Ladies and gentlemen, good day and welcome to the LIC's Nine-Month FY2026 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. We have with us the 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. Thank you, and over to you, sir.
Thank you. Good evening, everyone. I am Doraiswamy, Chief Executive Officer and Managing Director of LIC. I would like to welcome all of you to the results and performance update call for the nine-month period ended 31st December 2025. Our results declared today have been uploaded along with 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 Dinesh Pant, Sri Ratnakar Patnaik, and Sri R. Chander. Senior officials of the corporation present in this call are: Sri A.K. Srivastava, appointed actuary and executive director actuarial from the actuarial team; Sri Sunil Agrawal, CFO from the finance team; Mr. Arindam Dasg upta, executive director investment front office and chief investment officer from the investment team.
From the marketing team, we have Govind Agrawal, Executive Director, Marketing Product Development; Hemant Buch, Executive Director, Marketing, Bancassurance and Alternate Channels; K. Seshagiridhar, Executive Director, Pension and Group Schemes. Also, we have Shobha Sulochana, Executive Director, CRM Policy Servicing and Grievance Redressal Officer; Vandana Sinha, Executive Director, CRM Claims; and Sanjay Bajaj, Head of Investor Relations on this call. Let me now mention the key business, operational, and financial highlights for the nine-month period ended December 31, 2025. Our market share by first-year premium income for nine months ending December 31, 2025 is 57.07% as per IRDA, as compared to 57.42% for the similar period ended December 31, 2024. We continue to maintain our leadership in the Indian life insurance market across both individual and group business segments.
Now, if you bifurcate this overall market share of 57.07% into segment-wise share of individual and group business, we would have a market share of 35.84% in individual business and 71.36% in the group business for the period of nine months ending December 31st, 2025. On a comparable basis, for the nine months ending December 31st, 2024, the respective market share for individual and group business were 37.21% and 71.70%, respectively. Premium income: For the nine months ended December 31st, 2025, we have reported a total premium income of INR 371,293 crore as compared to a total premium income of INR 340,563 crore for the nine months period ending December 31st, 2024, registering a growth of 9.02% on a year-on-year basis.
The individual new business premium income for nine months ended December 31st, 2025 was INR 44,941 crore as compared to INR 42,441 crore for the similar period of last year, thereby registering an increase of 5.89% on a year-on-year basis. Renewal premium income of individual business for nine months ended December 31st, 2025 was INR 191,050 crore as compared to INR 178,975 crore for the period ended 31st December 2024, registering a growth of 6.75% on a year-on-year basis. Therefore, for the nine months ended December 31st, 2025, our total individual premium income, including renewals, was INR 235,991 crore as compared to INR 221,416 crore for the nine months ended December 31st, 2024, registering a growth of 6.58% on a year-on-year basis. The group business total premium income for nine months ended December 31st, 2025 was INR 135,302 crore, comprising new business premium of INR 132,611 crore.
In comparison, for 9 months ended 31st December 2024, last year, the group business total premium income was INR 119,147 crore, comprised new business premium of INR 115,576 crore. Therefore, for the 9 months ending December 31st, the total group premium has increased by 13.56% as compared to the similar period of the previous year. Breakup of business on APE basis: The total annualized premium equivalent for nine months ended December 31st, 2025 is INR 44,007 crore, which comprises individual APE of INR 27,552 crore and group APE of INR 16,455 crore. Therefore, on APE basis, the individual business accounts for 62.61% and the group business accounts for 37.39%. Further, of the individual APE, the par business accounts for INR 17,507 crore and non-par amounts to INR 10,045 crore. Therefore, our non-par share of individual APE is 36.46% and par is 63.54% for the nine months period ended December 31st, 2025.
As you may recall, for the nine months ended December 31st, 2024, our non-par share of total individual business based on APE stood at 27.68%. Since then, our non-par APE has increased from INR 6,813 crore to INR 10,045 crore, reflecting an increase of 47.44% on a year-on-year basis. We are consolidating our rapid gains in non-par share of individual APE. Sequentially, we are consolidating this year at approximately 36%-plus levels. The profit after tax for the nine months ended December 31st, 2025 was INR 33,998 crore as compared to INR 29,138 crore for the nine months ended December 31st, 2024, registering a growth of 16.68% on a year-on-year basis. The net VNB has registered a growth of 27.96% on a year-on-year basis to INR 8,288 crore for the nine months ended December 31st, 2025, from INR 6,477 crore for the nine months ended December 31st, 2024.
