Summary
Life Insurance Corporation of India - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026
Event Participants
Executives 11 A.K. Srivastava (Appointed Actuary), Arindam Dasgupta (CIO), Dinesh Pant (MD), G.P. Agarwal (ED Marketing/PD), Hemant Buch (ED MBAC), K. Seshagiridhar (ED Pension & Group), R. Chander (MD), R. Doraiswamy (CEO & MD), Ratnakar Patnaik (MD), Sanjay Bajaj (Head IR), Sunil Agrawal (CFO)
Analysts 6 Aishwarya Mittal (Priaish Finbridge), Alka J.R (Individual Investor), Dipanjan Ghosh (Citi), Gaurav Jain (ICICI Prudential MF), Madhukar (JP Morgan), Nischint Chawathe (Kotak Securities), Shobhit Sharma (HDFC Securities)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Premium Income | ₹3,71,293 crores | +9.02% YoY; Driven by strong growth in Group and Renewal premiums. |
| Profit After Tax (PAT) | ₹33,998 crores | +16.68% YoY; Reflects improved operational efficiency and scale. |
| Net VNB | ₹8,288 crores | +27.96% YoY; Significant growth driven by shift toward High-Margin Non-Par products. |
| Net VNB Margin | 18.8% | +170 bps YoY; Expansion due to favorable product mix and yield curve shifts. |
| Individual APE | ₹27,552 crores | Non-Par share within Individual APE rose to 36.46% from 27.68% YoY. |
| Group APE | ₹16,455 crores | Contributes 37.39% of total APE; Group business total premium grew 13.56%. |
| Assets Under Management | ₹59,16,680 crores | +8.01% YoY; Growth supported by robust market conditions and fresh inflows. |
| Individual New Business | ₹44,941 crores | +5.89% YoY; Management notes increasing average ticket sizes in this segment. |
| Overall Expense Ratio | 11.65% | -132 bps YoY; Improvement due to rationalization and digital efficiencies. |
| Solvency Ratio | 2.19 | Improved from 2.02 YoY; Remains well above regulatory requirements. |
| 13th Month Persistency (Premium) | 75.75% | Marginal decline from 76.66% YoY; Management focused on revival campaigns. |
Geographic & Segment Commentary
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Individual Non-Par: This segment saw a significant jump in APE share to 36.46%, with Non-Par APE growing 47.44% YoY to ₹10,045 crores. Management is intentionally shifting the mix toward these high-margin products while increasing minimum ticket sizes (from ₹1 lakh to ₹2 lakh for many products) to improve unit economics.
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Group Business: Remained a dominant segment with a 71.36% market share and total premium growth of 13.56%. Group business accounts for roughly 24% of the total VNB, with management aligning expenses to reflect current experience in this segment.
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Bancassurance & Alternate Channels: Registered robust growth of 66.74% YoY, reaching ₹3,341.37 crores in New Business Premium. This channel now accounts for 7.45% of Individual NBP (up from 4.73% YoY) and is predominantly Non-Par centric (90% mix).
Company-Specific & Strategic Commentary
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Product Portfolio Optimization: LIC is dynamically managing its offerings, having recently launched “Jeevan Utsav Single Premium” while withdrawing three older products to align with new regulations and margin targets.
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Bima Sakhi Yojana: A strategic rural push where 2.97 lakh women (Bima Sakhis) have covered 52% of India’s Gram Panchayats, generating ₹1,873 crores in New Business Premium.
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Digital Transformation (DIVE): The Digital Innovation & Value Enhancement project is being rolled out in phases to create a “mobile-first” Savvy interface for distributors and customers.
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Health Insurance Entry: CEO confirmed LIC is evaluating opportunities to acquire or enhance a stake in a health insurance company to broaden its portfolio, though no specific timeline was provided.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Government Holding | Reduction to 90% by 2027 | Regulatory requirement to reduce stake by 10% within 5 years of IPO; next tranche expected in “next few months.” |
| Dividend Payout | Sustainable growth | Focus on maintaining a sustainable payout; Board will decide post-FY results, noting reserves are comfortable. |
| Insurance for All | Coverage by 2047 | Strategic focus on balancing high-ticket margin growth with mass-market insurance penetration. |
Risks & Constraints
| Risk | Context |
|---|---|
| Operating Assumption Impact | A 2.8% negative impact on VNB margins was noted due to interaction between GST (approx. 45% of the impact), persistency, and expense alignment. |
| Persistency Pressure | Numbers declined across most cohorts (13th, 25th, 61st month) on a policy basis, cited as a result of lower ticket sizes from older cohorts. |
| Market Share Erosion | Overall market share by First Year Premium dipped slightly to 57.07% as new players enter the market and FDI limits expand. |
Q&A Highlights
VNB Margin Drivers
- Question: What led to the sharp increase in VNB margins between 1H and 9M FY26? (Madhukar, JP Morgan)
- Answer: A favorable yield curve, particularly in higher durations, contributed 1.9% to the margin increase. However, this was partially offset by a 2.8% negative impact from operating assumptions including GST and persistency (Ajay Srivastava).
Non-Par Hedging
- Question: Do you run a hedged Non-Par portfolio or just benefit from not revising IRRs? (Madhukar, JP Morgan)
- Answer: LIC is very active in interest rate derivatives and regularly uses Forward Rate Agreements (FRA) to hedge positions to the maximum extent (Arindam Dasgupta).
Bancassurance Ticket Size
- Question: Why has the Bancassurance policy count reduced while premium grew? (Aishwarya Mittal, Priaish Finbridge)
- Answer: A major alternate partner faced operational issues affecting small-ticket policies, but the focus has shifted to higher premium productivity, resulting in 40%+ growth in bank channel premiums (R. Doraiswamy).
Persistency Strategy
- Question: Why is persistency dropping across cohorts? (Shobhit Sharma, HDFC Securities)
- Answer: Lower ticket sizes and high payment frequency impact persistency negatively. Recent interventions, like doubling minimum sum assured to ₹2 lakh, are expected to improve future 13th-month cohorts (Dinesh Pant/Ajay Srivastava).
Key Takeaway
LIC delivered a solid 9M FY26 performance with PAT rising 16.68% YoY to ₹33,998 crores and AUM reaching ₹59.17 lakh crores. Strategically, the Corporation is successfully pivoting toward High-Margin Non-Par products, which now represent 36.46% of Individual APE, driving a 170-bps expansion in VNB margins to 18.8%. While persistency remains a watch-out area due to legacy small-ticket policies, management is mitigating this through increased minimum sum assured mandates and revival campaigns. Bancassurance and digital channels (ANANDA/DIVE) are showing significant traction, contributing to a more diversified distribution mix. Looking ahead, the Corporation is eyeing a strategic entry into the health insurance sector and preparing for the next tranche of government stake dilution. LIC remains focused on balancing its social mandate of ‘insurance for all’ with a clear trajectory toward enhanced shareholder value through cost rationalization and product mix optimization.
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