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Shares of LIC’S Shares surged over 3% after it posted a five-fold increase in Q4 profits

LIC's shares surge

LIC’s shares surged over 3% in morning trade on Thursday after the insurer reported a five-fold increase in fourth-quarter net profit.

In Q4, India’s largest life insurer made a net profit of ₹13,428 crore, up from ₹2,372 crore in Q4. On a sequential basis, LIC’s bottom line grew from 8,334 crore in Q3 by 61%. The company’s net commissions grew by 5.4% YoY to ₹8,429 crore, while sequential growth was 33.4%.

As per LIC’s exchange filing, the company’s consolidated net premium income decreased by 8.3% over the past year to 1.32 crore. “The first-year premium fell by 12.33% to ₹12,811 crore, however the renewal premium increased by 6.8% to ₹76,009 crore,” it said.

As a result, LIC’s net profit increased 9-fold to 36,397 crore in FY23, up from 4,043 crore in FY22, while its total premium income increased 11% to 4.74 lakh crore and the LIC’s shares surged.

The company projected an optimistic outlook for FY24, stating that “VNB (value of new business) margins will grow and improve”.

According to the insurer’s board, the final dividend OF of ₹3 per share equates to 1,897 crores in dividend payouts.

The insurer’s shares have surged by over 10% in the last one month. However, the stock remains down by 36% from its issue price of 949. The insurer’s shares hit an intra-day high of 616 in morning trade today, before paring some of the gains to trade at 605.

Loyalty improves among customers

In the March quarter, LIC reported an increase in customer loyalty – the 13-month persistency ratio rose to 70.16% from 69.24% in the same period last year.

A high persistency ratio indicates that customers are satisfied and have renewed their insurance policies over the past 13 months.

A rise in the insurer’s solvency ratio in the March quarter was also noted, rising to 1.87 from 1.85 a year earlier. Insolvency ratios measure how much capital the company has relative to its risk exposure.

LIC’s investments in Adani group have also rebounded – its holdings in the Adani group now total ₹44,670 crore, up from ₹30,127 crore at the end of January.

In order to increase the share of non-participatory products in the overall mix, the insurer said it is succeeding. The profits from non-participatory products do not go to policyholders, but rather to shareholders, increasing the value of their shares and returns.

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