Good evening, ladies and gentlemen. Thank you so much for joining LIC's earning call. The call will begin shortly. Request you please stay connected. Thank you so much for your patience. Ladies and gentlemen, good day and welcome to LIC's H1 FY 2026 earning conference call. As a reminder, all participants' line will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. We have senior management of LIC led by Mr. R. Doraiswamy, CEO and MD on this call. I now hand the conference over to Mr. R. Doraiswamy, CEO and MD LIC. Thank you and over to you, sir.
Thank you. Good evening, everyone. I am Doraiswamy, Chief Executive Officer and Managing Director at LIC. I would like to welcome all of you to the half-yearly results call of the financial year 2025-2026. Our results declared today have been uploaded along with the press release and the investor presentation on our website, as well as the websites of both the exchanges, BSE and NSE. Along with me on this call, I have three Managing Directors: Sri Sapal Bhanu, Sri Dinesh Pant, and Sri Ratnakar Patnaik. Senior officials of the corporation present on this call are Sri Ajay Kumar Srivastava, Appointed Actuary and Executive Director Actuarial from the Actuarial team; Sri Sunil Agrawal, CFO from the Finance team; Sri R. Chander, Executive Director Investment Front Office and Chief Investment Officer; Sri Sanjay Kumar Srivastava, Executive Director Investment Back Office from the Investment team.
From the marketing team, we have Sri Govind Agarwal, Executive Director Marketing Product Development, Mr. Hemant Buch, Executive Director in charge of marketing through Bancassurance and Alternate Channels , Sri K. Seshagiri, Executive Director Pension and Group Schemes. Also, we have Ms. Vandana Sinha, Executive Director Customer Relations Management, Claims and Annuities, and Sri Sanjay Bajaj, Head Investor Relations on this call. Let me take you through the key business, operational, and financial highlights for the half-year ended 30th September 2025. Our market share by first-year premium income for the six months ending 30th September 2025 is 59.41%, as compared to 61.07% for the similar period ended 30th September 2024. We continue to maintain our leadership in both individual as well as group business within the Indian life insurance industry.
Now, if you bifurcate this overall market share of 59.41% into segment-wise share of individual and group business, we would have a market share of 37.21% in the individual business and 72.74% in the group business for the six months ending September 30th, 2025. On a comparable basis, for the six months ending September 30th, 2024, the respective market shares for individual and group business were 39.79% and 74.77%, respectively. For the six months ended September 30th, 2025, we have reported a total premium income of INR 245,680 crore, as compared to a total premium income of INR 233,671 crore for the six months ended September 30th, 2024, registering a growth of 5.14% on a year-on-year basis.
The individual new business premium income for six months ended September 30th 2025, was INR 28,491 crore, and for the corresponding period last year, it was INR 29,538 crore, thereby registering a drop of 3.54% on a year-on-year basis. Renewal premium income of individual business for six months ended September 30th was INR 1,22,224 crore, as compared to INR 1,15,158 crore for the same period ended September 30th, 2024. Therefore, for six months ended September 30th, 2025, our total individual premium income, including renewals, was INR 1,50,715 crore, as compared to INR 1,44,696 crore for six months ended September 30th, 2024, registering a growth of 4.16% on a year-on-year basis. The group business total premium income for six months ended September 30th, 2025, was INR 94,965 crore, comprising new business premium of INR 92,586 crore.
In comparison, for six months ended 30th September 2024 last year, the group business total premium income was INR 88,975 crore and comprised new business premium of INR 86,056 crore. Therefore, for the six months ending 30th September 2025, the total group premium has increased by 6.73% as compared to the similar period of the previous year. The total annualized premium equivalent for six months ended September 30th, 2025, is INR 29,034 crore, which is comprised of individual APE of INR 17,170 crore and group APE of INR 11,864 crore. Therefore, on an APE basis, the individual business accounts for 59.14% and the group business accounts for 40.86%. Further, of the individual APE, the participating business accounts for INR 10,936 crore and non-PAR amounts to INR 6,234 crore. Therefore, our non-PAR share of individual APE is 36.31% and PAR is 63.69% for the six months ended 30th September 2025.
As you may recall, for six months ended 30th September 2024, our non-PAR share of total individual business based on APE stood at 26.31%. Since then, our non-PAR APE has increased from INR 4,778 crore to INR 6,234 crore, reflecting an increase of 30.47% on a year-on-year basis. During multiple queries post our June 2025 quarter results regarding the upper limit where non-PAR share may peak, we had suggested that we have enough wind behind our sails, and the momentum has been built in favor of non-PAR product mix change. The individual non-PAR APE share mix at 36.31% is a testimony to the momentum we mentioned earlier. The profit after tax for the six months ended 30th September 2025 was INR 21,040 crore, as compared to INR 18,082 crore for the six months ended 30th September 2024, thereby registering a growth of 16.36% on a year-on-year basis.
