Ladies and gentlemen, good evening and welcome to the LIC FY 2026 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 conference call, please signal an operator by pressing star and then zero on your touchtone 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, over to you, Mr. R. Doraiswamy.
Good evening, everyone. I'm R. Doraiswamy, Chief Executive Officer and Managing Director, LIC. I would like to welcome all of you to the results and performance update for the year ended March 31st, 2026. I also extend my gratitude to you for joining this call in the later hours of the evening today. 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 the managing directors, Shri Dinesh Pant, Shri Ratnakar Patnaik, Shri R. Chander. Senior officials of the corporation present on this call are Shri A.K. Srivastava, Appointed Actuary and Executive Director, Actuarial from the Actuarial team, Shri Sunil Agrawal, CFO from the Finance team, Shri Arindam Dasgupta, Executive Director, Investment Front Office and CIO from the Investment team.
From the Marketing team, we have Mr. Uthup Joseph, Executive Director, Marketing/Product Development, Mr. Hemant Buch, Executive Director, Marketing- Bancassurance & Alternate Channels, Mr. K. Seshagiridhar, Executive Director, Pension and Group Schemes. Also, we have Ms. Shobha Sulochana, Executive Director, CRM/Policy Servicing, Ms. Vandana Sinha, Executive Director, CRM Claims and Annuities, and Shri Sanjay Bajaj, Head of Investor Relations on this call. I would now like to present the key business, operational, and financial performance highlights for the fiscal year ended March 31st, 2026. Market share. Our market share by first year premium income for the year ending 31st March 2026 is 56.66% as per IRDAI, as compared to 57.05% for the similar period ended 31st March 2025. Therefore, we continue to maintain our leadership in the Indian insurance market across both individual and group business segments.
If we break down this overall insurance market share of 56.66% into segment-wise shares of the individual and group business, we would have a market share of 36.6% in individual business and 70.11% in the group business for the year ending 31st March 2026. On a comparable basis, for the year ending 31st March 2025, the respective market share for individual and group business were 37.46% and 71.19% respectively. Premium income. For the year ended 31st March 2026, we have reported a total premium income of INR 5,35,984 crore as compared to total premium income of INR 4,88,148 crore for the year ending 31st March 2025, registering a growth of 9.8% on year-on-year basis.
The individual new business premium income for the year ended 31st March 2026 was INR 67,676 crore as compared to INR 62,495 crore for the similar period ended 31st March 2025, thereby registering an increase of 8.29% on a year-on-year basis. Renewal premium income of individual business for the year ended 31st March 2026 was INR 2,71,699 crore as compared to INR 2,56,541 crore for the year ended March 31st, 2025, registering a growth of 5.91% on a year-on-year basis.
Therefore, for the year ended 31st March 2026, our total individual premium income, including renewals, was INR 3,39,375 crore as compared to INR 3,19,036 crore for the previous year, registering a growth of 6.37% on a year-on-year basis. The group business total premium income for the year ended 31st March 2026 was INR 1,96,609 crore, comprising new business premium of INR 1,92,912 crore. In comparison, for the year ended 31st March 2025, the group business total premium income was INR 1,69,112 crore, comprised new business premium income of INR 1,64,262 crore.
For the year ending 31st March 2026, the total group premium has increased by 16.26% as compared to previous year ending 31st March 2025. The breakup of business on APE basis. The total annualized premium equivalent for the year ended 31st March 2026 is INR 66,961 crore, which comprise individual APE of INR 43,335 crore and group APE of INR 23,626 crore. On an APE basis, the individual business accounts for 64.72%, and group business accounts for 35.28%. Further, of the individual APE, the par business accounts for INR 28,121 crore and non-par amounts to INR 15,214 crore. Our non-par share of individual APE is 35.11%, and par is 64.89% for the year ended 31st March 2026. As you may recall, for the year ended 31st March 2025, our non-par share of total individual business based on APE stood at 27.69%.
Since then, our non-par APE has increased from INR 10,581 crore to INR 15,214 crore, reflecting an increase of 43.78% on a year-on-year basis. At this point, I would like to take you back to our 9-month results for the year ended 31st December 2025, when our comparable non-par APE share within individual business was 36.46%. We had mentioned then that our effort would be to consolidate our non-par gains for some time, and the full-year numbers visible now are a testimony of that consolidation. Profit after tax. The PAT for the year ended 31st March 2026 was INR 57,419 crore as compared to INR 48,151 crore for the last year, registering a growth of 19.25% on a year-on-year basis. VNB and VNB margins.
The net VNB has registered a growth of 41.63% on a year-on-year basis to INR 14,179 crore for the year ended 31st March 2026, from INR 10,011 crore for the previous year. We are quite happy with the rapid gains in VNB growth, given that it was only last year that we became the first life insurance company in India to cross the INR 10,000 crore mark in VNB. Further, the net VNB margin has improved by 360 basis points on a year-on-year basis to 21.2% for the year ended 31st March 2026, from 17.6% for the previous year. The solvency ratio as on 31st March 2026 improved to 2.35 as against 2.11 on March 31st, 2025. The Indian Embedded Value as on 31st March 2026 has been determined as INR 7,89,185 crore as compared to INR 7,76,876 crore as on 31st March 2025.
