While Unit Linked Insurance Plans (ULIPs) and annuities faced headwinds in the April-June quarter of 2026 (Q1FY27) due to market uncertainty and interest rate concerns, he expects the insurer to grow on a sustainable and profitable basis.
Doraiswamy said LIC will continue focusing on improving margins through a better product mix and operational efficiency. He added that while interest rates remain an external factor, the insurer sees room for further margin expansion and expects the share of non-par products to gradually rise to around one-third of its individual business.
For the June quarter (Q1FY27), LIC reported a 10% year-on-year rise in new business premium to ₹66,185 crore from ₹60,262 crore. Retail Annualised Premium Equivalent (APE) grew 7% to ₹7,532 crore from ₹7,061 crore. Value of New Business (VNB) surged 61% to ₹3,136 crore from ₹1,944 crore, while the VNB margin expanded sharply to 22.9% from 15.4% a year earlier.
Mumbai-headquartered LIC, India’s public sector life insurer, has seen its shares decline nearly 12% over the past year. The company currently commands a market capitalisation of around ₹4.96 lakh crore.
This is an edited transcript of the interview.
Q: Tell us about the verticals which performed well and which lagged.
A: We have been trying to improve the contribution from the non-par segment, and that has been our focus area for some time now.
In the first quarter, we recorded good growth in non-par savings, which is our area of strength, and non-par protection, where we started focusing this year. Both performed very well.
We saw some strain in ULIPs and annuities. These are the two areas where we had done well over the last two years. This year, however, both saw slower growth because of market uncertainty.
When markets face uncertainty, interest rates also become an area of concern. As a result, annuity sales as well as ULIPs faced headwinds. ULIPs, in particular, could not deliver the kind of growth we wanted because of market uncertainty.
Overall, we still delivered over 8.8% growth, supported by strong performance in non-par savings and non-par protection.
Q: ULIPs did not perform well, naturally because of the markets. From the July-September quarter of 2026 (Q2FY27) and October-December quarter of 2026 (Q3FY27) onwards, do you expect ULIPs to recover? Keeping that in mind, what APE growth are you targeting for FY27?
A: We are a legacy player with a very large base. Naturally, we are not looking at very high growth over a long period. Our focus is to continue growing on a sustainable and profitable basis. I would expect our growth to be in the double digits.
Q: Early double digits?
A: We can think of early double digits to start with, but it can improve over a period of time. We need to work towards that.
Q: If ULIPs recover, will you have to compromise margins to achieve that growth?
A: Our margins come from different portfolios. In the first quarter, margins improved across all businesses. Participating (Par) products improved margins, the group business also improved margins, and non-par continued to deliver healthy margins.
We are focusing on improving margins through multiple factors. One is the product mix itself. The second is operational efficiency, where we optimise expenses and ensure that top-line growth remains higher than expense growth. The third factor is interest rates, which are market-driven and not within anyone’s control.
If interest rates remain around current levels, we should continue to see margin improvement going forward.
Q: LIC reported a margin of 22.4% in the first quarter compared with 21.2% in 2025-26 (FY26). Where do you see margins for the full year?
A: We cannot predict the interest rate scenario because of the uncertainty in the market and geopolitical developments. If interest rates change, they will impact margins across the industry. That part is not predictable.
However, the improvement that comes from product mix and operational efficiency will continue.
If the external environment remains broadly unchanged, we can look at an improvement over last year and even over the first quarter, to a small extent.
Q: Would you like to move closer to the industry average?
A: We can look at an improvement of around 100 basis points or so. But I do not want to give exact guidance. Our focus will be to continue improving margins.
Q: Can you share the margin profile across products such as ULIPs, protection and annuities?
A: ULIPs have limitations because of the cap on the Reduction in Yield (RIY). So, you cannot expect a significant increase in ULIP margins.
However, margins can improve if rider adoption increases and if the average ticket size goes up. Both are focus areas for us. We also receive healthy margin contributions from savings and protection products.
Annuities are interest-rate sensitive, so we cannot expect very high margins there either. However, annuities continue to contribute both to top-line growth and value of new business (VNB).
Watch the full conversation here
Q: The share of non-par products in individual annualised premium has increased to 32.5% from 30.5%. Do you see further improvement? How high can it go?
A: Yes, it should improve further because almost all the products we have launched since April 2022 have been non-par.
There is also strong customer preference for guaranteed products because customers know exactly what they will receive based on what they pay.
That preference for non-par products continues to increase.
We have consistently said that we would like to maintain roughly a one-third to two-thirds mix.
It can move slightly on either side. The non-par share can increase to around 35-36%, or remain in the 30-33% range.
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