer posted a profit of Rs 40,676 crore as against Rs 36,397 crore in the previous financial year.

Total premium income for the year ended March 2024 was Rs 4,75,070 crore as against Rs 4,74,005 crore for the year ended March 2023.

A total of 2,03,92,973 policies were sold in the individual segment in FY2024 compared to 2,04,28,937 policies in the previous financial year.

The board has recommended a final dividend of Rs 6 per share for 2023-24, subject to shareholder approval, LIC chairman Siddhartha Mohanty said.

Earlier in the year, an interim dividend of Rs.4 was announced and paid to the company’s shareholders.

Accordingly, he said, the total amount of interim dividend and recommended final dividend will be Rs 10 per share.

In terms of market share measured by first-year premium income (FYPI) (per IRDAI), LIC continues to be the market leader in terms of share in the Indian life insurance market with an overall market share of 58.87%.

“We have more than doubled the share of non-standard activities in our business. We now intend to focus our strategic interventions on maximizing our market share across all categories. At the same time, we will continue to focus on various parameters that create the highest value for all stakeholders, which has been proven,” Mohanty said.

Key channel and digital transformation initiatives are underway, he said, adding that the current fiscal year will see a renewed focus on the revenue growth trajectory.

Topline is expected to record double-digit growth in the current financial year driven by new product launches and agency force transformation projects.

Value of new business (VNB) was Rs 9,583 crore in FY24 as compared to Rs 9,156 crore in the year ended March 31, 2023, a growth of 4.66%.

VNB’s net margin for the year ended March 2024 increased by 60 basis points to 16.80% compared to 16.20% in the prior year.

The capital adequacy ratio increased to 1.98 compared to 1.87 as of March 31, 2023.

Assets under management (AUM) increased to Rs 51,21,887 crore as on March 31, 2024 as against Rs 43,97,205 crore at the end of the previous financial year, registering a growth of 16.48% year-on-year.

The bonus amount given to policyholders participating in the scheme was Rs 52,955.87 crore for FY24 as against Rs 49,439.56 crore for the previous financial year.