The net VNB has registered a growth of 12.3% on a year-on-year basis to INR 5,111 crore for the six months ended September 30th, 2025, from INR 4,551 crore for the six months ended September 30th, 2024. Further, the net VNB margin has improved by 140 basis points on a year-on-year basis to 17.6% for the six months ended September 30th, 2025, from 16.2% for the six months ended September 30th, 2024. The solvency ratio, as on September 30th, 2025, improved to 2.13, as against 1.98 on September 30th, 2024. The Indian embedded value, as on September 30th, 2025, has been determined at INR 813,230 crore, as compared to INR 821,716 crore, as on September 30th, 2024. Therefore, the IEV has registered a decrease of 1.03% on a year-on-year basis. However, you will recall that the IEV was INR 776,876 crore, as on March 31st, 2025.
Therefore, the IEV has improved by 4.68% between 31st March 2025 and September 30th, 2025. The asset under management, as on September 30th, 2025, was INR 5,722,896 crore, as compared to INR 5,539,516 crore, as on September 30th, 2024. Therefore, our AUM has registered a growth of 3.31% on a year-on-year basis. During the first six months of the period of FY 2026, we have launched two new non-PAR products on July 4th, 2025, namely LIC's new Jeevan Shree and LIC's Nav Jeevan Shree Single Premium. During the July 25th to September 25th quarter, we introduced two new riders also. As of September 30th, 2025, we had a comprehensive suite of 55 products, excluding Pradhan Mantri Jeevan Jyoti Bima Yojana, available for new business, including 35 individual products, 12 group products, seven individual riders, and one group rider.
Post the GST exemption announced in September 2025, LIC has launched two new non-PAR products on October 15th, 2025. These products are called LIC's Jan Suraksha and LIC's Bima Lakshmi. Therefore, as of date, we offer a total of 57 products, which include 37 individual products, 12 group products, seven individual riders, and one group rider. During the six months ended September 30th, 2025, we sold 7,260,573 new policies, as compared to 9,170,420 new policies in six months ended September 30th, 2024. As of September 30th, 2025, the total number of agents was 1,485,325, as compared to 1,439,658 as of September 30th, 2024. The market share by number of agents, as of September 30th, 2025, stands at 45.86%, as against 47.56% on September 30th, 2024.
On the number of policies sold basis, the agency force sold 7,144,242 policies during the six months ended September 30, 2025, as compared to 8,921,078 policies during the corresponding period last year. Further, 98.4% of our policies in the six months ended September 30th, 2025, were sold by our agents. When seen on premium basis, 92.13% of our new business premium came from our agency channels in the first six months of the current financial year. There is a strong growth in new business premium income from our Bancassurance and Alternate Channels. Bancassurance and Alternate Channels collected a new business premium income of INR 2,024.10 crore for the six months ended September 30th, 2025, as compared to INR 1,207.54 crore for the six months ended September 30th, 2024, thus registering a growth of 67.62% on a year-on-year basis. The new business premium income collected through banks was.
INR 1,265.88 crore for the six months ended 30th September 2025, and for the corresponding period of last year, it was INR 854.23 crore, thereby registering a growth of 48.19% on a year-on-year basis. Further, the alternate channel collected new business premium income of INR 758.22 crore for the six months ended September 30th, 2025, as compared to INR 353.31 crore for the six months ended September 30th, 2024, registering a growth of 114.60% on a year-on-year basis. Our Bancassurance and Alternate Channels now account for 7.12% of the individual new business premium for the six months ended September 30th, 2025, up from 4.1% for the six months ended September 30th, 2024. For the six months ended September 30th, 2025, the overall expense ratio was 11.28%, as compared to 12.74% for the first six months of last year.
You will observe that there is a decrease of 146 basis points on a year-on-year basis. Persistency. On premium basis, the persistency for the 13th, 25th, 37th, 49th, and 61st month up to six months ended 30th September 2025 stands at 75.29%, 71.37%, 67.70%, 63.70%, and 63.81%, respectively, as compared to 77.62%, 72.24%, 67.24%, 66.33%, and 61.46%, respectively, up to the six months ended 30th September 2024. On number of policies basis, the persistency for 13th, 25th, 37th, 49th, and 61st month up to the six months ended 30th September 2025 stands at 63.36%, 60.23%, 55.18%, 50.67%, and 51.50%, respectively, as compared to 67.23%, 59.73%, 54.06%, 53.84%, and 48.92%, respectively, up to the six months ended 30th September 2024.
The performance on persistency metrics has been a mixed bag, with an improvement in the 37th and 61st month cohorts on premium basis and improvement in 25th, 37th, and 61st months on a number of policy basis. In our digital initiative through the Agent-Assisted Ananda app, we have completed 878,470 policies through this app during six months ended September 30th, 2025, as compared to 723,281 policies for the six months ended September 30th, 2024, thereby registering a growth of 21.46% on a year-on-year basis. There is a growth of 40.07% in number of active agents in Ananda app for the six months ended September 30th, 2025. The Digital Innovation Value Enhancement Project and the Jeevan Samarth initiatives are progressing as planned and are in various stages of implementation.
