LIC India Reports Soft Q2 FY27 Performance with APE at ₹17,000 Crore

Life Insurance Corporation of India (LIC India) has released its performance metrics for the second quarter of FY27, reporting figures that came in below market estimates. During the quarter, the company's annual premium equivalent (APE) stood at ₹17,000 crore, marking a year-on-year growth of about 4 percent. However, this performance was roughly 7 percent lower than institutional estimates.

The slowdown in overall APE growth was primarily driven by an approximate 4 percent decline in the Individual APE segment. In contrast, the Group APE segment performed better, registering a year-on-year growth of about 17 percent.

The value of new business (VNB) for the quarter was recorded at ₹3,710 crore. While this represented a year-on-year growth of around 17 percent, it fell materially short of the estimated ₹4,240 crore. Furthermore, the VNB margin came in at 21.8 percent, which was lower than the estimated 23.2 percent. On a year-on-year basis, VNB margins expanded by 250 basis points, driven largely by a higher share of protection and annuity products. However, margins dipped by 110 basis points quarter-on-quarter, largely due to falling interest rates that impacted the metric by 120 basis points.

Operational metrics indicated mixed trends during the quarter. Persistency worsened across various cohorts, while the company's solvency ratio improved to 23 percent.

Looking ahead, the management remains optimistic about business growth in the second half of the financial year. This optimism is anchored on planned new product launches and initiatives to improve agent productivity. Management has also expressed expectations for margin expansion, aiming to bring them closer to levels seen among listed peers.

Following these developments, analysts have adjusted their forecasts, cutting APE estimates by about 2 percent for FY27-28 and reducing VNB margins by 40 to 60 basis points. This results in a 2 to 5 percent cut in VNB projections over the FY27-29 period. Despite these downward revisions, brokerages have maintained a 'Buy' rating on the stock with a September 2027 target price of ₹550, implying an FY28 estimated price-to-embedded value (PEV) of 0.7x.

"The recent financial performance of LIC India highlights the delicate balance large institutional players must maintain between product mix adjustments and macroeconomic factors like interest rate fluctuations. While short-term metrics such as APE and VNB margins have missed estimates due to a dip in individual business and rate changes, the company's focus on agent productivity and new product launches remains vital for future growth. Investors must closely watch how effectively management executes its strategy to bridge the margin gap with listed peers in the coming quarters." — Dr. Shishir Gupta, Founder & CEO, StartupLanes