The IEV has registered an increase of 1.58% on a year-on-year basis. The asset under management as on 31st March 2026 was INR 57,29,396 crore as compared to INR 54,52,297 crore as on 31st March 2025. Our AUM has registered a growth of 5.08% on a year-on-year basis. Product mix and new product launches. As on 31st March 2026, we had a comprehensive suite of 58 products, excluding the Pradhan Mantri Jeevan Jyoti Bima Yojana available for new business, including 36 exclusive individual products, 13 exclusive group products, and one common product, which is eligible for group as well as individual business. In addition, we have seven individual riders and one group rider. Post 31st March 2026, we have withdrawn one product, namely LIC's Nav Jeevan Shree single premium. The number of policies sold.
During the year ended 31st March 2026, we sold 18,441,175 new policies as compared to 17,782,975 new policies in the previous year, registering a growth of 3.7% on a year-on-year basis. Agency workforce. As on 31st March 2026, the total number of individual agents was 1,457,045 as compared to 1,486,851 as on 31st March 2025. The market share by number of agents as on 31st March 2026 stands at 44.25% as against 47.61% for March 31st, 2025. On number of policies sold basis, the agency force sold 18,149,650 policies during the year ended 31st March 2026 as compared to 17,358,723 policies during the corresponding period of last year. Further, 98.42% of our policies in the year ended March 31st, 2026 were sold by our agency force. When seen on premium basis, 91.75% of the new business premium came from our agency channel in the financial year ending of 2025/26.
Contribution by banca and alternate channels. Our banca and alternate channels growth has been a continuous story of increasing volumes and larger intra-day market share within our channel mix. Bancassurance and alternate channels collected a new business premium income of INR 5,076 crore for the year ended 31st March 2026, as compared to INR 3,496.0 crore for the previous year, registering a growth of 45.19% on a year-on-year basis. The new business premium income collected through banks was INR 3,151.33 crore for the year ended 31st March 2026, and for the corresponding period last year, it was INR 2,576.74 crore, thereby registering a growth of 22.30% on a year-on-year basis. Further, the alternate channels collected new business premium of INR 1,924.74 crore for the year as compared to INR 919.36 crore for the year ended 31st March 2025, registering a growth of 109.36% on a year-on-year basis.
The share of individual new business premium from our bancassurance and alternate channels has risen significantly to 7.51% in FY 2026, marking a notable improvement over the 5.59% achieved in FY 2025. Before I move on to other areas, I would like to say that for long, since our listing, we have quietly harbored an ambition to cross a level of INR 5,000 crore through bancassurance and alternate channels, and this financial year we achieved the same, and we are very happy about it. Our overall expense ratio. For the year ended 31st March 2026, the overall expense ratio was 11.91% as compared to 12.43% for the last year. There is a decrease of 51 basis points in our overall expense ratio on a year-over-year basis. Persistency.
On premium basis, the persistency for 13th, 25th, 37th, 49th, and 61st month up to 31st March 2026 stands at 74.64%, 68.98%, 66.94%, 63.03%, and 59.31% respectively, as compared to 74.84%, 70.99%, 66.11%, 61.51%, and 63.12% respectively, up to the year ended 31st March 2025. On number of policies basis, the persistency for 13th, 25th, 37th, 49th, and 61st month up to the year ended 31st March 2026 stands at 64.87%, 57.65%, 55.29%, 49.78%, and 46.88% respectively, as compared to 64.12%, 59.32%, 52.66%, 48.79%, and 50.31% respectively up to the previous year ended 31st March 2025.
Our persistency metrics reflect continued strength with improvement on a premium basis in the 37th and 49th months, and enhanced performance on a policy basis on the 13th, 37th, and 49th months. We are also focusing our energies on improvement across certain cohorts where we have seen a drop. Operational efficiency and digital progress.
In our digital initiative, through the agent-assisted ANANDA app, we have completed 2,390,983 policies during the year ended 31st March 2026, as compared to 1,474,208 policies on the year ended 31st March 2025, thereby registering a growth of 56.08% on a year-on-year basis. There's a growth of 29.56% in the number of active agents in ANANDA app for the year ended 31st March 2026. The Digital Innovation and Value Enhancement initiative, DIVE. The DIVE project is being rolled out in phases, both for customers and distributors. Many features and facilities have been activated, and many more will be launched in a phased manner. We have launched the new LIC customer app titled MyLIC, and the mobile app for the sales intermediaries titled LIC Super Sales Saathi on the 15th of April 2026.
MyLIC is a next generation mobile application built to redefine the experience of how policyholders will manage their life insurance portfolio. Super Saathi app is a next generation mobile application for LIC's marketing personnel. We hope the people logged into this call, and those who will be hearing this recording later, will be able to experience firsthand our digital transformation, and please do share your feedback with us on mail or even through our investor relations team who is continuously engaged with you. Claims. On individual claims front, during the year ended 31st March 2026, we have processed 2,49,56,342 number of claims, which includes 2,41,25,943 maturity and survival-based claims. On an amount basis, during the year ended 31st March 2026, the total maturity claims were INR 2,79,951 crore, and the total death claims were INR 24,885 crore.
On a comparable basis, for the financial year ended March 31, 2025, the maturity claims were INR 2,37,313 crore, and death claims were INR 24,420 crore. Therefore, the maturity claims are higher by 17.97%, and the death claims are higher by 1.91% on a year-on-year basis. The marketing initiative update on Bima Sakhi Yojana.
As of March 31, 2026, a total of 345,000 women have been designated as Bima Sakhis, successfully selling 21.94 lakh insurance policies and generating a new business premium income of INR 2,848 crore in the year ended March 31, 2026. Our objective is to appoint at least one Bima Sakhi in every gram panchayat, and we would like to inform that out of 2,44,806 gram panchayats, we have covered 59% gram panchayats by recruiting Bima Sakhis in 1,43,924 Panchayats up to March 31, 2026. Before concluding, I would like to reiterate significant highlights of our performance.