In the last earnings call, I had informed you that Customer Super App and Sales Saati App were undergoing testing and launches in select geographies, and it will be rolled out on a pan-India basis soon. I'm happy to inform you that both the apps have been made live in the months of August, September 2025. Claims. On the individual claims front, during the six months ended September 30th, 2025, we have processed 9,644,280 number of claims, which includes 9,234,314 maturity and survival benefit claims. On an amount basis, during the first six months ended September 30th, 2025, the total maturity claims were INR 107,587 crore, and the total death claims were INR 12,049 crore. On a comparable basis for the first six months ended September 30th, 2024, the maturity claims were INR 94,531 crore, and death claims were INR 11,645 crore.
Therefore, the maturity claims are higher by 13.81%, and the death claims are higher by 3.47% on a year-on-year basis. As of September 30th, 2025, a total of 2.57 lakh women have been designated as Bima Sakhis. Successfully selling 8.54 lakh insurance policies and garnering a new business premium income of INR 1,096 crore in the six-month period ended September 30th, 2025. Our objective is to appoint at least one Bima Sakhi in every Gram Panchayat, and we would like to inform that out of 2,47,876 Gram Panchayats, we have covered 44% Gram Panchayats by recruiting Bima Sakhis in 1,08,748 Gram Panchayats up to September 30th, 2025. Before concluding, I would like to reiterate significant highlights of our performance during the first six months of FY 2025-2026.
Our non-PAR share of individual APE business has further grown to 36.31% for H1 FY 2026, as compared to 26.31% for the same period of the previous year. The profit after tax has grown by 16.36% to INR 21,040 crore on a year-on-year basis. Bancassurance and Alternate Channels registered a growth of 67.62% on a year-on-year basis to INR 2,024.10 crore. VNB has increased by 12.3% on a year-on-year basis for the first six months of FY 2026. VNB margin has shown a positive bias, with a 140 basis points increase to 17.6% for H1 FY 2026. AUM has increased to INR 57,22,896 crore, registering a growth of 3.31% on a year-on-year basis. While maintaining growth in multiple parameters, we have kept a focus on costs, and as you can see, the overall expense ratio is down by 146 basis points to 11.28% in H1 FY 2026.
Now, I would like to share our view on the most significant development for the Indian life insurance industry, which is the exemption of Goods and Services Tax on the life insurance products by the Government of India. We believe this move is customer-friendly and will provide a major boost to the further penetration due to better affordability and therefore expand the size of the life insurance industry in India. We are already witnessing strong tailwinds due to these steps taken by the government and believe that the full impact will be seen in the coming quarters. At LIC, we are committed to passing on all intended benefits to the customers. We are confident that we'll be able to accelerate our efforts towards insurance for all by 2047 with such customer-friendly initiatives. We sincerely thank our stakeholders for their consistent support and faith in our strategy and its implementation.
I now request the moderator of this call to open the floor for question and answer session. Thank you very much.
Thank you very much. Ladies and gentlemen, we'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. A first question comes from the line of MW Kim from JPMorgan. Please go ahead.
Thank you so much for the opportunity and congratulations on the strong result. I have two questions. Firstly, I noticed that the ULIP is becoming an increasingly important part of the new life phase.
Looking ahead, should we expect that the share of the ULIP to grow meaningfully from current level, similar to the private players? Another question is about the solvency capital. The company has a very strong solvency ratio of 2.13% as of September 2025. I would like to understand the company's solvency ratio under the risk-based capital regime. I ask because the company's liability reserve structure differs somewhat from the private peers, and I have observed that overall, the adjusted net worth movement within the EV appears relatively substantial. Additionally, while the company is a major asset manager in India, the current solvency capital framework does not fully reflect this equity-related aspect. These are two questions from me.
Thanks for the greetings, Kim.
As you told, ULIP is slowly becoming more prominent in the entire life insurance industry in India, and LIC has also been catching up in the sale of ULIPs. It has recorded the highest growth among the various baskets of life insurance in the last quarter and the first half of the year. We are recording more than 100% growth on ULIPs as of date. On the solvency margin part, I would request my Appointed Actuary to give the full details.
Good evening. I am Ajay Kumar Srivastava, Appointed Actuary and Executive Director Actuarial. Now, the question is about RBC comparison of solvency margin in RBC regime and the current regime. We have actually submitted QIS-1 and QIS-2 to IRDAI. While we have submitted the results, we are still in discussion with them on several issues, and we are constantly engaged with them now.
The ultimate solvency ratio based on the final QIS regime will depend upon the outcome of those things which we are discussing with the regulator. At this stage, I think the numbers are quite dynamic and susceptible to change. For the time being, we will not be able to comment anything on what is the impact on that unless things are finalized by IRDAI.
That's very clear. Thank you.
Thank you.
Thank you, sir. Our next question comes from the line of Harshal Mehta from AM Securities. Please go ahead, sir.
Thanks for the question, sir. And congrats on both sets of numbers. My couple of questions. Yeah. So a couple of questions. First is on the NOP. If you can say, like NOP, we have seen a very sharp drop both on totality and as well as in terms of bank and alternate channels.