Further, the net VNB margin has improved by 170 basis points on a year-on-year basis to 18.8% for the nine months ended December 31st, 2025, from 17.1% for the period ended December 31st, 2024. Our solvency ratio as on December 31st, 2025 improved to 2.19 against 2.02 on December 31st, 2024. The assets under management as on December 31st, 2025 was INR 5,916,680 crore as compared to INR 5,477,651 crore as on December 31st, 2024. Therefore, our AUM has registered a growth of 8.01% on a year-on-year basis. The product mix and new product launches: As on December 31st, 2025, we had a comprehensive suite of 59 products excluding Pradhan Mantri Jeevan Jyoti Bima Yojana available for new business, including 39 individual products, 12 group products, seven individual riders, and one group rider. Here, I would like to add that currently we have 57 products.
Since January 2026, one new product has been launched, namely LIC's Jeevan Utsav single premium, and three products have been withdrawn, namely LIC's New Endowment Plus, LIC's Bima Ratna, and LIC's Jeevan Azad. Hence, we are dynamically managing our product portfolio. Therefore, as of date, we offer a total of 57 products, which comprise 37 individual products, 12 group products, seven individual riders, and one group rider, excluding the Pradhan Mantri Jeevan Jyoti Bima Yojana. During the nine months ended December 31st, 2025, we sold 11,663,856 new policies as compared to 11,710,505 new policies in the nine months period ended December 31st, 2024. As on December 31st, 2025, the total number of agents was 1,472,370 as compared to 1,419,480 as on December 31st, 2024. The market share by number of agents as of December 31st, 2025 stands at 45.32% against 47.40% for the December 31st, 2024.
On number of policies sold basis, the agency force sold 11,454,396 policies during the nine months ended December 31st, 2025 as compared to 11,356,466 policies during the corresponding period last year. Further, 98.20% of our policies in the nine months ended December 31st, 2025 were sold by our agency force. When seen on premium basis, 91.72% of new business premium came from our agency channel in the first nine months of the current financial year. There is a significant upward trend in the new business premium income from our bancassurance and alternate channels. Bancassurance and alternate channels collected a new business premium income of INR 3,341.37 crore for the nine months ended December 31st, 2025 as compared to INR 2,003.95 crore for the nine months ended December 31st, 2024, registering a growth of 66.74% on a year-on-year basis.
The new business premium income collected through banks was INR 2,035.62 crore for the nine months ended December 31st, 2025, and for the corresponding period of last year, it was INR 1,451.64 crore, thereby registering a growth of 40.23% on a year-on-year basis. Further, the alternate channels collected new business premium of INR 1,305.75 crore for the nine months ended December 31st, 2025 as compared to INR 552.31 crore for the nine months ended December 31st, 2024, registering a growth of 136.42% on a year-on-year basis. Our bancassurance and alternate channels account for 7.45% of the individual new business premium for the nine months ended December 31st, 2025, which is significantly higher than the 4.73% for nine months ended December 31st, 2024. For the nine months ended December 31st, 2025, the overall expense ratio was 11.65% compared to 12.97% for the same period of last year.
Therefore, there is a decrease of 132 basis points in our overall expense ratio on a year-on-year basis. Persistency: On premium basis, the persistency for 13th, 25th, 37th, 49th, and 61st month up to the nine months ended December 31st, 2025 stands at 75.75%, 70.76%, 67.37%, 63.77%, and 61.09%, respectively, as compared to 76.66%, 71.67%, 67.10%, 63.39%, and 61.84%, respectively, up to the period of nine months ended December 31st, 2024. On number of policies basis, the persistency for 13th, 25th, 37th, 49th, and 61st month up to nine months ended December 31st, 2025 stands at 64.28%, 58.92%, sorry, 59.82%, 55.70%, 50.63%, and 49.06%, respectively, as compared to 66.47%, 60.10%, 53.84%, 51.17%, and 49.22%, respectively, up to the nine months ended December 31st, 2024. While acknowledging that certain cohorts have not shown any significant improvement, we assure you that we are taking multiple steps to achieve better persistency ratios.
