LIC eyes entry into health insurance market amid record dividend payout and robust financial performance

India’s leading insurer Life Insurance Corporation of India is eyeing an entry into the health insurance market and is looking into potential acquisitions. This initiative follows a proposal to introduce composite insurance companies in the industry.

The Times of India reported that in February, a parliamentary panel recommended the creation of composite insurance licenses to lower costs and ease the compliance burden for insurers. Currently, life insurance companies are restricted to offering long-term health benefits. For them to provide hospitalisation and indemnity coverage, an amendment to the Insurance Act would be necessary.

India’s insurance market remains significantly under-penetrated. By the end of the 2022-23 fiscal year, fewer than 2.3 crore health insurance policies had been issued covering 55 crore individuals. Of these, nearly 30 crore were under government-sponsored programmes, and around 20 crore were through group insurance. The government and regulatory authorities are eager to expand health coverage and LIC’s potential entry into the health insurance sector is anticipated to boost this effort.

Government dividend gains

This year LIC proposed a record-breaking final dividend of Rs6 per share for the fiscal year 2023–24 with the payout record date set for 19 July. This marks the highest dividend payout in LIC’s history doubling last year’s Rs3 per share.

With the Government of India holding a 96.5 per cent stake in LIC, it is set to receive a substantial dividend of Rs3,662 crore. This comes shortly after the government received a significant dividend from the Reserve Bank of India, a CNBC-TV18 report said.

Financial performance highlights

In its financial results for the fiscal year 2023–24, LIC reported a 2 per cent year-on-year increase in net profit, reaching Rs13,763 crore for the fourth quarter ending 31 March, 2024. The total income for the quarter rose to Rs2,50,923 crore.

During the fourth quarter, LIC saw a 10.7 per cent rise in its annual premium equivalent which totalled Rs21,180 crore.

Market dominance

LIC remains the dominant player in the Indian life insurance market, holding a market share of 58.87 per cent in First Year Premium Income as reported by the Insurance Regulatory and Development Authority of India. For the fiscal year ending 31 March, 2024, LIC’s market share stood at 38.44 per cent in the individual business segment and 72.30 per cent in the group business segment.

Yearly financial growth

Over the full fiscal year ending 31 March, 2024, LIC’s net profit surged to Rs40,676 crore, up from Rs36,397 crore in the previous fiscal year ending 31 March, 2023.

Stock market performance

This year, the stock price of LIC jumped by almost 21 per cent, and over the past year, it has delivered an impressive return of more than 71 per cent. On 17 January, 2024, LIC’s stock exceeded its listing day price of Rs 904 for the first time. In mid-May 2022, the government sold a 3.5 per cent stake in the company, raising over Rs 21,000 crore.