So what are our steps to improve the NOP going ahead? That was first. Secondly, EV has been broadly flat on a wide basis, but within EV, ANW, and VF, there is a lot of discrepancy in terms of growth and one is the growth. If you can explain why there is such a sharp variation between both of them, that would be helpful. Lastly, in terms of margins, we have seen a very sharp increase in margins for the first half and as well as Q2. When we see the product mix, we have seen a very sharp increase in non-PAR, and that is led by ULIP. Is it fair to assume your ULIP margins are higher than the company level? Those are my three questions.
First, I will take the NOP question. Actually, you remember. On 1st of October 2024.
The new master circular came into effect. To get aligned with the master circular conditions, we had to completely modify almost all the products that were available on sale as of 30 September. As a part of becoming compliant with the circular, we had to raise the minimum sum assured under the most popular products in the savings category of LIC. That resulted in a sharp fall in the number of policies sold, particularly in the ticket sizes between INR 100,000 and INR 199,999. That resulted in a degrowth in the number of policies sold in the last second half of the year. That continued in the first half because the comparison was with the earlier regime.
Also, because the planned withdrawals were announced, the September month of 2024 saw a big surge in the number of policies sold to catch up before the old policies went out of sales. We are comparing on a large base. First point. Second, on September 5th, Government of India came up with the reforms to the GST structure in India. The GST exemption for life insurance business was announced with effect on 22nd September. Between these two dates, there was almost a complete stop of purchase of policies on the individual side, and people were looking forward to getting the exemption from GST. The business during that almost 15-day window suffered a major fall, and that could not get compensated in the last eight days of the current September month.
That was the main reason for the number of policy degrowth in the first half of the current year. However, from 1st October, the scenario has completely changed, and we are having very good traction and showing substantial growth in the number of policies sold. We are very confident. By the end of the current financial year, we would be able to completely catch up and show a good performance on the number of policies as well. On the EV part and the margins, I would request Appointed Actuary to give clarity on that.
Yeah. We have a basket of products to cater to the need of the policyholders. You would appreciate that all these products, based on whether they are in PAR or non-PAR, the savings term, they have different margins.
What is important for us is to also look for the VNB being contributed by each of these segments. The growth in ULIP actually contributes to the VNB, which is equally important for us because that is what is the preference of customers. Those products are actually chosen by them. What we actually look for is not one particular metric like VNB margin, but we concentrate on the products which actually meet the needs of the customers and keep on modifying them based on their change in their needs. That ultimately results in some number based on VNB or the VNB margin. The fact remains that.
It may not be completely fair to just talk about the VNB margin for one particular line of business, which may be less or more, but the contribution for each line of business is for VNB, which is important for the corporation.
Thank you. You talked about two components, sir?
Yeah. As far as EV, embedded value, you mentioned about. You would appreciate there are different components of embedded value, coming from core business as well as fair value change as well as ANW. While we are not talking about individual specific numbers and we are not discussing, but there is an improvement, a significant improvement in our core business contribution. We all appreciate that between the comparable periods. The markets have actually been tepid, and a significant portion comes from the fair value change also.
What is appreciable is that this, with not understanding all those things, from March to September numbers, the embedded value has significantly improved. Largely backed by the improvement in the core business component of the corporation. That is one thing. Margin increase, as we talked about, ULIP is one part of our overall strategy. Within the overall product mix, the contribution to the new business has largely come, as was earlier mentioned about, because of a better proportion of non-PAR business, which is not only about ULIP, but also saving products. Where the new business margins have significantly improved. Also, VNB margins are held by the improved RFR rates during this period. That is also largely because of the better contribution coming from the product mix, from the saving line of business, including from ULIP also.
But as you will appreciate, the larger contribution, ULIP is not the significant driver for VNB margin. It is a good driver for one, in the context, as was said earlier, the satisfaction the customer needs. Market needs it, and it is aligned to the customer needs for the overall AP growth also. The other lines of businesses give better margins. It is a proper mix and balance of different products within this segment, which has contributed to overall increase in VNB margins and also improved the embedded value as compared to the margins. Thank you.
Thank you, sir. And all the best.
Thank you.
Thank you, sir. Our next question comes from the line of Prayesh Jain from Motilal Oswal Financial Services. Please go ahead.
Yeah. Hi. Good evening, everyone. Good evening. Just on the previous participant's question, your adjusted net worth from H1 FY 2025 to.
H1 FY 2026 has jumped while your value in force business has gone down. What explains this difference movement in both the elements?
Largely, as has already been explained, the variation is mostly coming because of that MTM contribution. If you look at the core business, as has already been explained, the contribution from the core business has already gone up. If you look at this adjusted net worth, it has gone up, but value of in force business, that has some constituents in which other constituents are contributing almost similarly to that, which is flat. MTM, there is some impact, has actually slightly marginally touched down.
Actually, present value of future profit and VF, as compared to March, has only improved. It has not gone down. The present value of the VF portion, as compared to March, has improved in September. It has come down from six. Yes. Yes.
MTMs have been flattish. Okay. MTM is the main factor contributing to both the movement. Yeah. Yes, yes. With the surplus transference to the shareholder portion, the adjusted net worth has always been going upwards.
Okay. Got it. Second question is on persistency. I see that there is some drop in persistency in the near periods. What explains that?