Our non-par share of individual APE business has now consistently settled at above 35% sequentially over the last three results performance updates. Our PAT has grown by 19.25% to INR 57,419 crore on a year-on-year basis. This is the highest PAT in our history. Bancassurance and alternate channels registered a growth of 45.19% on a year-on-year basis to INR 5,076.07 crore.
This is the first time we have crossed INR 5,000 crore premium in B&A channels. VNB has increased by 41.63% on a year-on-year basis for FY 2026. This is our highest VNB till now. VNB margin has increased by 360 basis points to 21.2% for FY 2026. This is our highest VNB margin till now. IEV has increased by INR 12,309 crore to INR 7,089,185 crore as on March 31, 2026, registering a growth of 1.58% on a year-on-year basis. While maintaining growth in multiple parameters, we have kept a focus on cost.
As you can see, the overall expense ratio is down by 51 basis points to 11.91% in FY 2026. This is the lowest overall expense ratio for us till now since listing. I would like to share that the board of directors has recommended a final dividend of INR 10 per equity share of INR 10 each, equivalent to INR 20 per equity share pre-bonus issue basis for the financial year 2025-2026, subject to approval of shareholders in the fifth annual general meeting of the corporation. When we now look back at our four-year journey post-listing in May 2022, we feel happy that we have delivered more than what was told to the shareholders at the time of listing as our three to five-year ambition with regards to product mix, channel mix, and margins.
We are now very confident that having achieved significant directional changes, we are on a path of superior growth with sharper focus on enhanced performance parameters. We extend our sincere gratitude to all our stakeholders for their complete support and faith in us, and we executed the defined strategy. With that, I now hand over to the moderator to open the floor for question and answer session. Thank you very much.
Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Swarnab Mukherjee with 360 ONE Capital. Please go ahead.
Hi, sir. Thank you for the opportunity and congrats on the good set of numbers. Three questions from my side. First of all, on the individual savings business on the non-par side, there was a very strong show this quarter. I just wanted to understand that this significant growth that has come through this quarter vis-à-vis, say, what we saw in 3Q also, and vis-à-vis, say, fourth quarter last year. What products would have led to this growth, and how much of this we can think to continue in a similar momentum going ahead in FY 2027? That is the first question. Second is, in terms of the operating assumption changes that you have mentioned in EV and VNB walk.
If you could give some color on that, what are the changes that you are seeing, as well as in the VNB walk, the economic assumption changes, if you could highlight what is playing out there in this particular quarter? I think in nine months, that number, if I remember correctly, was a negative number. If you could highlight that? Lastly, sir, if you could give some color on how of this margin that has been reported in the fourth quarter, what would be the trend for the individual business, how the margin would be?
Mr. Uthup Joseph, Executive Marketing will take the first question. Other two.
Thank you. As far as the savings products are concerned, the question which you have asked, which product has contributed maximum towards this growth. Actually, we have shown a growth of almost 48.40% as far as the savings bucket is concerned. The product which has contributed best is Jeevan Utsav, which has given us a very good percentage as far as the savings bucket is concerned, and this product is having a good ticket size also, which has actually helped us in ensuring that this savings product is actually bringing a lot of premium to us. As far as the savings product is concerned on the par side, Jeevan Lakshya also has performed very well, which has contributed to almost 40% of the premium as far as that segment is concerned.
These two products, I can say that they have done the best performance as far as savings is concerned.
Our appointed actuary , Ajay Kumar Srivastava, will take the EV VNB walk and margins.
First, about VNB walk. As at 31st March 2025, the VNB margin was 17.6%. As we have already spoken about the mix of business and a very strong growth in the non-par business as compared to par. See, the growth is on all lines of business except probably VNB. There is a strong growth in non-par segments, and therefore the proportion of non-par business to the total business has gone up. This business mix, which has gone up, has contributed to 3% to the VNB margin. The RFR quotes here, if you see, it is ranging. It's remained calm and then in some months it has gone up to 0.84 basis points or so. This RFR has contributed to 3.4%.
With regard to this operating assumptions, as you asked, this is mainly because some lines of business, the expense has been realigned based on experience and in a few lines of business, the persistency also has been aligned. The combined effect of the persistency and the expense in some line of business adjustments based on the experience, along with the GST impact, which has been taken as part of the policy expenses, the contribution is a negative 2.8%. This explains the movement of VNB from 17.6% to 21.2% as of 31st March 2026. Does that answer?
Understood.
Thank you.
Yes. If you could also explain the theme for EV walk in terms of the operating assumption changes and the variances.
If you look at the starting rating as of March 2025, the figures were INR 7,76,876 crore . Unwind is contributing to the extent of INR 74,748. The operating assumption changes I explained, that has also the impact on the VNB and also has impact on the embedded value to the extent of INR 1,663 negative in case of contribution to the embedded value. The operating experience variance, whatever we had assumed, because of the positive outcomes in each of the parameters the EV that operates the EVOP has contributed to the extent of INR 92,639 crore. This economic assumption changes and investment variance. One thing is what has contributed is RFR change. Another important thing is that there is a fall in MTM in equity to the extent of INR 53,698 and debt to the extent of INR 46.53 crore .
If you look at the dividend paid, that is also taken out from this. If you add and to all this in plus and minus, it reaches the figure as of 31st March 2026. Hope I answered.
