September became the third consecutive month when India’s largest life insurance company, LIC saw decline in its premium collection. LIC’s premium collection in September dropped by 27%, coming in at Rs 18,126 crore, which compares to nearly Rs 25,000 crore in the month of September 2022.

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September has not been an exception as it is the third straight month of decline in premium collection for LIC. The premium collection for the life insurance behemoth dropped by 35% in the month of August and a massive 47% in the month of July 2023.

This consistent underperformance from LIC has led to a drop of 26% is LIC’s premium collection for the first half of FY24. Since LIC is the largest life insurance company with nearly 60% market share, its underperformance has had a significant bearing on the total life insurance industry performance as well.

The government's decision to tax long-term savings life insurance policies, where LIC had a large share has had a severe impact on LIC’s market share as well. LIC’s market share (based on premium collection) has declined by a massive 1000 basis points or nearly 10% between September last year and now. Its market share has also witnessed a decline of nearly 400 basis points or 4% in FY24 so far.

LIC’s stock has also not generated any significant value for its investors so far. LIC’s stock this year is down 7%. In the same period other life insurance stocks have seen a decent move. Max Financial Services has rallied 32% this year, ICICI Prudential Life Insurance has gained 18%, HDFC Life is sitting with gains of 10% whereas SBI Life has also moved by nearly 5% this year.

In the last conversation which CNBC-TV18 had with LIC on August 11, Chairperson-Siddhartha Mohanty said that certain receivables from group business were deferred in Q1FY24 which impacted the premium collection. Mohanty said that he expects these deferred premium to be received only by Q4FY24.

Mohanty also said the he expects to see improvement in margins going forward and the insurer will stick to the guidance of 20-22% VNB margin in the next 4-5 years.

First Published:Oct 10, 2023 1:12 PM IST