LIC - Q1 FY27 Earnings Call Summary Thursday, August 6, 2026, 7:00 PM IST
Event Participants
Executives
14 Ajay Kumar Srivastava, Arindam Das Gupta, Dinesh Pant, Hemant Buch, R. Chander, R. Doraiswamy, Ratnakar Patnaik, S.K. Srivastava, Sanjay Bajaj, Sesha Giridhar, Shatmanyu Shrivastava, Shobha Sulochana, Uthup Joseph, Vandana Sinha
Analysts
10 Gaurav Jain, Harshal Milan Mehta, Manas Agrawal, Mohit Mangal, Nischint Chawathe, Prayesh Jain, Shobhit Sharma, Srihari Venugopalan, Supratim, Swarnabh Mukherjee
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Premium Income | ₹1,27,250 crore | +6.75% YoY vs ₹1,19,200 crore; driven by individual NBP (+14.48%) and group business (+8.61%) |
| Individual New Business Premium | ₹14,351 crore | +14.48% YoY vs ₹12,536 crore; agency channel contributed 93.07% of NBP |
| Total APE | ₹13,692 crore | +8.22% YoY; individual APE ₹7,532 cr (55.01%) and group APE ₹6,160 cr (44.99%) |
| Non-par share of Individual APE | 32.49% (₹2,447 cr) | Up 215 bps from 30.34% (₹1,529 cr) in Q1 FY26; par APE ₹5,085 cr (67.51%) |
| AUM | ₹59,39,384 crore | +4.10% YoY from ₹57,05,341 crore as on 30 Jun'25 |
| Profit After Tax | ₹13,492 crore | +22.81% YoY vs ₹10,986 crore in Q1 FY26 |
| Net VNB | ₹3,136 crore | +61.32% YoY vs ₹1,944 crore; growth led by non-par savings (+59.24%) and protection (+43.59%) |
| Net VNB Margin | 22.9% | +750 bps YoY from 15.4%; mix contribution +6.5%, assumption change +2.9%, expense impact -1.9% |
| Overall Expense Ratio | 10.63% | +16 bps YoY from 10.47%; driven by GST input tax credit loss (no ITC on individual lines) |
| Solvency Ratio | 2.42 | Improved from 2.17 YoY; post-dividend equivalent 2.32; ₹1,82,000 cr ring-fenced ASM funds |
| Persistency (13th month, premium basis) | 75.33% | Down 30 bps from 75.63% YoY; 61st month at 61.12% vs 63.85% YoY — decline of 273 bps |
| Market Share (FYP Income) | 60.10% | Down 341 bps from 63.51%; individual share 38.89%, group share 70.90% |
| New Policies Sold / Agent Count | 31,02,281 / 14,45,692 | Policies +2.06% YoY; agents down 2.73% YoY; agency market share 43.69% (vs 47.11%) |
Geographic & Segment Commentary
Individual Business: NBP grew 14.48% YoY to ₹14,351 crore; non-par savings grew 59.24% and protection grew 43.59%. Par/non-par mix at 67.51%/32.49% of individual APE, with non-par share increasing 215 bps YoY. Average ticket size supported by revised minimum sum assured (₹1L to ₹2L) effective Oct'24.
Group Business: Total premium grew 8.61% YoY to ₹51,834 crore (NBP ₹51,229 crore); group APE ₹6,160 crore, 45% of total APE. Group segment delivered 29.4% VNB margin on 45% of APE. Persistency experience on group was marginally negative in assumption changes.
Channel Mix: Agency remains dominant — 98.51% of policies and 93.07% of NBP. Bancassurance and alternate channels collected ₹907.14 crore NBP (+5.25% YoY); bank channel down 8.62% to ₹483.39 crore due to West Asia conflict impacting remittance-linked annuity sales; alternate channels up 27.27% to ₹423.75 crore. Channel share of individual NBP at 6.34% (vs 6.89% YoY).
Rural Expansion (Bima Sakhi): 2.87 lakh Bima Sakhis sold 4.52 lakh policies generating ₹656.91 crore NBP; 62% of 2,44,876 gram panchayats covered (1,51,620). Target: at least one Bima Sakhi in every gram panchayat.
Claims Experience: Maturity claims ₹57,099 crore (+12.88% YoY amount, -10.94% policy count); death claims ₹5,934 crore (+0.97% amount, -3.09% count); 37.27 lakh total claims processed in Q1.
Company-Specific & Strategic Commentary
Digital Transformation (DIVE Initiative): Launched My LIC (customer self-service) and Super Sales Saathi (agent workspace with real-time customer data, commissions, renewals, sales insights) in April 2026. ANANDA agent-assisted app processed 4,36,925 policies (+25.56% YoY), active agents on app up 16.29% YoY.
Product Pipeline & Rationalization: 59 products available (excluding PMJJBY) — 37 individual, 13 group, 1 common, 7/1 riders. Launched LIC's New Jeevan Sathi single premium and limited premium in April 2026; withdrew Nav Jeevan Shree single premium (closed-ended). Post-IPO focus on expanding non-par product suite where margins are structurally higher.
