LIC CEO expects stronger second half of FY27 as ULIP demand recovers

Question

Tell us about the divergence in new business premium growth.

Answer:

Our focus in the July-September quarter of 2026 (Q2FY27) has been on improving our protection business. The protection business comes with quite a good amount of yearly premiums being opted for. Therefore, the increase in APE was not well pronounced due to the protection business. We also found that market volatility resulted in lesser interest in ULIPs, and that was another reason why our APE growth was muted in the quarter. But we are confident that as we go forward in the second half of the year, this gap should significantly narrow down.

Question

Interest in ULIPs reduced significantly, and for LIC, ULIP premium was down about 50% year-on-year. How do you see the second half? ULIPs bring larger premiums and help APE growth. Also, you had earlier spoken about double-digit APE growth for FY27, while growth in the first half was about 5%. How confident are you about growth picking up in the second half?

Answer:

As an organisation, we are not providing any guidance as such. We are confident of growing, and that is what we have been consistently maintaining. We are focusing on profitable growth, and we have been delivering on that profitable growth throughout. On ULIPs, yes, market volatility and a significant reduction in the value of stocks in the market caused a reduction in the interest shown by our intermediaries as well as customers in ULIPs in the first half of the year, particularly towards the end of the second quarter. But with market sentiment changing, we are confident that interest in ULIPs will improve in the days to come, along with the focus that we have been giving on the protection business as well as savings. We expect good growth in the second half of the year, and we are confident that we will be able to reach good growth in APE as well by the end of the year.

Question

Would that be about double-digit growth?

Answer:

As I told you earlier, I am not pinning it to a particular number, but we are confident of very good growth, which LIC has been maintaining for quite some time.

Question

At about 21.8%, there are assumptions that a large part of the margin improvement has come from economic variance, or the yield curve benefit, rather than operating variance. Could you clarify, and how do you see margins moving from here?

Answer:

It’s not the case. Our operational variance has also been substantially contributing to the improvement in value of new business (VNB) margins over a period of time, and we have been continuously focusing on improving our operational efficiencies. ULIPs had a degrowth in APE terms, but they had growth in weighted received premium (WRP) terms. So, we have been getting a good amount of premium through ULIPs as well. We have both single-premium and regular-premium ULIPs, and with the market being what it was, we got good traction in single-premium ULIPs as well. So, our premiums have not been that badly affected, but we expect them to come back to earlier levels in the second half of the year. Coming to VNB margins, yes, there has been a small contribution from yield curve changes and RFR changes.

Question

Would you be able to tell us how much?

Answer:

We don’t normally give the split of that. You will see it at the end of the year when we give the walk.

Question

Are you confident of having margins higher than 2025-26 (FY26), as you had said in the previous interview?

Answer:

Our continuous focus is on improving our efficiency and growing profitably.

Question

What portion of your APE business comes from IDBI Bank, and what is the contribution of bancassurance as a whole? With the IDBI Bank divestment going through, would you continue to have exclusive control over IDBI Bank’s insurance distribution?

Answer:

LIC has currently improved the contribution of bancassurance and alternate channels in the overall new business premium to 7.8%. In the last two or three years, we have seen good growth in contributions received from corporate agents, brokers and other alternate channels as well. On the banking side, we have a very big banking partnership bandwidth. IDBI Bank is one of the premier partners. IDBI Bank has an exclusive partnership with LIC in India and has been contributing substantially well. Currently, the IDBI transaction, as announced by the government, is going forward. We expect a new promoter to take a controlling stake in it. The indications are that it may have another life insurance company as part of its group, in which case perhaps the monopolistic partnership might not be there. But we don’t expect any great fall, or any fall at all, in the volume of business being contributed by IDBI Bank for LIC’s bancassurance distribution.

Question

You would be selling half of what you own in IDBI Bank as part of this divestment. What do you plan to do with the balance stake? Would you look to unlock that value as well?

Answer:

The banking regulations do not permit an insurance company to own a bank. It was a special dispensation given to LIC considering the condition that prevailed at IDBI Bank, and we were given special permission to increase our stake. When this divestment transaction goes through, the old regulations will come back. So, we may have to bring down our stake in any organisation to a level below the regulatory permitted levels.

Question

That would be below 15%?

Answer:

It’s 15%. As of now, if the current deal goes through, we will be coming down to 19%, and we will have the opportunity of a two-year window to bring it down to 15%.