Operational efficiency and digital process: In our digital initiative through the Agent-Assisted ANANDA application, we have completed 1,453,124 policies during the nine months period ended December 31st, 2025 as compared to 972,504 policies for the nine months ended December 31st, 2024, thereby registering a growth of 49.42% on a year-on-year basis. There is a growth of 41.50% in the number of agents who are active in the ANANDA app for the period ended December 31st, 2025. The Digital Innovation and Value Enhancement project, which is being rolled out in phases both for the distributors and customers, many features and facilities have been activated, and many more will be launched this calendar year. I am sure that all of you will experience a much more digital-savvy interface in how LIC connects with you.
On the individual claims front, during the nine months ended December 31st, 2025, we have processed 15,411,320 number of claims, which includes 14,799,971 maturity and survival benefit claims. On an amount basis, during the first nine months ended December 31st, 2025, the total maturity claims were INR 168,613 crore, and the total death claims were INR 18,156 crore. On a comparable basis for the nine months ended 31st December 2024, the maturity claims were INR 147,739 crore, and death claims were INR 17,588 crore. Therefore, the maturity claims are higher by 14.13%, and the death claims are higher by 3.23% on a year-on-year basis.
The marketing initiative update on Bima Sakhi Yojana: As of December 31st, 2025, a total of 2.97 lakh women have been designated as Bima Sakhis, successfully selling 14.3 lakh insurance policies and generating a new business premium income of INR 1,873 crore in the nine-month period ended December 31st, 2025. Our objective is to appoint at least one Bima Sakhi in every Gram Panchayat, and we would like to inform that out of 244,876 Gram Panchayats, we have covered 52% Gram Panchayats by recruiting Bima Sakhis in 127,417 Gram Panchayats up to December 31st, 2025. Before concluding, I would like to reiterate significant highlights of our performance during the first nine months of FY 2025-2026. Our non-par share of individual AP business has further grown to 36.46% for the nine-month period of FY 2026 as compared to 27.68% for the same period of the previous year.
The profit after tax has grown by 16.68% to INR 33,998 crore on a year-on-year basis. Bancassurance and alternate channels registered a growth of 66.74% on a year-on-year basis to INR 3,341.37 crore. VNB has increased by 27.96% on a year-on-year basis for the first nine months of FY 2026. VNB margin has increased by 170 basis points to 18.8% for the nine-month period of FY 2026. AUM has increased to INR 59.17 lakh crore, registering a growth of 8.01% 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 132 basis points to 11.65% in the nine-month period of FY 2026. Now, I would like to conclude by saying that LIC is well on its way to deliver all our commitments, whether on product mix, channel mix, profitability, cost-effectiveness, and newer products.
We are doing all this while ensuring that we continue to maintain our image of trust and credibility in the minds of the buyers of life insurance in India. We think that ongoing use of digital marketing and a mobile-first approach will help achieve the national aim of insurance for all by 2047. We are thankful to all our stakeholders in their faith in our strategy and its rollout. I now hand over the call to the moderator to start the question-and-answer session. Thank you very much.
Sure. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and one. The first question is from Alka J.R., who is an individual investor. Please go ahead.
Does the company currently have any plans for or ongoing discussions regarding acquisition or entry into health insurance sectors?
We are a strategic investor, and we are a major investor in many companies and sectors. We have been evaluating. We have been looking at opportunities for enhancing our investment opportunities. As a part of it, we are looking for enhancing our stake in a health insurance company. We are evaluating various options available in the market, but we don't have any particular deadline or any such immediate date by which we are looking at doing that.
We'll be open to having a stake if a very good opportunity makes itself available.
Thank you.
Thank you. The next question is from Madhukar from J.P. Morgan. Please go ahead.
Sorry. Hi. Thank you for taking my question. So when I look at your VNB walk, there is a pretty significant change between nine month and first half of FY 2026, the VNB walk that you've explained of there. So the economic assumptions have sort of significantly improved from the first half. And so can you explain that? And I'm guessing this impact of operating assumption is mainly related to the GST-related issue. So can you help sort of simplify both the numbers? What are the economic assumptions which are resulting in such a sharp increase in the margin? Also, when we look at the product mix, there is a very big jump in non-par savings products.
So can you sort of give some sort of indication of what the underlying margins are in non-par savings for you and also for the group segment? Yeah. Earlier, you used to give gross sort of VNB margins, but you've stopped disclosing that. So that would be helpful.
I would like my appointed actuary to explain. So good evening. I am Ajay Kumar Srivastava, appointed actuary and executive director at LIC. Your first question is about the yield curve, why that economic assumptions and the results have gone up. So the favorable yield curve of Q3 of around 83 basis points or 80 basis points, particularly at higher durations, that has impacted and contributed to an increase of 1.9%. So it's because of the higher favorable yield curve. And your second question was the operating impact on the VNB margin. So that has impacted 2.8%.