OFS & MPS Compliance: Government sold 6.5% stake via OFS during the quarter; public float now 10%, meeting minimum public shareholding norms. Management welcomed new shareholders; LIC completes 70 years of existence on 1 September 2026.
Agent Network Quality Focus: Agent count declined 2.73% YoY to 14.46 lakh; attributed to weeding out non-serious candidates who joined Bima Sakhi expecting stipendiary roles without performance obligations. Market share of agents at 43.69% (down 342 bps YoY) with rural agent numbers growing.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Net VNB Margin | Mid-20s target for FY27 | Q1 at 22.9%; management confirmed "working towards" low-to-mid 20s exits; RFR movement is the uncertain factor; continued focus on value-accretive non-par and protection lines |
| APE Growth | Expected to accelerate in Q2-Q4 | Q1 APE growth muted due to ULIP slowdown; management expects uplift as new business focus intensifies and monthly-mode APE annualization normalizes |
| ULIP Sales | Recovery expected when market normalizes | Q1 ULIP weak due to market volatility; no cannibalization expected of non-par growth; Q2 dependent on market conditions |
| Bancassurance & Bank Channel | Recovery expected in subsequent quarters | Q1 weakness due to delayed marketing plans with bank partners and West Asia remittance impact; management expects FY27 bank channel performance to surpass last year |
| Expense Ratio | Normalization expected from Q3 | GST input tax credit loss impacts Q1/Q2 YoY comparisons; volume growth from GST exemption on premium (post-GST) expected to reduce per-policy expense assumptions |
Risks & Constraints
| Risk | Context |
|---|---|
| Market Volatility / ULIP Sensitivity | ULIP sales materially weak in Q1 due to volatile equity markets; APE growth was held back; recovery uncertain and market-dependent. Management notes ULIP contribution to return when "market situation normalizes." |
| GST Input Tax Credit Loss | Loss of ITC on individual life insurance lines increased expense ratio by 16 bps YoY; will distort expense comparisons through Q1-Q2 FY27; management expects normalization with volume growth, but near-term margin headwind real. |
| Persistency Deterioration | 13th, 25th and 61st-month persistency declined YoY (premium basis); persistency assumption change was marginally negative on VNB; group persistency negative, individual mixed by duration — a watch item for lapse risk and margin quality. |
| Market Share Erosion | FYP market share down 341 bps YoY to 60.10%; agency market share down 342 bps to 43.69%; competitive pressure from private insurers and shifting distribution dynamics. Management attributing agent exits to deliberate weeding. |
| Bancassurance Concentration Risk | Bank channel NBP down 8.62% YoY, driven by West Asia conflict impact on remittance-linked annuity demand and delayed partner marketing plans; recovery assumed but timing pending market stabilization. |
| RFR / Interest Rate Sensitivity | VNB assumptions positively impacted by RFR changes (+5% contribution); adverse rate moves could unwind these gains; management flagged RFR as the "uncertain factor" outside their control. |
| Regulatory Minimum Sum Assured Impact | Master circular raised minimum sum assured from ₹1L to ₹2L, reducing low-ticket policy volume; margin up but policy count growth (2.06% YoY) remains sluggish; market adaptation time required. |
Q&A Highlights
VNB Walk Breakdown & Assumption Changes
- Question: What are the assumption changes in the VNB walk, and is the cost impact driven by GST exclusion? (Swarnabh Mukherjee)
- Answer: Business mix contributed +6.5% — individual non-par savings grew 59.24% and protection 43.59%. Assumption changes (RFR, persistency, CRM/HR deductions) contributed +2.9%: RFR positive ~5%, persistency marginally negative (group negative, individual mixed across durations). Expense assumptions including ITC impact deducted -1.9%. Net improvement of 750 bps to 22.9%. (Ajay Kumar Srivastava)
- Question: Will the -2% expense impact normalize? (Swarnabh Mukherjee)
- Answer: The ITC loss will hit Q1 and Q2 YoY comparisons (ITC was available last year in Q1/Q2); after assumption changes are incorporated, subsequent quarters should see much less of an impact. (R. Doraiswamy)
Segment-Level VNB Margins & Product Mix
- Question: Can you break down margin improvement between mix and product-level margin gains across segments? (Harshal Mehta, Supratim)
- Answer: All segments improved — par 19.4% margin on 37.1% of APE, individual non-par 49.3% (₹1,678 cr of VNB), group 29.4% on 45% of APE. Post-IPO product introductions in non-par and term assurance drove segment gains; product mix will keep evolving based on customer needs. (Ajay Kumar Srivastava)
- Question: Is persistency positive or negative in the assumption walk? (Nischint Chawathe)
- Answer: RFR positive ~5%; persistency combined (individual + group) is marginally negative; group persistency negative and individual persistency mixed across durations. (Ajay Kumar Srivastava)
