Last quarter (April-June) earnings soared from a year ago. What drove the growth and is it sustainable?
This is sustainable and profit is likely to increase in the coming quarters. We have reported ₹9,543 crore, of which ₹7,491 crore was accretion on available solvency transferred. Even if we remove this, it has grown to ₹2,050 crore.
But the overall policy sale has slowed, denting market share. What happened?
After listing, we have had a directional change in our product mix. Participating products are dominant in LIC’s product mix. We have sensitised our field force in the best interest to sell non-par products that yield better margins. Share of non-par has gone up to 10.22% from 7.75% last year. Our objective is to take it to high double digits.
‘Looking to regain market share’
Has the withdrawal of tax benefits from high value non-par products affected the income?
It had minimal impact on LIC. The number of policies beyond Rs 5 lakh was less than 1% and premium wise 2%. People today buy insurance not just for tax purposes. There is no substitute for life insurance. People take life insurance for life risk.
LIC has been strong in group businesses. That segment seemed weak. What is the outlook on margins?
In group business, some receivables we should have received in Q1 have been deferred due to expectations of higher interest rate. They will come in during this quarter. On margins, our objective is to go beyond 16.2%. In the product mix, the share of non-par APE must grow.You said there is a directional change. What is that and where do you see LIC in the next three years?
We aspire to grow on par with the industry. We want to not just sustain our market share, but also regain some market share. In three years from now, if I am able to sustain market share, it will be great. Directionally, we will be working toward digital transformation of all operations so that we move to 90% digital in the next three years. We want to move to digital customer on-boarding for agencies and the Banca channel.
You are the biggest investor in the country. What is the investment outlook with stocks at near peak and interest rates also at a high?
Our approach to investment philosophy is to take advantage of market movements in the best interest of all stakeholders. We are mostly contrarian investors. When the market heads down, we buy and at the same time when it is soaring, we take some profits off the table. We are a systemically important insurer, we have responsibility toward the market. We must ensure that our actions don’t adversely affect the market.
One of the investments in focus in recent months was your ownership in Adani group companies. How has it performed for LIC?
We do not discuss individual investments. We have never made any loss in those investments. Our profit in those investments is huge. Those companies are growing. I want to allay the fears or doubts of policyholders and other stakeholders and that LIC is a regulated entity, and that we follow due process for investments.