But this includes the GST impact, the impact of persistency, and alignment of expenses in group business to reflect the current experience. All these things put together have actually contributed to this decrease in VNB margin by 2.8%. As regards the business mix, as regards business mix, the business mix, if you look at in entirety, it has increased from 18%-23% if we consider the entire business including group. And the impact of this is the 48% contribution to the VNB margin, which indicates the contribution of non-par business and the increase of it on the VNB margin. And the group, you asked about the impact of that. So for the group, marginally, the proportion has gone up from 35%-37%. And 37% of this proportion contributes to about 24% of the VNB margin.
So I think while we have given the consolidated numbers on VNB margin for the corporation as a whole, this proportion of the business and the contribution to the VNB margin may give you a good indication of why the VNB margin has increased from 17.1% to 18.8% year-on-year basis.
Got it, sir. And just a follow-up question. Do you hedge, do you run a hedged non-par product portfolio, or is it just that this quarter you did not revise the IRRs upwards, which has sort of resulted in a higher margin in non-par?
Yeah. I'm just responding to it. I'm the CIO here. To speak here, we are very active in the interest rate derivative sphere currently, and we are regularly doing forward agreements at regular intervals. And we try to hedge our position to the maximum.
Got it. Got it, sir. Congratulations on a very good set of numbers, and all the best.
Thank you very much.
Thank you.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Sucrit Patil from Eyesight Fintrade Pvt Ltd. Please go ahead.
Good evening to the team. My first question to Mr. Doraiswamy is, as LIC moves through this stage, how do you balance between growing the business, keeping operations efficient, and protecting the profits? And when the situation changes, like competition, cost, or customer trends, what helps you decide which of these should be the main focus? That's my first question. I'll ask my second question after this. Thank you.
Thank you. The focus is on managing continuous, sustained, profitable growth.
Our focus will be continuously to improve the new business performance and top-line growth so that the impact of expenses that happen, like the input tax credit of GST or whatever it is, gets subsumed into the overall efficiency of the corporation. On the expenses part, yes, we are continuously focusing on the rationalization. Of course, partly because our senior working team is also facing a lot of retirements, and we are replacing them by younger people by recruiting at various levels. So we are able to attain a cost rationalization in this also, as well as the other expenses by going digital, by saving our operational expenses at various levels. So there's a continuous activity of improving our operational efficiency at the ground level while also focusing on increasing the contribution from the various channels.
We are also focusing on improving the contribution of bancassurance and alternate channels, which in our case also comes up with a bit more cost efficiency, as well as we are also looking at enhancing our digital footprint. So all these will continue to be focused, and we'll like to take on the competition or whatever it is based on our continued focus on keeping our agency productivity increased as well as contribution from other channels by improving the top-line growth while continuously working on the rationalization of expenses.
Thank you. My second question to Mr. Agarwal is, again, along the similar lines, when early signs such as receivable investment flows or costs begin to change, what guides your response towards this? How do you decide the next step so that you stay ahead of pressure or capture the upside before it shows up on the balance sheet?
I want to understand how you approach this particular thing. Thank you.
It all depends on the cash flows that are available from time to time and depending on our ALM position because we know the maturities and the outgoes that are planned. More or less, the expense trend is also known in advance. Accordingly, we plan our investment strategy and deploy the funds in the market.
Thank you, and best of luck.
Thank you.
Thank you. Next question is from Gaurav Jain from ICICI Prudential Mutual Fund. Please go ahead.
Sir, first of all, congratulations on the great set of numbers.
Gaurav, I'm sorry to interrupt, but we can barely hear you. Could you please speak a little louder?
Any better now?
Okay. Go ahead. I'm able to hear you.
Yeah. Yeah. Yeah. Thank you, sir.
So first of all, sir, congratulations on a great set of numbers. Sir, if we can see that for the nine months, we have reported a PAT growth of 17%, which is now at INR 34,000 crore around. And sir, in spite of reporting such strong growth, our solvency is, sir, continuously improving. So quarter-on-quarter, it has also improved. And now we are at 219% solvency, which should be comfortable again. Sir, my question is on dividend payout. What we are seeing is the payout ratio is on the lower side. So if you can help us understand how is the board and corporation really thinking on dividend payout, that will be very helpful, sir.