As I told you, we had a large quantum of low ticket size policies. See, we cater to all the segments of the society, and we cover the entire geographical spread of the country. We experience a lower persistency at small ticket size policies, particularly because of the variation in seasonal income of people who take policies under this card. This will be the reason for the drop in persistency, both in number of policies as well.
You will find that in terms of premium, our persistency is better than the persistency in terms of number of policies. This has been the case always. With the improvement in the minimum ticket size, or the minimum sum assured, and the average ticket size going up, we are very hopeful. We are very confident that the persistency going forward will improve, and it will be much better in the days to come. The higher ticket size policy sale, or the change in minimum sum assured, happened on 1st October, and the effect of which will be seen only in the months to come because they will be completing the 13th month only from the next month onwards.
Just as a corollary to what was being discussed earlier, while the markets.
The fair value change portion has, as of September 2025, remains even below September 2024 as well as March 2025. For the period from March to September, that fall has been more than made good by the improvement in the present value of future profits. That has resulted into the VF from March to become positive in September 2025, even as it is below September 2024 level because the difference, the fall as compared to September 2025, is very sharp, which has improved from March, and now it is better than that. That is the reason that the embedded value, overall embedded value, has improved as compared to March because the core business has more than compensated for the loss in the fair value changes.
Okay. The third question is on the GST. Input tax credit not being available. How are you kind of.
What is the kind of impact that you would expect on embedded value as well as VNB margin in the time to come? Any impact that you've already absorbed in the EV and VNB? Third will be on how are you kind of going to offset whether you're passing on the impact to the agents or how are you going about this?
The numbers which have been actually provided, the different metrics, VNB margin, embedded value, solvency ratio, etc., they all have been considered after GST impact. The impact of ITC. The numbers have already taken account of GST reforms. Going forward, what we look for is the increase in the volume of business and also the operational efficiency. We have been looking into that because ITC actually is one of the expense items, and we are looking together with the cost optimization.
You would see that as a result of that, the expense ratio has actually come down from 12.7% to 11.3%. This is in addition to the proactive measures we had taken in the last year when the product regulation had come up. Where we have retained actually the profitable products, the margins, and backloaded the commission, etc., which improves the persistency. All these measures actually have resulted into the numbers which have been provided to you today. As you were asking particularly about the embedded value, the embedded value numbers we have already disclosed, that was in LODR, 0.5%, and the impact of that is within that. Going forward, the numbers will depend upon the VNB margin, etc., and will depend upon the mix and volume which is going to come up.
That effect we can see at the time of the embedded value in the month of March, when we can look into the WOC.
Just in order to supplement that thing, as is already stated in the statement of CEO also. See, we are looking at this GST, which is an individual line of businesses, in order to see as an opportunity for the growth. What we want is that, in line with the policy changes which have happened, the policyholder should benefit out of it, the distributor should benefit out of it, the insurance company should benefit out of the higher production, and working towards higher market insurance penetration levels. The entire effort of the corporation, as we have already come out and disclosed also, is at this point of time, take this opportunity for growth of the business. That growth of the business.
By improvement in per policy expenses or other ways, should lead into the control of the expenses so that it becomes a win-win proposition for insurer as well as the customers without much any impact on the distribution. As an insurance company, we continue to analyze our experiences and continue to take decisions based on the outcomes that emerge. At this point of time, we are confident that this should lead, and those types of outcomes are already starting to be seen in which the business growth, which is the prime focus area for us as an insurance company, as a lead insurance company. We are working towards that goal only.
Any number you want to quantify with respect to if there are no, without any adjustments or without any changes to operational efficiencies, what could be the impact on the VNB margin for us in case
You're not passing on the GST input tax credit also, as well as.
It is fair for us to just see one side of it from the expense point of view because, see, when the expenses naturally will get impacted, but on the other side, the GST waiver should lead to growth. That growth in business shall also impact the expenses in a favorable way. It will not be actually correct to see just one side of the picture and not take the overall scenario out of it. As was already explained by Appointed Actuary, at this point of time, the impact is well within what we have gone and disclosed in terms of the impact on the embedded value, much below that thing.
We are sanguine that with more effort and more propagation of this benefit to the customers, the growth in business and the quality of the business should lead into insignificant or actually cutting down any impact that could.
Okay. Thank you, sir. Wish you all the best.
Thank you, sir. Our next question comes from the line of Sankeet Gowda from Everyday Spark. Please go ahead.
Thank you for the opportunity. Sir, probably my question again is on little similar lines. Given only eight days of the business had a GST negative impact, and second half full will be with GST negative impact. Are you confident to deliver at least similar VNB margin that is 17.6%, what you have reported for the first half? Or you believe even if the volumes come. Will there be some bit of
Derating to the margin compared to what we have delivered today? That is one thing. Maybe if you answer that question, then I have two other questions.
Sankeet, you would observe that the trend of our VNB margin has always been upward from Q1, Q2, Q3 to Q4 onwards, right? Actually, it is very heartening that notwithstanding, despite all these things, because on the strength of the better product mix and all those things, we have been able to deliver VNB margin, which was actually in the Q4 of the last year. Rest assured, corporation does everything which it is confident about, and we are committed to create value for our shareholders as well as policyholders. We are quite confident that this trajectory in the medium to long term should continue in line with our original. Go ahead.