Right, sir. Just one quick follow-up. In terms of persistency, if I look at the persistency data that you have provided, we see that there is a improvement in terms of premium basis, slight improvement. Sorry, improvement in terms of number of policies basis, but while in terms of premium basis, there is a minor drop. I just wanted to understand, I think last year you had highlighted that the strategy was to reduce lower ticket size products. How this is playing out despite you having now vis-à-vis last year a larger maybe average ticket size, and how does that reflecting in that positive persistency variance number in the EV walk?
If you look at it, the focus has been to increase the ticket size. At the same time, we are also looking at increasing the overall number of sales because we are also focusing on contributing towards the vision of Insurance for All by 2047. The effect of increased ticket size over the persistency will only be seen in the years to come. The minimum sum assured has been increased in 2024 October as part of our alignment to the new Master Circular released, and the effect of that will be seen over a period of time. We are sure that the persistency will improve across cohorts. What happens some year, the product looks different and the kind of policies sold during COVID and other things have also resulted in a five-year, that is 61st month persistency being lower.
We'll be looking at increasing it across all the cohorts in the days to come. Certainly, the increase in ticket size is going to help us in achieving this.
Okay, sir. Understood. Just if you could address the last question on some color on the individual business margin profile.
We have given you a total VNB margin which has gone up as compared to March 2027. If you look at in different components, if you look at the par individual business, which is about 42% of the APE, is contributing to the extent of 28% of VNB margin. If you look at the individual non-par business contribution to the VNB, 22.7% is the proportion of APE which is contributing to the extent of 53% of VNB. That was for individual business and the remaining comes from the group.
Thank you.
Right. This is for the full year?
Yes. This is for the full year.
Okay. Got it, sir. Very helpful. Thank you so much, sir. All the best for FY 2027.
Thank you.
Thank you. The next question comes from the line of Nischint Chawathe with Kotak Institutional Equities. Please go ahead.
Thank you. Just moving on, I just want a clarification. What you mentioned is par business is contributing to around 28% of VNB. Individual non-par is 53% and group is 19%. Is my understanding right?
That's correct. Yes.
To us. Hello?
Sorry to interrupt. Nischint, sir, your voice is breaking up in between. Your line is not clear.
Better now? No?
Yes.
Yes.
Please go ahead, sir.
Yeah. Is this better now? Hello?
Yes.
Yes. This is better.
Yeah. Sure. I'm just saying that of the economic assumption change and variance of INR 72,000 crore, I think we shared a breakup between equity and debt. Can you just repeat that number?
Equity is INR 53,698 and the debt is INR 46,853.
Okay. As a percentage. Got it. Just a couple of things. If I look at the P&L statement, your credit debit fair value change is almost INR 1.5 lakh crore decline. I was just curious, your equity market book has not corrected or not gone down as much. I think even now, the equity benchmark indices have also not come off so much. Why is the debit fair value change so high?
There are two components to it. One is the realization of the fair value change which happened during the year. Plus, some portion definitely is related to the market position as of 31st March 2026 as compared to 31st March 2025.
Equity markets, if I look at the benchmark, NSE 500, et cetera, almost flat. There should not be almost a INR 1.5 lakh crore decline. You have equity investment book of INR 15 lakh crore. It's a fairly sharp decline.
Just to add here, there was a lot of volatility at the end of the financial year, especially in the last month, that is the month of March. March, the value went down. Again, in the month of April, we have recouped almost 80% of the value. That has happened.
Got it. The other thing is on this accounting policy change, where you said that accounting of debt investments this is now going to be the amortization of discount versus the capital gains policy that was booked earlier. You mentioned a number of around INR 11,000 odd crore. Is this the net impact or is this a discounting or the gross component?
This is a gross component. As if we would have accounted this year-on-year, this would have not been recognized. This is a one-time correction that has happened for the investments that were made in the past. It is a gross impact.
No, sorry, this is only one time, right? This is amortized. This into the duration of the book will be-
Whenever those securities were bought, from that point of time, I would have recognized the amortization regularly. This would have been the impact of the overall investment that I hold as of 31st of March 2026.
That's right. What is the duration of your bond book?
In what form you are asking this?
No, I'm just saying that the way I would look at it is that this INR 11,000 crore into the duration of the bond book kind of reflects the unrealized gains that you're sitting on the bond portfolio. Is that a fair reading?
No, I don't think so. Because the entire bond book will not be on amortization basis completed.
12-15 years. Maybe the duration.
Sure. I'm just curious, if the policy was not changed, what would be the net impact on the surplus or PBT?
The majority of the portion is going into the participating because the majority of the securities are held in the participating line of business. Out of this INR 11,000, roughly about INR 9,000 odd crore is the impact in the participating, which does not impact the PAT at all directly.
Okay. I think the notes to accounts say that this is essentially the non-linked part of the book.
Non-linked.
Non-linked.
Non-linked. Okay. Includes par as well. Okay, got it. It doesn't really impact the P&L. Sure. I think just last if I can squeeze, your dividend policy, you have increased the payout which is a good thing. I'm just curious, how should we think about the payout ratio going forward?
The payout ratio will depend on how the regulatory changes also happen. We have to be a bit cautious in releasing it because there are some expected regulatory changes, particularly in respect of the risk-based capital being planned to be introduced. We are not sure when it is going to be introduced. We need to build some reserves so that we remain at a comfortable level of solvency throughout. That is one thing which you have to keep in mind. We have now released what we think of what our board felt is the rightful amount to be released immediately as a matter of our paying back to the shareholders. Before that, we have done that bonus issue. Bonus issue followed by an increased dividend is what we have done this year. We expect it to be sustained in future also.