Thank you for your question. Actually, this is a call that the board will have to take from time to time.
If you see, for the last three years, we have been improving or increasing our dividend paid. We started at INR 4, then we moved to INR 10, and then we have moved to INR 12. We are expecting it to be better in the current year also, but it's not a call that I can take individually. When we declare the results of the full financial year, we may be our board will be taking a call so that our growth in the dividend payout is also sustainable. As of now, we have built up quite a good amount of reserves, so we are comfortable in that area. After the final results are declared, perhaps we'll be able to take a call.
Got it, sir. That was very helpful. All the best, sir. Congratulations on a great set of numbers. Thank you, sir. Thank you, sir.
Thank you.
Thank you. Participants who wish to ask questions may press star and one. The next question is from Dipanjan Ghosh from Citi. Please go ahead.
Hi. Good evening, sir. Just a few questions from my side. First, if I look at the ticket size of your non-par savings business and par business, there seems to be a little bit of trajectory change compared to what we were seeing for the past few quarters in both the segments. Just wanted to get some color on the subproducts within these segments and has there been any shift across the quarter out there? My second question is on the banca and alternate channels. Could it be possible for you to kind of segregate it between core bancassurance and other channels and also the sort of product mix across some of these channels? How are you seeing that evolving?
The third question is taking cues from the previous participant's question in terms of your dividend payout policy. I just wanted to understand. Now you're sitting with almost a net worth of INR 1.5 trillion+. Your solvency is also quite comfortable. It seems that you might have done some rounds of exercise on IFRS calculations also. So is there some visibility on, let's say, even two, three years out? What can be a steady state dividend payout ratio for a company of your vintage? Those are my three questions.
Govind Agarwal on the ticket size of?
Yeah. Our ticket size of individual non-pars is improving because of this annuity plans. We are having a growth similarly in ULIPs also.
Non-par savings?
Actually, yeah.
So if we look at on the basis of individual APE, then in that case, you will find that because that takes care of the mode of payments. So therefore, average individual APE, if you look at as compared to December 2024, it has gone up from INR 28,034-INR 31,882 in case of single premium. And in case of non-single, it has gone up from INR 20,542-INR 23,051. So it has increased significantly. And with these interventions, which we had done last year while reviewing the products after these product regulations had come up, you would be aware that in some products, not on all, we had increased the minimum sum assured. So we expect that going forward, we'll be having a higher ticket size on the basis of APE going forward.
Coming to bancassurance part, I think CEO, sir, detailed it out during his address that both banca as well as the alternate, they have, in fact, contributed significantly in terms of overall volume. Banks continue to grow at almost around 40% for a period ending 31st of December. Alternates, of course, have been showing a healthier growth of around 136% in terms of comparative data over the corresponding period of last year. Putting it in numbers, banks contributed around INR 2,035 crore as at December 25, while INR 1,305 crore came from alternates. We look forward to continuing with the same set of healthy numbers and quite confident of maintaining the same growth rates for the year as well. So hopefully, we should be closing Q4 also on a strong note.
As far as the product mix within banca is concerned, in fact, banca continues to lead in terms of non-par contribution. And currently, in fact, banca has almost around 90%-10% kind of weighted between non-par and par. As regards to your last question on dividend, if you look back at the dividend history, we started off with INR 1.5 per share, and we've increased it eight times over a period of last three, four years. As sir already mentioned, we'll be sustaining. So we are ensuring that the dividend is sustainable in coming days. Also, as you rightly pointed out, there are a variety of things happening on the IFRS front as well. So we are yet to complete the assessment because many things are at the draft stage as of now.
So as in when they are notified and they are enforced, so we'll look at the impact and thereafter come back with a concrete dividend policy. But as far as the sustainability is concerned, we'll ensure that it is sustainable whatever dividends are paid.
Got it. So just one small follow-up question. I mean, in terms of the government shareholding in LIC, obviously, there are some stipulated timelines. Any color that you can share on this aspect? That's all from my side. Thank you and all the best.
See, on that, the government or the regulatory position now is that the holding of the government will be reduced by 10%. That is, it will come down to 90% within a period of five years from the date of IPO, which is by 2027. We should be able to come down to that.
The government and LIC together, we are working towards making it happen. Maybe you'll be hearing about the further tranche of shares being offered in the next few months to come.
Got it, sir. Thank you and all the best.
Thank you. Participants who wish to ask questions, please press star and one. The next question is from Aishwarya Mittal from Payash Finbridge. Please go ahead.