Sir, given we have an improving trajectory every quarter passing by, is it fair to say that still you will end up FY 2026 with a margin better than what you reported in one H? I mean, that's a fair assessment to make?
That is always our intention. Nobody can predict the future, but it can be better than this also. We all know, for example, this policy change came to us as a surprise. It was not something which was on cards. The government has been very kind to take this step in order to give the fillip to the growth of this industry. At the end of it, it depends on the execution. We are very confident that whatever we have set as goals for us, we have been achieving and overachieving on them.
We see no reason that there should be anything, unless there is some force majeure or something like that, anything else should happen. We are very confident about this onward trajectory to continue.
Okay. Understood, sir. Sir, the second question is, honestly, your non-par, largely led by you. You answered that question, but just wanted to understand that. Making a simple assessment straight, yes or no, that, look, margins are better than the company average, that is largely the reason why the margins improved, or your group did very well, and maybe if that was driven by group annuity and that was the trigger which led to the margin improvement because the product mix looks a little, I mean, in general, is perceived to be a low-margin product compared to par. Just wanted to understand, is it largely you led or more led by group?
Sankeet, on that, it is not only just line of businesses which decides the overall margin. Within every line of businesses also, we keep on taking steps to realign the margins as well as the benefit to the policy. For example, say annuities, which used to give very high margins, their margins came down, then the steps have been taken even to align VNB margins with that. It is not we are seeing just ULIP versus the line of businesses. Every line of business has got a different purpose. As we mentioned earlier also, the primary focus for us as an insurer is to be able to provide, it's just not that because VNB margins are less in ULIP. We all know that ULIP do not deliver great on margins. Saving products at times will deliver better than them on the margins, right?
But then the product offering is not just based on margins only. It is also, in fact, more for what customers need. The art or science, whatever we want to call it, lies in how to balance the product mix in a manner so that customer needs are satisfied and other stakeholders' interests are also well protected. ULIP, there was a time we were being questioned, being laggard on ULIP, and now we have taken good growth in ULIP. Because customers are choosing to buy ULIPs, that will continue to be our focus. We continue to create value through what we offer. You will see ULIP maybe is significant, but saving has got a significant portion in overall mix. That creates good VNB margins for us. We will continue to work on a balance of product mix and continue to take
Decisions within the line of businesses also to strike the right balance of VNB and the growth.
Okay, sir. Understood. Sir, just at product level, given you are saying that we are focusing on higher sum assured and maybe the yield curve also became favorable for the sector. At the product level also, are we experiencing in general a better margin profile compared to last year? That can be a potential reason also to continue to drive the margins?
Yeah, definitely. If our margins can improve, then definitely some of the products would be able to deliver better margins than before. You see, margin is not product-based. Again, within the product itself, when the ticket size improves, margin is likely to improve. You would have observed that last year, we took the decision in certain line of businesses, the minimum ticket size was improved.
The entire purpose of that is to improve the quality of business margins as well as persistency of those businesses, which will come to be seen from coming year onwards. That product mix, the ticket size, and as you rightly mentioned about the impact of RFR also has got a role to play in that from time to time.
Okay. Sir, are you quantifying, typically used to quantify, are you quantifying the group margin and individual business margin separately in that 17.6%?
I do not think we are giving it by that category.
Okay. Okay. No, you used to disclose previously, so just trying my luck again. Okay. Lastly, sir, you said that EV impact due to GST is 0.5%, right, sir? Is that, I understood you,
0.5%. We disclose in the public disclosure that we do not estimate it to be more than 0.5% of that.
What we are confirming is, a s for the current valuation when we are done for the embedded value, it is much less than that.
Understood. Lastly, sir, in EV of INR 813,000 crore, how much is fair value change?
Again, I think component-wise, we are not disclosing. We are disclosing. Component-wise, we are not disclosing.
Is it fair to say it is 50% of the total EV, closer to that number?
I do not think we disclose it that way. We have to see that value in totality. I would not see no reason why we should want to see it from different component because even if fair value changes come, it is coming out of the business only. That is part. Yeah, yeah.
Understood. Understood, sir. That is it from my side. Thank you for my answers. Yeah.
Thank you. Thank you.
Thank you, sir.
Our next question comes from the line of Madhukar Lada from Nuvama Wealth Management. Please go ahead.
Hi. Thank you for taking my question. See, most of my questions have been answered, but just again. On the GST impact, I wanted to understand. One, o n the next six months, which is the second half of the year, what would be sort of the margin impact because of ITC not being available? We can make some assumption in terms of the product mix remaining constant. Some sense of there would be helpful. That is one. Even in this current 17.6%, you had the GST impact for the last sort of 10 days, right? What is the impact in the VNB margin of that also, if you could give that number? Third, what are we doing in terms of reducing this? Are we changing commission
payout structures or reducing commissions? Because that would, again, be a pretty large component of the ITC also. Yeah, if you could help me with these three questions. Thanks.