That also has been kept in mind before the board decided the amount of dividend to be declared.
Got it. You mean the payout ratio, right? The books will be adjusted.
Yes.
Got it. Thank you very much. Those were my questions, and all the best.
Thank you.
Thank you. The next question comes from the line of Madhukar from JP Morgan. Please go ahead.
Hi, good evening. Congratulations on a good set of numbers.
Thank you.
Most of my questions have been answered. Sir, the line was a little unclear. The change in operating assumptions. Most of your operating assumptions are actually yielding positive variances. What is this, apart from GST, what is contributing to negative changes of yours?
Sorry. Operating experience variance is on three counts, sir. That is persistency, mortality, and expenses.
Yeah. Why is your operating assumption change negative? Apart from GST. GST would be one negative then.
Yeah. It's only GST.
It's GST. Some lines of business, as I said, expenses have been adjusted to the current year's experience. Persistency for some lines of business where it has come down, there I think that adjustment for that particular line of business because the lapsation has gone up. That has been accounted for in that variance.
Another question I had is, your persistency positive variance is quite large. Is there any sort of one-time element in it, any particular policy type which is contributing to this? Because on a premium basis, there is some sort of negative persistency that we observed, right, in these disclosures?
As we had discussions earlier as well, in 2024, the ticket size were increased for most of the policies. There the full experience is yet to unfold. We need to see how going forward that unfolds. Before that, it has to be line of business wise. We need to see where the persistency or the lapsation has come down and though overall it has gone up, for some lines of business, the impact has come down.
Understood, sir. That's it from my side.
Thank you. Your next question comes from the line of Avinash Singh from Emkay Global. Please go ahead.
Hi. Good evening. Thanks for the opportunity, great set of numbers. My question again is around capital and dividend policy. If we look in terms of the current solvency regime of 235% now your solvency ratio, that I would say perhaps the strongest in the sector, of course it has been rising. When it comes to dividend, of course, your dividend payout ratios are at a different level. However, given this kind of a capital glut and solvency accumulations, we would expect it to be even higher. You seem to be a bit or reasonably more cautious around risk with capital. Whereas if we see some of your private sector peers, they have kind of a host of risk-based solvency leading to some sort of a releasing capital or you can say that less capital is spent.
Now what is the reason behind your cautiousness? What is driving that, okay, you therefore are fearing that there could be kind of an increased capital requirement once you transition to risk solvency? What is this apprehension about capital?
Actually it is not because of any fear. Every insurance company has to decide. When we declare results, as has been the practice, as we have been trying to show, that whatever we are demonstrating should lead to further improvements going forward. Our investors as well as policyholders should not be very sure. You would appreciate then when we go for a risk-based capital, LIC because of large book size of it with participating policies and our exposure to equity is significantly higher as compared to the competing company. On one side that leads to improved returns to the policyholder. That's why we are seeing something like 8.9 as compared to the previous year, something around 8.5 or so. On the other side, when the risk-based capital assessments are done-
As of now, it has only been a QIS exercise, I will not get into details of that. The point here is sensitivity to the volatility in equities is a significant factor which will impact the risk-based capital. As of now, idea is not formed up what is ultimate protocol which will be formulated. Based on that thing, that's an area we have to be concerned. We are in continuous discussion, and we have submitted our points of it. We are, as a prudent and responsible insurance company, already 2.35 is the situation which you are showing and which will continue to be like that.
We will like to first understand fully how this RBC is going to pan out, what is the implication of that thing, that when we have any shift in dividend policy, in fact, already LIC started with a dividend declaration of INR 3, moved on to INR 10, INR 6 or INR 4 , then to INR 12, now INR 12 to INR 20 on pre-bonus issue, which is a significant improvement coming on top of bonus. We do not want to create expectations which cannot be sustainable for future, as a responsible organization, we would like how the RBC pans out. As I explained to you, because of the exposure into equity, the ultimate numbers which will be taken, factors which will be taken for determining sensitivity, because risk-based capital is going to be dependent upon the factors which are applied to different parameters.
We also want to ensure that we have to continuously grow. Actually, if you deep dive into the outcomes, you would see the lines of business which are most profitable to us. In fact, some of the products which are most profitable to us non-par, as is expected in the initial stages, consume capital. While we want to be prudent on the high solvency side, we also want to grow. The growth aspirations are there, and we would like this capital to be consumed for the growth purposes also. Already LIC is delivering on shifting of business profile as well as consolidating on solvency and being aware about the likely possible scenarios in the risk-based capital.
We are walking a journey in which we continue to walk a growth trajectory and maximize and utilize our capital, and we should not run out of capital for any reasons. As a responsible institution we have, while catered to the expectation, we want to be very sure about how the risk-based capital scenario comes out and then take a sort of finality to the dividend policy will emerge only after that thing.
Yeah. Thanks. One follow-up. Sorry, another question. Regarding your margins. GST came as sort of a post 1 of this year. That has consumed 2% of margin. If I remove that, the margin side is 23%. Next year, when I see the two benefits that you have derived this year, product mix changes and also the economic assumption changes probably in terms of movement in terms of shape and absolute level, would probably not be there. Also you will have to respond to this rising yields by offering probably higher IRR. Nevertheless, in a kind of a stable product mix and these economic assumptions, is it fair to assume that, okay, the margins will be looking more towards 23% next year?