Good evening, sir. My question about the performance of the company. Being an investor, my concern is that from the last four years, I'm carrying the negative carry from your listed price. So when I can just look at the positivity see, dividend is all this is fine. But when I carry the capital depreciation negative carry, then why should I keep your share in my portfolio?
The second thing, now the page number seven and 11 of your presentation slides, there is a lot of negativity. There is a market share is low. Your bancassurance policy is reduced by 44%. So why are these four and five negativities there in the particular performance? Because you are losing your market share versus in other companies.
Thank you. See, we are looking at all the steps that we can be taking to ensure that price will see an uptick at the earliest. We are working on that continuously. We are hoping that this will be happening at the nearest possible time.
On the other side, yes, the market share that are lost when the market as a number of players expands, the market share of the biggest player is likely to be reduced because any new player coming in and taking up even a small volume of business means it will be the overall pie will grow, but the share will get split. We are looking at continuously growing on a sustainable basis. That is what we are looking at. So we'll be looking at a growth rate commensurate with the industry or in such a way that we propel the growth of the industry as a whole. That's what we are looking at. So when the number of players keep increasing now with the latest Insurance Act of 100% FDI, there may be more players entering the market.
As more and more players enter, the market gets divided among the participants. So market share loss by itself is not a major issue. But what we are looking at is a growth, and that too at a sustainable level is something that we are looking at. On the bancassurance side, I don't know whether you are looking at the number of policies, right? Yes. We had a good contribution from a major alternate channel partner with us who has been facing some issue with their operation in the area where they are focusing. So they could not repeat. They did a good volume of number of policies last year, but they were all of small ticket size on the individual side. They were having some problem during the current year.
I think they are overcoming that problem, and soon they'll be coming back to their earlier form of activity. I'm sure we'll be recapturing on that. Though there had been a fall in the contribution on number of policies by the bancassurance, the alternate channel partner, we have been able to show a substantial increase in the premium side from the bancassurance as well as alternate channel. Bankers have shown a growth of more than 40%, whereas the alternate channels have shown a growth of more than 126% in terms of premium. Our focus has been on garnering more premium through this channel and improving that share. If you have noticed, over a corresponding period of a year-to-year basis, we have almost increased from 4.7%-7.23% as a share from bancassurance. That focus will continue to be there.
We'll be improving the contribution from this channel as the days to come.
Thank you, sir.
Thank you. The next question is from Nischint Chawathe from Kotak Securities. Please go ahead.
Hi. Just going back to the first question, which is the impact of operating assumptions. You mentioned that this 2.8% includes persistency expenses and GST. Is it possible for you to give us some color in terms of how this breaks up?
In fact, if we go through the calculations, all these factors which I spoke about, that is persistency expenses, GST as part of expenses, they all interact. And there are various other factors which get into the determination of the VNB margin. So therefore, what we have shown is the overall impact of that. Because of that interaction and all those things, these numbers keep on changing within those parameters which I had mentioned.
So that's the reason we have shown it together as 2.8%.
GST is a, so to say, one-off event which can probably be neutralized over time. And hence, if we kind of set that aside, we were just curious to understand as to how the ongoing business is moving. So if you could give any color on that, that would be useful.
GST, I don't know whether you can take it as a one-off event because as of now, it stands by the council. So you can take it as around 40% of the 2.8% or whatever it is. Maybe it will be through the GST ITC not being available. But as we go forward, we are looking at getting it subsumed by the rationalization of expenses. So that's why we are not splitting it. We are trying to do two things.
One, thanks to the increase in affordability by the customer not having been required to pay GST, we are seeing an uptick in both the ticket size as well as the amount that we are looking at. So we are looking at a top-line growth while maintaining a rationalization of expenses. So overall expenses get reduced so that the impact of GST can be suitably accommodated within that.
And why would you have higher than estimated expenses? Because I mean, I thought on the expenses line, we should be positive, right, given the volume tailwind that we have seen.
Oh, yeah. That's what we are looking at. We are reduction in the overall expenses ratio as well as the management expenses have been going down.
If you're talking about the quarter-over-quarter comparison, as you rightly observed, that it's a one-time GST impact that was accounted for in quarter three.
And therefore, comparatively, it is higher as compared to your previous quarter.
