LICI - Life Insurance

📊 NSE: LICI 🏢 Finance & Investments 📅 Last Updated: 12/14/2025 9:15

💰 Financial Performance

Revenue Growth by Segment

Total Premium Income for H1 FY26 reached INR 2,45,680 Cr, growing 5.14% YoY. Segmental performance shows Individual Renewal Premium at INR 1,22,224 Cr (+6.14%), Total Group Business Premium at INR 94,965 Cr (+6.73%), and Individual New Business Premium at INR 28,491 Cr (-3.54%).

Geographic Revenue Split

LICI maintains a geographically diversified presence across India with 2,048 branch offices and 1,208 satellite offices. While specific regional % splits are not provided, the company emphasizes a lack of single-state concentration.

Profitability Margins

Profit After Tax (PAT) for H1 FY26 was INR 21,040 Cr, a 16.36% increase from INR 18,082 Cr in H1 FY25. The Value of New Business (VNB) Margin stood at 17.6% as of March 2025, with management noting an upward trajectory driven by a shift toward high-margin Non-Par products.

EBITDA Margin

Not disclosed in available documents; however, the Overall Expense Ratio improved to 11.28% in H1 FY26 from 12.74% in H1 FY25, reflecting a 1.46% absolute reduction in operational costs.

Capital Expenditure

Not disclosed in available documents; however, Assets Under Management (AUM) grew to INR 57,22,896 Cr in H1 FY26, a 3.31% increase YoY.

Credit Rating & Borrowing

LICI reports zero borrowings (INR 0.00 Cr) as of September 30, 2025. The Solvency Ratio improved to 2.13 in H1 FY26 compared to 1.98 in H1 FY25, indicating a strong capital cushion.

⚙️ Operational Drivers

Raw Materials

As a service provider, LICI's primary 'input costs' are Commission Expenses (4.36% of premium) and Operating Expenses (11.28% of premium).

Import Sources

Not applicable for a life insurance corporation.

Key Suppliers

Not applicable; however, the company relies on a vast distribution network of 14,85,325 agents and 95 Bancassurance partners to generate business.

Capacity Expansion

Current distribution capacity includes 1.48 million agents (up from 1.43 million YoY). Planned expansion focuses on the Bancassurance and Alternate Channels, which grew 67.62% to INR 2,024.10 Cr in H1 FY26.

Raw Material Costs

Commission Ratio decreased to 4.36% in H1 FY26 from 4.97% in H1 FY25, a 0.61% absolute reduction, improving the net retention of premiums.

Manufacturing Efficiency

Claim Settlement Ratio (Death) remains high at 97.25% for H1 FY26. Conservation Ratio stood at 91.15%, indicating strong policy retention.

Logistics & Distribution

Distribution is primarily human-capital intensive; agency force sold 71,44,242 policies in H1 FY26, though this was a decline from 89,21,078 policies in H1 FY25 due to product realignment.

📈 Strategic Growth

Expected Growth Rate

5.14%

Growth Strategy

LICI is aggressively shifting its product mix toward Non-Participating (Non-Par) products, which now account for 53.34% of Individual New Business Premium. This includes a focus on ULIPs (19.92% share) and Annuity/Pension products (25.22% share) to drive higher VNB margins. The company is also increasing minimum sum assured levels to improve ticket sizes and persistency.

Products & Services

Life insurance policies including Participating (Par), Non-Participating (Non-Par), Unit Linked Insurance Plans (ULIP), Term Insurance, Health Insurance, and Annuity/Pension plans.

Brand Portfolio

LIC (Life Insurance Corporation of India).

New Products/Services

Recent focus on ULIPs and modified Non-Par savings products following the new Master Circular; ULIPs contributed 19.92% to the Individual NBP in H1 FY26.

Market Expansion

Focus on increasing penetration in the Bancassurance channel (currently 4.45% of NBP) and Digital Marketing to capture younger demographics.

Market Share & Ranking

LICI is the market leader with a 59.41% share in Premium and a 63.44% share in the number of policies as of H1 FY26.

Strategic Alliances

95 Bancassurance partnerships and various alternate channel tie-ups.

🌍 External Factors

Industry Trends

The industry is shifting toward Non-Par and ULIP products as customers seek market-linked returns and guaranteed savings. LICI is positioning itself by increasing its Non-Par NBP share to 53.34% to match private sector competitors.

Competitive Landscape

Faces intense competition from private insurers in the Bancassurance and ULIP segments, leading to a slight decline in premium market share from 61.07% to 59.41% YoY.

Competitive Moat

LICI's moat is its massive agency force of 1.48 million (45.86% market share of agents) and its unmatched brand trust, which supports a 91.15% conservation ratio. These advantages are sustainable due to the high entry barriers for physical distribution at this scale.

Macro Economic Sensitivity

Highly sensitive to interest rate movements; a 100 bps increase in reference rates increases VNB margin by 4.7%, while a 100 bps decrease reduces it by 8.0%.

Consumer Behavior

Increasing preference for ULIPs and higher sum assured products, prompting LICI to modify its product basket.

Geopolitical Risks

Minimal direct impact as operations are primarily domestic, though global economic shifts affect investment yields on the INR 57.22 lakh Cr AUM.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with the IRDAI Master Circular (effective Oct 1, 2024) required a total overhaul of the product portfolio to align with new surrender value and sum assured norms.

Taxation Policy Impact

The effective tax rate impact is significant; a shift to a 25% assumed tax rate would decrease the Indian Embedded Value by 10.3%.

⚠️ Risk Analysis

Key Uncertainties

Equity market volatility is a major risk; a 10% decrease in equity values would result in a 6.7% decrease in the Indian Embedded Value (IEV).

Geographic Concentration Risk

Primarily concentrated in India, though geographically diversified within the country across 2,048 branches.

Third Party Dependencies

Heavy reliance on the agency force for 92.13% of new business premium; any regulatory change affecting agent commissions could disrupt the primary sales channel.

Technology Obsolescence Risk

Risk of being outpaced by 'digital-first' private competitors; LICI is mitigating this by building an Omni-channel network and increasing digital marketing focus.