I think we would not like to get into it. The beauty of a diversified product like what LIC is having, where some people tend to discount our group business, but that's also giving. The markets and the parameters in the scenarios and the factors will continue to change. Something which is going to be a contributor this year can become a challenge for the next years. We have to work upon in the direction, and if you could see the margins in the last quarter was significantly higher than for the overall year. This is the beauty of the balanced portfolio. For example, we have got large annuity book size, we have got ULIP, we have got non-par business, we have got group business.
What we expect and what is our strategies and the market, whether it's insurance market or investment market, will continue to change and evolve and different thing, for example, nobody perhaps was expecting interest rates to go up, right. The RFR contributed. Similarly, at times, RFR may not contribute, but then that will lead to the market valuations going up. What is our strategies to be able to anticipate the market, to be able to rebalance the portfolio and keep on working on the long-term strategies. The goal has been to cross 20, which we have achieved. Nobody can say this will be our for sure, but that is the direction in which, and as we have been saying from beginning, margin is very important.
For LIC, ultimately it is the VNB growth which is the most important because that's the most balanced version of the business growth and the VNB margin growth. We do not want to be going overboard on VNB margins because the customers are also very critical and the profitability is very important, but the customer base has to grow. Our ultimate strategy, as you mentioned rightly, yes, we expect margins to further improve, but that all depends upon various factors, and that will have to be seen over a period of time. This is what we have been mentioning, that soon there will be a time where our margins and the margins for the market will converge, and that's clearly the direction in which we are seeing things pan out.
Thank you, Patnaik.
Thank you.
Thank you. The next question comes from the line of Dipanjan Ghosh with Citi. Please go ahead.
Hi. Good evening, everyone. First, few questions from my side. Firstly, if I look at your EV walk, this is almost the second out of fourth year where you have been sustainably reporting a positive other variance, which is X of persistency expense and mortality. I just wanted to get some color on what exactly gets factored in this line item and how should really one think of it going ahead. My second question is on the persistency side. Now, what you're seeing persistency trends. On a premium basis, we are seeing some softness on the 13th and the 25th month. You have also strengthened your assumptions on persistency, but on the flip side, we are also seeing positive releases from the back book in the EV walk.
It would be great if you can kind of bifurcate this performance and persistency across the three major product classes, which is on the individual side, par, non-par, and linked business, both on the back book and on the strengthening that you have done and on the yearly performance that we're seeing on a YOY basis. The third question was on the P&L, and two questions rather on this part. One is if you can give some color on why the operating expenses were high in the fourth quarter and also in terms of benefit payouts. Was there any lump sum group related payout in the fourth quarter?
I'll take the last question first. There is no lump sum group payout that happened in the last quarter or anything like that. We had some assured benefit individual policies which were sold in big numbers 25 years back, which policies are maturing now. One cohort of policy is called endowment. We expect the number of policies that mature in the last year also, we already mentioned in the last year also. In 2025, 2026 and 2027 are expected to be significantly high. All those are with a high sum assured also. High ticket size sold in those years. There is a good amount of maturity claims that are going to happen, that happened in the last quarter as well as will continue to happen till January of 2027. We are well planned and working towards that.
That is one reason why the outgo on the number of policies and particularly the benefit payouts are more on the last quarter. On the EV and VNB margin, I would like to ask my appointed actuary , Shri appointed actuary to answer.
If I correctly understand the question that was on persistency. The persistency.
Operating variance.
Sorry. Operating variance on persistency, which has given a big positive of INR 3,509. I think that's the question on that. You want further bifurcation? Is that the question?
No. Basically, I'm trying to understand that if I break up the persistency variance and also the strengthening that you have done in the assumption changes on persistency across the three major product cohorts, which is par, non-par and linked. If I were to look at it like sum of parts of the three products and how have each of the product segments behaved.
In fact, as I mentioned earlier, in group line of business, because there is some persistency which has for some line of business it has come down. There that persistency assumption was strengthened and simultaneously in that area whatever was assumed on account of persistency, the actual experience was a little different from that. For group line of business, therefore it was strengthened. For par business, as I said, 13 months persistency has improved. That persistency assumption per se has not changed and that has contributed to a positive of INR 2,463.
Actually, just to clarify on that, these assumptions are set every year, then it is largely drawn from the previous year's experiences. You would appreciate that for our non-participating business, which has come into picture for a very short period of time, we had to largely draw upon the experience of the past. Good thing is with the changes which have happened in the previous few years, when the assumptions are set, it is expected that we have to first actually believe that it is going to change. The resultant largely coming from par is for all these changes which have happened since October 2024 or so. Ticket size has improved, the nature of business has improved, not across the entire portfolio, but for particular policies which are beneficial to us.
Actually, almost all lines of business it has been positive contribution has come onto that number INR 3,509, largely coming from participating in group business and small amount coming from non-participating business also. A chunk of business is there, large business is there.
If you can take the question on the other variances which have been reporting a positive number for some time now.
On which operational variance you are-
In the operating variance, you divided into four buckets, right? Persistency, mortality, expense and others.
Yeah. Expenses
I have claimed that has contributed positively, as the experience is better than what was assumed. The persistency also has contributed as we see that the mortality is almost flat. There's no big variance on account of mortality and morbidity. These are the three areas on which this has been divided. Persistency is INR 3,509, as we said. The expense also it is a positive, while I say this, the GST impact, this is the net of GST impact. GST impact has contributed negative to that extent.