No, no. Sorry. What I was trying to say is that, see, if I look at the -2.8%, clearly, you mentioned GST was sort of 40% contributed to it. And then I would believe the balance 60% is negative on persistency and negative on expenses. I understand the persistency part, but why would you have a negative why would you carry a negative operating variance on expenses when your volume growth is so strong?
The mention was not in all lines of business. As the overall expenses, as has been discussed, has come down. But in some lines of business, depending on the experience, that has been factored in. So the impact of those lines of business where it has been set to the current experience, the impact is only on that, not on the entire business.
Okay. Okay. Got it. Thank you.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Shobhit Sharma from HDFC Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. So my first question is on the growth side. So if I look at par business during the quarter, it seems we have grown significantly higher than what we have done in the first six months. So if you can shed some light on that, have we made any product intervention, or is this primarily because of the base effect we had? Secondly, on the persistency, it has dropped across most of the cohorts.
So if you can shed some light on which product segments we are experiencing lower than the company average persistency levels, and is there anything to read from the monthly mode of persistency's? So these are two questions from my side.
Our experience on persistency is that the low ticket size of policies have poorer persistency. And the frequency of payment, if it is higher, that is also having an adverse impact on the persistency. Now, some of these things we have addressed in the last year. As I say, the minimum ticket size has gone up. And the impact of that is expected when we start looking at the 13th month persistency, which is yet to unfold. So for the time being, we are talking about the persistency, which is coming down, is pertaining to those businesses which were done prior to the intervention which we made last year.
So once we get this unfolding of the impact of the interventions we have taken last year, we would be able to see the impact of that increase in the persistency. Okay, sir. And what about the growth on the par business side, which we have seen during the quarter? So the par business also, as we mentioned, slightly this VNB margin also has gone up on that, particularly because on an APE basis, if you look at the average ticket size in par business has gone up. So that average ticket size going up is, again, a result of what I mentioned was due to the intervention of some of the products where the minimum ticket size were increased. So going forward, once the ticket size increases, I mean, that will be having impact on the margins in the par business as well.
Okay, sir. Yes, sir. Please continue.
I would also like to add that the geographical spread and the segment-wise spread that LIC has compared to other insurance companies in terms of business also adds to the persistency issue. People who are not from the affluent sections of the society, they take a policy, but perhaps they may not be able to pay on time. But as and when their seasonal income improves, they come back and pay their arrears and bring the policies in force. So we continuously work on reviving the existing policies for which premiums are not paid in time, which would have affected our persistency by getting them back as a revival or reinstatement. That also helps. So we address the lack of persistency, particularly in terms of 13th month and earlier months, by going on a campaign mode in terms of revival of lapsed policies also.
That's also contributing to our improvement in profitability over a period of time.
Sir, is it right to assume that we are experiencing a negative persistency variance as compared to what we have actually built in?
Persistency and other experience items continuously get reviewed periodically. It is not one such factor which gets into the purpose of the VNB margins, etc., but whole lots of things. Persistency is one such thing. When the persistency goes down, if that gets factored in, that will be having impact on the margins as well.
One weak point we can note here is that, yes, as it is a point in which this assumption changes negative, the persistency has gone down. We need to appreciate one thing that LIC, as an organization, is not exactly the same to the other organizations.
We have a role to play for ensuring insurance for all, right? So in that context, it is a very important decision. See, LIC can take a decision to improve the ticket size significantly. Naturally, it will lead to higher persistency. But then affordability of insurance and being responsible for ensuring that everybody is covered is also very paramount because the customer base is something which is USP for LIC. Even when persistency is an issue, but the large base of the insurance coverage that is being provided by being done with the corporation. A lot of steps have been taken in this context, if you would recall that. Many products have been withdrawn. Many products have been modified. But as has been mentioned by Mr. Srivastava just now, that it is a very key area of focus for us.
The steps that they were taken because you will see, last year, we revised the ticket size of the policies from minimum INR 1 lakh to INR 2 lakh. And that had an impact that the business volumes in terms of policies went down significantly. So now we have to ensure that coverage also continues. So now in this context, the steps that were taken last year because the manner of determination of persistency is that you have to observe it for one year entire period, and then the method in which it is done, that will unfold in the next year. And what you are talking about persistency in terms of 63%-65% or so is in terms of policies. In terms of premium, actually, our persistency is much better, 75% or so.
