Life Insurance Corporation of India (LIC), the country’s largest insurer, reported a 32 percent year-on-year (YoY) jump in its consolidated net profit for the second quarter (Q2) of FY26, reaching Rs 10,054 crore. The surge was driven by robust investment income and steady growth in premium collections, reflecting strong operational efficiency and prudent portfolio management despite an evolving regulatory environment and competitive challenges.
The insurer’s total premium income rose 5 percent year-on-year to Rs 1.26 lakh crore in Q2FY26, while investment income continued to support profitability amid volatile equity markets. However, LIC’s overall market share based on first-year premium income (FYPI) declined to 59.41 percent for the half-year ended September 2025, compared to 61.07% in the same period last year, marking the first time LIC’s share has dipped below 60 percent.
LIC CEO and Managing Director R. Doraiswamy acknowledged the decline in market share but underscored the company’s shift in focus toward sustainable and profitable growth.
“Rather than worrying too much about market share, we are focusing on profitable growth over a period of time,” Doraiswamy said, attributing the temporary decline to the new surrender value guidelines and transitional disruptions caused by recent Goods and Services Tax (GST) rate changes.
He explained that the revised GST framework had caused short-term hesitancy among customers, particularly in September, as many awaited the implementation of the new exemption for individual life insurance policies.
GST restructuring and policy mix impact business volume
The new GST rate structure, implemented on September 22, 2025, brought full exemption to individual life policies. However, Doraiswamy said that the announcement period between the policy declaration and implementation led to a “withholding of business,” as customers deferred purchases in anticipation of tax benefits.
“From the date of announcement till implementation, there was a complete withholding of business by customers in anticipation of GST exemption. This affected our business in September,” Doraiswamy said.
He added that with the GST exemption now effective, new business volumes are expected to witness a meaningful recovery in the next two quarters. The company expects this relief to encourage more first-time buyers and strengthen LIC’s competitive edge in the individual policy segment.
In Q2FY26, LIC’s individual business premium stood nearly flat at Rs 79,241 crore, up marginally from Rs 77,504 crore a year ago. Within this, individual new business premiums, a key indicator of fresh policy sales, declined 10 percent to Rs 15,955 crore, while renewal premiums rose 6 percent to Rs 63,286 crore, demonstrating strong retention among existing policyholders.
The number of individual policies sold dropped 25 percent year-on-year to 4.22 lakh, reflecting the temporary slowdown due to GST-related deferments.
On the other hand, LIC’s group business segment posted strong performance, with premiums rising 11 percent to Rs 47,239 crore during the quarter. The insurer’s market share in the group business stood at a commanding 72.74 percent, while its share in the individual segment was 37.21 percent.
Doraiswamy emphasised that the group business remains a core strength for LIC, supported by large institutional clients, government schemes, and corporate partnerships.
Doraiswamy confirmed that LIC has passed on the full GST exemption benefits to customers while ensuring that agents do not bear additional financial burden arising from the loss of input tax credit (ITC).
“We are not currently considering any passing on of this GST liability to agents,” he said, adding that higher business volumes are expected to offset any increase in commission-related expenses.
Under the new GST regime, ITC benefits apply to life and reinsurance premiums but exclude commissions and management expenses, increasing distribution costs for insurers. Despite these challenges, LIC expects to maintain margins through volume-driven efficiencies.
“We will be able to take care of the pressure on margins and continue to focus on margin growth and profitability,” Doraiswamy stated.
LIC reported an Indian Embedded Value (EV) of Rs 8.13 lakh crore as of September 2025, compared to Rs 8.22 lakh crore a year earlier. The insurer maintained that the GST rate changes had an immaterial impact of less than 0.5 percent on its EV, underscoring strong balance sheet resilience.
The solvency ratio, a key measure of financial stability, improved to 2.13 percent from 1.98 percent last year, well above the regulatory requirement of 1.5 percent.
The Value of New Business (VNB), a metric reflecting the profitability of new policies sold during the period, rose 8 percent year-on-year to Rs 3,167 crore. The net VNB margin also expanded to 17.6 percent from 16.2 percent, signifying improved efficiency and better profitability on new policies.
LIC’s investment strategy once again proved to be a strong contributor to profitability. Despite global market fluctuations, the insurer’s diversified portfolio delivered healthy returns, supported by equity market performance and stable interest rates. The corporation’s investment income continues to serve as a key cushion against cyclical variations in premium income.
Notably, LIC’s long-term investment approach, rooted in conservative asset allocation and large exposure to government securities, positions it well amid economic uncertainty.
Capital market strength and policy reforms support growth
At the same event, SEBI Chairperson Tuhin Kanta Pandey highlighted the pivotal role of India’s capital markets in supporting the country’s progress toward the ‘Viksit Bharat’ goal.
He said that companies have raised nearly Rs 2 lakh crore from the primary market this year, reflecting strong investor confidence and deepening financial inclusion. Pandey also pointed out significant growth potential in mutual funds, noting that assets under management currently represent less than 25 percent of India’s GDP, with urban participation at 15 percent and rural participation around 6 percent.
Such growth in capital markets is expected to create additional opportunities for insurers like LIC to channel savings into long-term investment products.
Despite strong earnings, LIC’s stock ended 1.29 percent lower at Rs 894 on the NSE on Thursday (Nov 6). Market analysts attributed the decline to short-term concerns over market share erosion and muted individual business growth. However, most brokerage reports maintain a positive outlook, citing improving margins, higher renewal rates, and favourable policy reforms.
With a 32 percent jump in quarterly profit and improving operational indicators, LIC has demonstrated its ability to navigate regulatory shifts and competitive pressures while sustaining growth momentum. Though its market share in the individual premium segment has slipped marginally, the insurer’s focus on profitability, financial discipline, and customer-centric policies is expected to deliver long-term stability.
The coming quarters will be crucial as LIC capitalises on the GST relief and intensifies its expansion into untapped markets, reinforcing its leadership in India’s life insurance sector.
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