A 27 per cent jump in premium income and massive gains from changes in its accounting policy along with investment income helped national insurer LIC on Friday report a multifold jump in net income at Rs 15,952 crore in Q2 from Rs 1,434 crore a year-ago. More than 40 per cent of the net income came in from profit from investments which reached Rs 6,798.61 crore, but down from the year-ago period when it had booked Rs 6,961.14 crore.
The bottomline was also boosted by gains from changes in its accounting policy, the nation’s financial powerhouse said in exchange filings.
In the June quarter, which was its first earnings after going public in May with an over Rs 20,530-crore IPO, the insurer had reported a net profit of just Rs 682.9 crore.
Other reasons for the massive spike in the profit were vastly lower commissions to the agents and a sharp decline in employee cost.
In the reporting quarter, while it said agency commissions almost halved to Rs 5,844 crore from Rs 10,896 crore a year ago, its employee cost came in at a much lower Rs 16,474.76 crore from Rs 24,157.5 crore.
The statement did not attribute any reasons for the same. It can be noted than its over 15 lakh agents bring majority of its business.
Changes in actuarial liability led to a lower income at Rs 96,088.03 crore in the reporting quarter, down from Rs 1,74,277.93 crore. Similarly, the company’s surplus came down to Rs 16,171.14 crore from Rs 18,356.42 crore First-year premium, which is an indication of business growth, rose to Rs 9,124.7 crore for the quarter, up 11 percent from Rs 8,198.30 crore it booked a year ago, the nation’s largest life insurer said.
Net premium income was Rs 1.32 lakh crore from Rs 1.04 lakh crore in the year-ago quarter, while the total income rose to Rs 2.22 lakh crore from Rs 1.87 lakh crore.
Of this, first-year premium income rose to Rs 9,175.89 crore from Rs 8,270.91 crore a year ago and renewal premium rose to Rs 56,514.63 crore from Rs 55,342.62 crore and single premium income rose to Rs 67,021.9 crore from Rs 41,428.7 crore, the company said.
In the run-up to the earnings, a section of the media had reported based on sources that the state-run company was planning to pay dividends or issue bonus shares, leading to a spike in share prices. But the company was silent on any such move. The LIC counter on Friday closed at Rs 628 on the BSE, nearly 1.17 per cent higher but is over 30 per cent down from its listing price of Rs 940.
The solvency ratio, which measures an insurer’s cash flow in comparison to the amount it owes as total life cover, came in at 1.88 per cent, similar to the June quarter.
Gross non-performing assets stood at Rs 26,111 crore, down from Rs 26,619 crore a quarter ago, and Rs 28,929 crore a year ago. The gross NPAs came down to 5.60 per cent from 5.84 per cent in the June quarter and 6.57 per cent in the year-ago period.
LIC’s 13th month persistency ratio, which measures a customer’s stickiness with the insurer, improved to 70.52 per cent in the reporting quarter from 68.81 per cent a year ago.
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