We are confident that as this and another important factor which needs to be noted is that the ticket size between participating and not participating is significantly different, while the average is around INR 20,000. The ticket size for the non-participating is larger. The persistency in that segment is there. Another important point in context of LIC which has to be noted is that LIC has a big book size of single premium policies, which actually does not come into the regulatory method of calculation of 13th month persistency because fully paid-up policies and single premium policies are not a part of that calculation. If a realistic assessment is done, including based on inclusion of single premium policies also in paid-up policies, LIC's persistency will look much better and higher as compared to that thing.
So what is being seen persistently, currently being seen, is in context of the methodology which is prescribed, which excludes paid-up and single premium policies. But as we mentioned earlier, while we remain focused and it's a total endeavor for the corporation that we have to work towards persistency because, yes, as you rightly mentioned, reduction in persistency impacts the profitability, long-term profitability. But we have to rebalance that we continue to provide products which are for the masses as well as which are for the classes so that while we continue to create value for the shareholders, we also need to keep on creating options and the solutions, product solutions, for all classes of customers. So that is something which is very important and core to our business activity.
Thank you. Sir, just a small follow-up on this.
If you can shed some light on the alternate channels. So what kind of product mix they are into? Are they much more heavier onto the non-par side as compared to the par segment? And what's the persistency on those channels? And lastly, final question is on the distribution cost. So there have been a lot of concerns around the distribution cost in terms of the payouts which the companies make to the distributors. So what do you think? If the deferral of the commissions gets into the picture, would it be a help the industry to resolve the persistency-related issues and bring on the distributor payouts?
Alternate channel. Sir, alternate channel product mix remains, in fact, more or less non-par-centric with both, in fact, NUET and ULIPs contributing healthy volumes. It is not only, in fact, driven by ULIPs.
NUET will also contribute, in fact, significantly in terms of contributions coming in from alternate channels, including banks. So far as the commission structure or the payout part is concerned?
On the alternate channel, good amount not only alternate channel, banks have also been contributing substantially on a single premium component. So their persistency at the highest, we can safely take it as very big. Even for the one organization which was contributing heavily in the last year, which they could not repeat this year, they were all of a very high persistency of close to around 90%-92% is what we were experiencing. When it comes to the distribution costs, you will appreciate that LIC has been different from the rest of the industry. We have been managing and maintaining our distribution costs at a much lower level than the rest of the industry.
Whatever the talks that are being made now is in respect of the higher distribution cost that was seen in the other companies. We have been consistently maintaining, and we are adhering to the regulatory restrictions which were there in 2013 and 2016. Though subsequently, those regulations were removed, we have been keeping it at an optimal level. As and when the regulator takes a call, and in case there is a modification that is going to be prescribed, we will be fully compliant and ensuring that it happens. LIC has always been having a good amount of commission being paid, or rather, proportion of commission that is being paid out of the total that we are spending towards the renewal premium.
That has been one area where we have been able to do much better in terms of persistency of 61st month and thereafter, which is not being measured or disclosed.
Thank you, sir, for this elaborate answer. And wish you all the best.
Thank you very much.
Thank you. The next question is from Madhukar from JP Morgan. Please go ahead.
Hi, sir. Thank you for taking my follow-up. So just on the break-up of the operating expense assumption changed, so how much of that is because of GST? Can you sort of just quantify that number? And second, the mark-to-market fluctuation for 31st December ending, that we can get from PDs, right? Would the policyholders' account that number would be the fair number, right number to look at? Is that the first question?
Yes. As I said, the components within that, they interact with each other.
At any point of time, that number may be different when the mix actually differs. So therefore, quantifying this specific one component may be a little information may be taken in a different manner. And therefore, any information which is going to be different on the basis of the GST based on the mix, we have taken all the components together and have given a single number which is 2.8%. So that includes GST expense, which we have been taking as the part of expenses and absorbed accordingly.
Got it, sir. Thank you. All the best.
Thank you. Participants who wish to ask questions may press star and one. Ladies and gentlemen, to ask questions, please press star and one. As there are no further questions, I would now like to hand the conference over to Mr. Doraiswamy for closing comments.
First of all, I would like to thank all of you for taking the time to attend our late evening conference call today. As we conclude our review for the nine-months performance of FY2026, I want to convey my appreciation to everyone for your continued confidence, collaboration, and engagement with LIC. Your thoughtful questions show a deep insight into our operations and strategic direction. I trust we have resolved all your concerns satisfactorily. If you require any further assistance or wish to continue the dialogue, please contact our investor relations team. Thank you, and have a good night.
Thank you very much. On behalf of LIC, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.