ULIP Decline & APE vs WRP Reporting Gap
- Question: Is ULIP reduction deliberate, and should recovery be expected in Q2? (Swarnabh Mukherjee)
- Answer: ULIP reduction is a function of market volatility and continued focus on margin-accretive lines; expect ULIP to recover when markets normalize. No cannibalization of non-par expected. (R. Doraiswamy)
- Question: Why is APE lower than IRDAI WRP data? (Swarnabh Mukherjee, Manas Agrawal)
- Answer: APE annualizes first-year premium by frequency (e.g., monthly × 12) and does not include renewal premiums received in the first year; WRP captures actual collections. Shift to regular/monthly premium products increased WRP yet muted APE growth; APE growth expected to accelerate in subsequent quarters. (R. Doraiswamy)
Protection Business Growth Drivers
- Question: Which channels are driving 40%+ individual protection growth? (Gaurav Jain)
- Answer: Individual agents are the primary contributors by policy count; bancassurance focuses on annuity and ULIP so far but will add protection push; growth in protection is a key focus area and expected to continue for several quarters. (R. Doraiswamy)
Non-par Surplus & ASM Ring-fencing
- Question: Why does surplus largely come from non-par book despite smaller book size? (Prayesh Jain)
- Answer: Par surplus is recognized only at year-end annual valuation (90/10 share with policyholders), while non-par surplus is valued quarterly. Also, ₹1,82,000 crore ASM ring-fenced funds (book value) accrete returns that flow to shareholders. (R. Doraiswamy, Ajay Kumar Srivastava)
VNB Margin Sustainability & Targets
- Question: What is the sustainable VNB margin given RFR uplift may not repeat? (Shobhit Sharma)
- Answer: Expect margin to grow beyond current levels and settle around industry average. Confirmed on track toward mid-20s VNB margin by year-end; expense efficiency improvements and value-accretive product mix will drive momentum; RFR remains the one uncertain variable. (R. Doraiswamy)
Bancassurance Weakness & Bank Channel
- Question: Why has bancassurance weakened after strong prior quarters? (Mohit Mangal, Nischint Chawathe)
- Answer: Bank channel specifically down 8.62% — West Asia conflict affected remittance-linked annuity demand and market upheaval hit ULIP sales; some partner marketing plans were delayed in Q1. Recovery expected and FY27 bank channel performance will be better than last year. (R. Doraiswamy, Hemant Buch)
- Question: Lower ticket size driving premium decline in banca channel? (Mohit Mangal)
- Answer: No — increase in minimum sum assured from ₹1L to ₹2L reduced low-ticket policies but raised margins; the channel continues to focus on annuity/ULIP where West Asia and market volatility impacted. (Hemant Buch)
Solvency Strategy & Capital Deployment
- Question: Is higher solvency a deliberate strategy to support protection growth? (Mohit Mangal)
- Answer: Pre-dividend solvency 2.42; post-dividend ~2.32. No set strategy — solvency supports liability underwriting and will be aligned with regulatory changes; a call will be taken as capital requirements evolve. (R. Doraiswamy)
Average Ticket Size & Renewal Commission
- Question: Is average ticket size jump sustainable and what drove it? (Shobhit Sharma)
- Answer: Annuity (single-premium ongoing) sales plus minimum sum assured revision from ₹1L to ₹2L drove ticket size; sustainable given product mix direction. Renewal commission decline reflects agents leaving books and no longer eligible — no other structural driver. (R. Doraiswamy)
IDBI Stake
- Question: Where does the IDBI stake sit — policyholder or shareholder account? (Supratim)
- Answer: IDBI investment predates LIC IPO (unified fund), so it continues to sit in policyholder funds awaiting stake sale; no change. (R. Doraiswamy)
Key Takeaway
LIC reported a strong Q1 FY27 with PAT up 22.81% YoY to ₹13,492 crore and net VNB margin expanding 750 bps to 22.9%, driven by an 61.32% VNB growth to ₹3,136 crore. The quarter saw 14.48% individual NBP growth, 59.24% non-par savings growth, and 43.59% protection growth, lifting non-par share of individual APE to 32.49%. AUM crossed ₹59.4 lakh crore (+4.1% YoY) and solvency improved to 2.42, while the ₹1.82 lakh crore ring-fenced shareholder ASM book provides an additional earnings buffer. Strategic focus remained on margin-accretive business, digital transformation (My LIC, Super Sales Saathi, ANANDA +25.6%), rural Bima Sakhi coverage at 62% of gram panchayats, and completing the first government OFS (6.5%) to reach 10% public float. Management guided VNB margin toward mid-20s by FY27 exit, conditional on RFR stability, with ULIP recovery and banchannel normalization expected through the year. Key watch points: persistency deterioration at longer durations, FYP market share erosion of 341 bps, and expense pressure from GST ITC loss persisting through Q1/Q2 comparisons.
Transcript incomplete — balance sheet details (investments, asset composition) not discussed in the call; management did not provide full-year APE or premium growth guidance figures.