As we have already discussed, in the next six months, the mix and business is very difficult to guess at this stage because within that particular product, as I have already been informed, the ticket size, if it goes up, the margins could be different. If the particular line of business, if more business is there, then the contribution towards margin will be more or less. Standing at this stage, assessing all those because ITC is only one of the components of the entire things which actually impacts the margins. We need to actually look at the entirety, how the margins are going to move going forward at the end of the year.
Once we go at the end of the year, as I said, we can actually look at the impact on the embedded value when we actually also present the embedded value walk.
Historically, at least, we could say, right, that if, let's say, ITC was not available in the first half of this year, then what would the impact be on the margins?
See, one thing we need to note is that what was made out on the eight-day issue of ITC, that was from a financial presentation point of view. On an actual exercise, once information gets known to us, it is already factored in our assumptions. Rest assured, when we are doing VNB analysis, even for the business which has been done, we are aware that this is not available for the future period. That is recalculated.
It's not that it's on stagnant basis that only for eight days new business it is taken care of. That is the type of confidence that we are trying to give you, that all those assessments have already been factored. This is what I wanted to actually, already was mentioning, have already been factored. Now, beyond this, it's not that we are not. We have a lot of experience with what type of business is going to happen in future years, what is our focus area. We expect, that's the basis which we only explain to you, that we are saying that this trajectory, we expect to continue for the future period also.
To supplement, Mr. Lada, actually, margin improvement is possible with so many other changes as well. We are looking at one, the increase in top line of business.
Because of the reduction in the exemption from GST itself, that is one. Two, the product mix cannot remain constant because we will be coming up with new products as well, and the product focus also will change. Our focus will be on increasing the top line substantially in the second half, one, to take care of the impact of the input tax credit not being there, plus also improving the profitability by focusing on improved ticket size as well as contribution from product line also. We are certainly not looking at anything passing on the commission or changing the commission structure right now, but we will be looking at increasing the ticket size and the contribution from the existing business as well as the products to be launched in the days to come.
Understood. Again, it will be very helpful if you can give the mark-to-market impact
in the EV. So of the total EV, how much is mark-to-market if you could give that number. For the first half and for FY 2025? That is also helpful. I mean, yeah.
We'll give that number. We'll work it out because we have not been disclosing this thing. I think you can work it out from our financials if that's the case. We have not been disclosing, so we'll not like. Yeah. We're not disclosing. Yeah. The sensitivities we are disclosing, so possibly you can look into the sensitivity numbers on sensitivity impact of fall and rise in equity is being disclosed in our IVM in this.
Understood. Okay. Okay. Thank you.
You can.
Thank you, sir.
We'll see whether we can share this information because as of now, we have not been sharing this thing.
But the sensitivities are very much aware there in the public domain. I think that can be understood from there. You can pick it up.
Thank you, sir. Our next question comes from the line of Mohit Mangal from Centrum Broking. Please go ahead.
Yeah. Thanks for the opportunity. My first question is with respect to agency channel. If I was looking at your agents as on 1st April and 30th September, it is kind of very flattish. Are we becoming more aggressive with respect to agents in terms of deletion from the company?
Yeah. Thank you. This is Govind Agarwal, ED Marketing. Yeah. Currently, we have 1,485,000 agents. Last year, it was 1,439,000. There is a net increase. You will also see that this agency shape, it is quite volatile in the market because people take agency and they take time to stabilize.
That flattishness is always there. There is no steep jump. Even if we go for heavy recruitment, then again, it will have an impact after 12 months. We are focusing on stabilization of agents and better productivity rather than low-quality recruitment. That is how you see there is a big growth in this number as compared to last year, September 2024.
Okay. We do expect around what, six policies per agent, right, on an annual basis?
See, there are certain guidelines for continuation of agency, like six policy, 12% PM basis also. On average, this may not be in line with the industry because only number of policies cannot be a parameter alone. We have a focus. One moment. I would like to supplement.
Last year, the average productivity per agent was around 12 policies.
We are trying to improve the productivity, retain the agents, train them so that they are having a good career with us. So average productivity, we are trying to increase by way of training and motivating them.
All right. That is helpful. My second question is towards the individual MVP because we have seen a 67% increase in individual MVP driven by Bancassurance and Alternate Channels. Just wanted to confirm, IDBI Bank is again the major driver for this growth?
Good evening. This is Hemant Buch, Executive Director of Bancassurance. While IDBI continues to be the leader, considerable growth has come both from existing as well as IDBI itself. As also in fact made available earlier, we are in fact forging new ties. That keeps on continuing delivering value for us. One of them is.
Value creation has been in fact in form of forging a tie-up with AU Small Finance Bank. This will continue. Yes.
Understood. That is helpful. My last question, sir, in terms of annuity, I again understand it is a small base, but we have seen a decline. Do we have any particular strategy for growth in the annuity business?
We will be focusing on increasing annuity business as well. Yes. In between, it has taken a reduction in terms of volumes, but we expect it to come back. The focus was on ULIPs also, as we were not doing well in ULIPs. Now we are showing a substantial increase in the number of policies sold under ULIPs as a basket. We will also be focusing on annuities as well as savings. Both we will be looking at.
Okay.