If you're talking about the bracket of the others, there's not much difference as compared to the last year. That is coming for some account of cost of hedgeable, non-hedgeable risk, and then frictional cost of capital and slight model changes that result differences which are there. It's about slight changes compared to last year is there. Largely as appointed actuary just explained, coming from the persistency, and the expenses also. These are the main contributors to this.
Got it. Thank you, and all the best.
Thank you.
Thank you. The next question comes from the line of Mohit Mangal from Centrum. Please go ahead.
Patnaik, can you stand for the question? Right. You've got a strong case first. I've got three questions. First is, I wanted to know if there are any revisions to the IRR in the non-par category of last 12 months. If I could look at financial year 2027, do you think they need to see an increase in the offering rates? That's question number one. Question number two, I was looking at your agency count.
Your voice is not coming clear. It is not audible.
Is this better, sir?
Now it is better. Yes.
My first question was on non-par pricing. I just wanted to know, have you done any revisions to the IRR over the last 12 months? Secondly, if I look at FY 2027, do you intend to increase any offering rate, in the non-par category? My second question was in terms of the agency count. I was looking at your agency count at the end of FY 2025. We were about 1.48 million, and now we are at about 1.45 million at the end of March 2026. There has been kind of a reduction, and obviously our market share has also kind of come down in terms of number of agents. How should we see that going forward?
Lastly, in terms of the number of policies sold, so if I look at individual policies sold, they have gone up by 4%. If I look at the policies sold by bancassurance and alternate channels has declined by a very strong 36%. Just wanted to know the reasons for that.
On the first question of the IRR you just mentioned about, the IRR is a factor which depends upon the available investment opportunities, not necessarily from year-to-year basis, but for the duration for which the products are priced, as well as for the competitive reasons. There has to be balance between what IRR can be given in the products in a competitive scenario, ensuring that the policyholder's reasonable expectations and competitive scenario both are met. As you have been asking in the previous question, ensuring that the margins are not compromised. We'll continue to watch and see whether there is a possibility of also adding to it the hedging possibilities, particularly in the non-participating portfolio, how much of the risk can be hedged, because as of now, these hedging instruments are not available for very long duration.
All these constraints and opportunities have to be balanced. That is the reason, depending on the investment opportunities, possibly suppose the investment goes up in a particular year, does not mean that it is going to be insured for 15, 20 years of the life of the policy. We have to take a very conscious call, particularly in case of the non-par products where everything is guaranteed. As the VNB margins go upwards, they can move in the different direction if proper calls are not taken. That is important area. Definitely we believe that giving best value to the customer is the starting point for the business growth and for the purpose of sustainability of an insurance company.
Wherever we believe, whether these are the annuity products, and we have been giving one of the most competitive returns, if you could see in our non-participating core products. That's why a major uptick. This is outcome of the appropriate pricing and value to the customer that has been the focus for us, and we'll continue to work on that direction.
The agency growth.
As far as the agency growth is concerned, you have rightly pointed out that there is a small reduction in the number of agents to the tune of around 30,000 coming to around a negative variation of 2%. Let me tell you that over so many years, if you look at even the increase or decrease as far as our net agency addition or deletion is concerned, it is in these type of numbers only, and it has never affected us as far as the business is concerned. The current year we'll be looking at better recruitment as well as we'll be having a lot of initiatives to ensure that the quality of the agent is going up and the productivity is going up. The total focus will be on that to ensure that this is taken care of.
Also we'll be taking care of new recruitments as well as ensuring that the existing agents are preserved. That is what.
Just two more things I would like to add. Training will be our focus for the new agents as well as existing agents.
Second will be young generation, new agents, younger age group agents we are going to rope in more numbers so that they are with us for quite some time and they will address the requirements of the millennials.
Last question?
No.
The last question was.
Coming to reduction in number of sales through bancassurance. Primarily, it is not in bank-driven or in alternate channels-driven performance decline. It is mainly attributed to one geographical issue where one of our corporate agencies, and particularly a microfinance institution was not able to concentrate that heavily and that has impacted, I think in the earlier quarters also the same phenomena was observed and it was articulated. Having said that, yes, no doubt the number has come down slightly in terms of bank, but it's a conscious decision because some login-based contest has been done away because that was affecting the persistency part and it was conscious decision to do away from that kind of initiative by our partners and concentrate more on better and bigger ticket size so that going forward we don't impact the persistency parts of it through our bancassurance vertical.
Largely the decline is attributed from the micro side and overall bank universe in terms of bank as well as the alternate channel more or less remains intact. Now gradually the shift has started in terms of picking up a number of sales. If you observe only for the quarter that is Q4 alone, leaving aside the pain of earlier three quarters, Q4 has in fact given us nearly almost a 10% growth in terms of number of sale also and now the healthy trend is going to continue from here.
Right. This is very helpful. Thanks and wish you all the best.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, we have time for just two more questioners. Our next question comes from the line of Supratim Datta with Jefferies. Please go ahead.
Hi sir, thanks a lot for taking my questions. My two questions are on your VNB margin you indicated that you expect VNB margins to continue to expand. Just wanted to understand what would be the building blocks there given you are saying that the non-par mix should now consolidate here and if the yield curve does not steepen further then economic benefit that you got this year may not recur. How do you see the margin expansion from here? If you could help me understand this a bit better it would be helpful. My second question is, we are moving towards IFRS. You indicated on the call about risk-based capital framework as well.
