(Reuters) -Life Insurance Corporation of India (LIC), the country’s biggest insurer, posted a 3.8% fall in second-quarter profit on Friday as it paid out higher benefits, while new business margins for the half-year expanded.
LIC’s profit after tax fell to 76.21 billion rupees ($903.6 million) for the quarter ended Sept. 30 from 79.25 billion rupees a year earlier.
The net premium income rose 11.6% to 1.20 trillion rupees but the net benefits paid by the insurer to policyholders climbed 17% to 975.62 billion rupees during the quarter.
Rising awareness about insurance policies after the COVID-19 pandemic and new product launches have aided net premium income growth for insurers, analysts said.
Solvency ratio, the measure of an insurer’s ability to meet its long-term debt obligations, rose to 1.98 during the quarter from 1.90 a year earlier.
LIC has been focusing on increasing its share of high-margin non-participating policies to cushion its margins.
Its net value of new business (VNB), which measures expected profit from new premiums, jumped 37.7% year-over-year for the April-September period. The VNB margin for the period rose to 16.2% from 14.6% a year ago.
Other Indian life insurers such as ICICI Prudential Life Insurance and HDFC Life Insurance have struggled to keep their margins intact for the past few quarters with rising demand for low-margin market-linked policies.
LIC’s group business’ total premium rose 25.4% year-on-year for the April-September period, the insurer said in an exchange filing.
Group insurance covers multiple people in the same plan and is generally taken by companies to provide insurance cover for their employees.
Shares of the company ended 1.6% lower ahead of results.
($1 = 84.3400 Indian rupees)
(Reporting by Dimpal Gulwani; Editing by Eileen Soreng)