Would we be launching newer products or maybe favorable IRS? I mean, what would be our strategy in that?
For annuity markets, you do not have to launch any new products. The products, it needs to have a focus on that aspect. I am sure it happened, but there will be new products coming in different baskets. Yes.
Okay. Okay. Understood. That is helpful. Thanks, and wish you all the best.
Thank you, sir. Thank you.
Thank you so much. Ladies and gentlemen, we are moving forward to the last question from Deepanja Ghosh from Citi Group. Please go ahead.
Hi. Good evening, sir. Just a few questions from my side. First, in terms of your balance sheet, annually, we get the breakup of your fair value change between PAR and non-PAR. Obviously, first half, we do not get the overall balance sheet. If you can just break it up.
If I recall correctly, from your PAR segment, the fair value change was around INR 3.9 trillion as of March. If you can just break that up. My second question is on your VNB margin walk. If I see for the first quarter on a rolling basis, you had a 1.9% positive operating assumption change, and as of first half, it is a - 1.1%. Would it be fair to assume a majority of this change between 1Q to 1H on a rolling basis is actually the impact of GST not being there, or is there any other component also? My third question is more on the accounting part. If I recall correctly, since your listing, you made one accounting change whereby any mark-to-market change on your ASM is being routed through the net worth.
This is pertaining to some of the questions asked by previous participants also in terms of the EV between fair value and non-fair value. Is there a possibility or something that you're considering of some of the excess fair value on the equity side on the non-PAR book or the ASM part, if that can be parked within the net worth or can be routed through the net worth? I mean, is there any possibility of any accounting challenge? Is that even feasible out there? The last question is on the growth part. Obviously, you have done a good job in terms of business mix realignment. Just wanted to understand at what stage would you feel that the mix is stabilizing and probably focusing on market share stabilization kind of picks up in your priority or pecking order out there?
Yeah. As of now, as per our accounting policy, the realized portion through accounting, the profit and loss account, is only transferred to the shareholder fund. Currently, we do not have any thought process that on accounting basis, analyzed portion could be transferred or would be transferred. That's not something we need to follow, and we'll continue to follow the best accounting practices that be the case here because that can lead, if analyzed portion can be considered, it can lead to, and market is subject to volatility. That's not the step at this point of time in any consideration for us just to inflate the number. That's not the goal. What is the second question?
Fair value change? PAR, non-PAR? Fair value change. We want a break up of fair value change between the PAR and non-PAR if you don't discuss.
See, we are again not giving the breakup between PAR and non-PAR fair value change. One thing has to be considered is that the fair value change does not come about only through the equity. It also gets impacted on the debt portion based on the interest rate changes. Currently, we are not giving that type of breakup. For PAR and line of business-wise breakup is not being given for our VNB margin walk, VNB walk.
The VNB margin walk which has been provided with the presentation is that because of the business mix, the change is 3.4% positive contribution. Because of the RFR change, the impact is - 1.1%. And 0.9% - is on account of operating assumptions. That includes the impact of GST. The margin has moved from 16.2% to 17.6% because of this component.
Can I take the last question on the growth part?
Sorry? Growth. Sorry.
The last question was more on you have done a good job in terms of your VNB product mix realignment. At a certain stage, would you kind of focus a little bit more on market share stabilization over business mix realignment? I mean, is that a thought that you're considering?
Yeah. Actually, we are not taking a target business mix component, as I mentioned last time also. There is a traction. There is an improvement in our APE, non-PAR APE that has grown from 26.131% to 36.31% over a period of one year. We expect some more improvement to happen just because the momentum that has been built up in this direction over a period of the last three years. Though we are not targeting for any particular.
Mix proportion, we expect some kind of an improvement on the basis of the momentum that has already been in place. Now, there is a possibility that we can even start showing a growth on all the parameters, all the buckets, including PAR, non-PAR savings, ULIPs, as well as annuities. We will be looking at all the three. There are different segments. As things go, in Q3, we will see a fair amount of improvement in savings component thanks to the focus on MDRT and other focus as well. It is likely to happen. We are not targeting a particular mix, that's for sure. We expect it to grow, improve a bit more further, and stabilize that way. Again, though our focus will be exclusively on top-line growth, not necessarily keeping in mind a market share.
We would like the entire PI to grow and LIC to show a good growth. If possible, better than the industry growth. If that happens, naturally, our market share will stabilize and improve. Otherwise, also, we have a target on growth rather than looking at the market share per se directly.
Got it, sir. Thank you and all the best.
Thank you very much. Thank you.
Thank you, sir. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Doraiswamy for closing comments. Thank you, and over to you, sir.
Thank you. First and foremost, I would like to thank for sparing your time to join the call late in the evening today.
As we wrap up our discussion for the first half of FY 2026, I would like to express my gratitude to each of you for your ongoing trust, partnership, and involvement with LIC. Your insightful queries reflect an in-depth understanding of our business and strategy. I hope we have addressed your queries to your satisfaction. In case you would need to engage more with us, please reach out to us through our Inner Circulations team. Thank you very much, and good night. Thank you.
Thank you so much, sir. Ladies and gentlemen, on behalf of LIC, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.