IN THE 80s, Doordarshan ran an ad series with the message, ‘Roti, Kapda, Makan aur Jeevan Bima’ (Food, Clothes, Shelter and Life Insurance). In the 1990s, an audio-visual ad with the message ‘Zindagi Ke Saath Bhi, Zindagi Ke Baad Bhi’ (In Life and After Life), echoed in every household as a widow shared her story of discharging her responsibilities without financial constraints due to her husband’s life insurance policy.

In a country where life insurance penetration is just 3% even today, Life Insurance Corp. of India (LIC) has spent over six decades creating a market for life policies. The result: Even almost a quarter century after the sector was opened for private players, LIC continues to reign with a 64.02% market share (as on June 2024), according to the Insurance Regulatory and Development Authority of India.

“We continue to retain the leadership position in both individual and group segments in the Indian insurance industry… we will choose profitable growth instead of just market share,” says Siddhartha Mohanty, MD and CEO, LIC.

Mohanty’s priorities reflect in the company’s financials. LIC’s total income grew 8.6% to ₹8.60 lakh crore in FY24, making it the second-largest listed firm in India in terms of revenue after Reliance Industries with ₹9.22 lakh crore.

LIC’s revenue growth last fiscal was led by a double-digit rise (19.5%) in income from investment operations to a 10-year high of ₹3.68 lakh crore in FY24, and a 4% growth in individual business premiums. The company invests the surplus premium income it receives from policyholders (after paying off maturity and mortality claims) in bonds and equities. It earns interest, dividend income and capital gains on its investment portfolio. The insurer also invests in commercial real estate and earns rents from these investments.

In comparison, LIC’s total premium income (business and individual) was up a marginal 0.2% YoY to ₹4.75 lakh crore in FY24 following competitive pressure.

Bouncing Back

LIC, however, is regaining its market share by improving its product mix, which has led to strong growth in the value of new business and technological adoption.

“For the last five to six quarters, LIC is once again giving a tough fight to private players. It is now more aggressive in marketing, technology implementation, and is expanding its distribution network and product mix,” says Chokkalingam G., founder, Equinomics Research.

Prayesh Jain, lead analyst at Motilal Oswal Financial Services says LIC is focusing on ramping up growth in segments, including protection, non-participating insurance and savings annuity. “Product launches, stronger bancassurance, alternate channel presence and digitisation will enable LIC bridge the gap with private players,” adds Jain.

Mohanty, meanwhile, is looking to counter the private sector by fine-tuning LIC’s market growth strategies. “We were already there in Tier-II and III and have further strengthened our position. Now private players are also focusing on Tier II and III. This year our target is to represent every panchayat. Every panchayat in the country must have one LIC agent at least. We have started work in that direction,” he adds.

Transformation Underway

Last fiscal also saw a 13.7% growth in LIC’s net profit to ₹40,916 crore, thanks to a slower increase in expenses and launch of new products. The company is focusing on increasing the proportion of non-par business (where the policyholder does not benefit from profits generated by the company), says Mohanty. “We launched six new non-par products during FY24,” he adds.

Cost has been a double-edged sword for the company. While expenses on salary and wages and other employee costs were down 1.3% to ₹39,584 crore in FY24, its biggest cost head — operations and administration expenses, including commission payment to 14.15 lakh agents as well as maturity and mortality claims — were up 10.9% to ₹7.67 lakh crore.

“We have started working on a project to transform our agency business to make it future-ready,” claims Mohanty. “LIC’s digital transformation will be crucial for its journey to grow market share,” adds Chokkalingam.

Benefitting Shareholders

LIC’s overall balance sheet or total assets rose 16.3% to ₹52.22 lakh crore at the end of March 2024, making it the second-biggest financial institution in the country after SBI with a balance sheet size of ₹67.47 lakh crore. The growth in balance sheet was led by a rise in policyholders’ liability (the future pay-out it owes to policyholders), reflecting higher sales of new life insurance policies last fiscal. LIC’s policyholder’s liability was up 15.6% YoY to ₹51.69 lakh crore at the end of FY24. In comparison, net worth, or shareholder liability, was up 78.64% YoY to ₹82,937 crore. The insurer paid ₹6,325 crore in annual dividend to shareholders, including the government, in FY24, from ₹43 crore in FY20. The Centre holds 96.5% stake in LIC.

The company is also looking at potential acquisition targets in health insurance. “We are exploring all possibilities to have some stake in a standalone health insurance firm,” says Mohanty.

If Mohanty’s search materialises, the country’s largest life insurer will enter a new segment. The company will have a new revenue source, and customers will have more to choose from.