On the IFRS bit if you could help us understand how would the move from IGAAP to IFRS result in the risk and how should we look at the risk translating into the CSM in force . If you could give us some color on how to think about that would be helpful. Thank you.
Before I ask my Appointed Actuary to give you more details, so the focus would be on increasing the ticket size. The product mix that we are selling, though the mix may not increase too much, we would like it to consolidate or whatever it is. Two aspects, one, the ticket size of the policy is going up and 2 improvement in persistency are the ones which should be the drivers for margin expansion further. Appointed actuary can throw further light on.
Thanks sir.
Yeah, with regard to implementation of Ind AS, a certain exercise we have already carried out. A couple of reports we have already submitted it to the regulator. We are further working on these things. There are many works which have to go on before we can have a view on how the margins are going to be moving going forward.
Okay. Thank you.
Thank you. The next question comes from Shobhit Sharma from HDFC Securities Limited. Please go ahead.
Yeah, hi, sir. Thanks for the opportunity and congrats on a great set of numbers. I have only one question which is on your product mix. If I look at the par business which was not growing in the first half of the year or last year second half, that business has picked up the momentum. If I look at the non-par guaranteed business that is now contributing to close to a lower teens kind of a business mix and in APE if I look at that is in high teens. If you can give us some color around what kind of product mix are we aspiring for. Should we see more gradual shift towards the non-par guaranteed piece of business rather than the ULIP business which we have seen historically. Yeah, this is my question.
To straight away answer, it's a bit difficult, but there is an impact of the flare in the market as well. When the markets give a good opportunity for people to invest and there is a good amount of interest that is being shown, ULIPs also get a good amount of welcome and so ULIPs also show a growth. We would naturally like to increase our contribution from guaranteed business both in terms of non-par savings as well as protection, as well as tap the market in full in terms of annuity business that is possible.
It has to be a growth in all the engines but only thing is ensuring that the margins are kept in mind when we look at increases. When we have to fulfill our responsibility towards ensuring Insurance for All by 2047 or in expanding that coverage as well as penetration in the market, we need to have a focus on the bottom of pyramid as well. That is one reason why we have a good number of policies sold on the micro-insurance as well as on small sum assured also to cater to the needs of every segment of the society. They in turn result sometimes in lesser persistency rates as well as in terms of margins getting affected.
When we are focusing on a mix which will have a good number of policies with high ticket sales on the non-par savings and protection, we expect the margins to be taken well care of. Anything else you would like to add?
In the starting and the important point for the corporation is not focus on margins only. As we were mentioning, our primary responsibility is to ensure that we provide the products and solutions which cater to the needs of the customer. While margin became an important criteria, but we had a situation in which our entire book was participating business and participating business from margin point was low margin business. We were leaving out a big segment of society which wanted guaranteed products. Eventually in this situation, this guaranteed products offered us an opportunity to increase and go towards a segment where the market needed it for their needs, and this helped us improve the margins. In between, we have seen the journeys in the certain non-participating products because interest rates coming down had a challenge on the margins also.
Margin, we are not saying that we are focusing only on increase in margins. We actually reached 21%. This journey possibly can be very gradual in scope from here because we have seen even for the industry, the margins have been around between 20%-30% for a very short period of time. We have reached the right level. What we want, as we mentioned earlier also, not only focusing on margins, but being the insurer of a responsible insurer and with a focus on Insurance for All. Sometimes this becomes challenging. Margin can be improved by offering very few policies of high ticket size only, but then we have a responsibility to ensure this Insurance for All by 2047 and contribute towards a larger cause.
This will have to ensure that we offer products, variety of products, and train our agents and the marketing forces. In fact, what the question that you asked about the agency coming down is also because of the focus on the quality of the agency force and the productivity to be the focus. All this balancing will continue to happen. We are at a very good level, 20% having crossed VNB, having seen a 14% + growth. Here onwards, the changes will be dynamic depending the market situation. Almost we are not looking for any major significant changes from here, but largely looking to consolidate from this position so that the VNB growth should happen. Either it should come through improved margins or either it should come through improved business growth.
We are happy with either situation as long as the VNB growth can continue to be achieved.
Got it. Just a small follow-up. This is related to current situation which we are in. Last two months we are seeing market being very choppy. How have you seen the unit demand or we are seeing the non-par demand, guaranteed product demand being sustaining?
It is too early to comment. Perhaps the effect of the crisis has not completely circulated. As of now, what we are seeing in the month of April, our performance has been good. It has been in tune with what we are doing in the previous financial year, and it has been better than that as well. Till now, we are finding that our trajectory in terms of growth in volume has been there. It spans across all, both participating as well as non-participating. We are seeing a good growth in terms of both the number of sales as well as the premium that's being accumulated. Particularly the April figures have been testimony to that.
Okay, sir. Thank you and wish you all the best.
Thank you very much. Thank you.
Thank you. Ladies and gentlemen, this concludes our question and answer session. I would now like to hand the conference over to Mr. Doraiswamy for closing comments.
Thank you. To begin with, I sincerely thank you for joining us this evening for LIC's performance review for the financial year 2026. Thanks for your continued faith and trust in us. Your very focused and sharp questions on a continuous basis keeps us on our toes, and we are able to dynamically adjust our business strategies to achieve better outcomes on all parameters. I do hope we have addressed all your concerns today. Should you require any further clarification or wish to continue this dialogue, our investor relations team remains at your disposal. Thank you once again for your time and engagement. Wishing you a very good evening. Thank you.
Thank you. On behalf of LIC, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your line.