LIC's Strategic Outlook: Digital, High-Margin Growth Ahead

Ashwin Thakker

— 2 min read

Key Facts on Outlook & Guidance

  • Net Value of New Business (VNB) margin improved by 150 basis points year-on-year to 15.4% for Q1 FY'26.
  • Individual Non-Par Annualized Premium Equivalent (APE) share increased to 30.34% (from 23.94% in Q1 FY'25), reflecting a strategic shift towards higher-margin products.
  • New Business Premium from Bancassurance and Alternate Channels grew significantly by 98.23% year-on-year.
  • Overall expense ratio decreased by 140 basis points year-on-year to 10.47%, indicating ongoing cost optimization.
  • Company plans a complete digital transformation, integrating AI/ML for enhanced customer engagement, underwriting, and risk assessment, with a pan-India rollout targeted within 5-6 months.
  • Committed to sustainable dividend increases and maintaining a robust solvency ratio (improved to 2.17; target 1.8-2).
  • Exploring entry into health insurance, evaluating options including potential investments, pending regulatory changes.

Life Insurance Corporation of India (LIC) has unveiled its Q1 FY'26 earnings, showcasing a clear strategic roadmap for future growth and enhanced profitability. With a new CEO at the helm, the company is steering towards a significant digital overhaul and a focused product mix, aiming to solidify its market leadership and deliver sustainable value to all stakeholders.

Driving Profitability Through Strategic Product Mix

LIC is actively reshaping its product portfolio to prioritize higher-margin offerings, particularly within the non-participating (Non-Par) segment. This strategic shift is already yielding positive results, with the Non-Par share of Individual Annualized Premium Equivalent (APE) business growing to 30.34% for the quarter ended June 30th, 2025, a substantial increase from 23.94% in the prior year period. This growth is directly linked to the introduction of new non-par products like Jeevan Utsav and Jeevan Shree, which have gained good traction and offer superior margins.

“Our Non Par share of Individual APE business has further grown to 30.34% for quarter ended June 30th, 2025 as compared to 23.94% for quarter ended June 30th, 2024. This consists of those products which have high margins.”

While Unit-Linked Insurance Plans (ULIPs) contribute to volume, the focus remains on non-par savings products to drive margin improvement. The company is intentionally shifting towards high-ticket size policies, a move designed to enhance both persistency and overall profitability. This balanced approach ensures that while meeting diverse customer needs, LIC maintains a strong focus on its value generation objectives.

Enhancing Reach and Efficiency via Digital Transformation

LIC is bolstering its distribution channels and operational efficiency through a comprehensive digital transformation. The agency force saw a net addition of over 61,000 agents, reaching 14.86 lakh. Complementing this, the Bima Sakhi Yojana, empowering women agents, has significantly expanded, with 1.99 lakh women designated as Bima Sakhis, selling 3.26 lakh policies. The company is actively focusing on training existing agents and recruiting from the millennial segment to boost agent productivity and combat attrition.

Significant strides are also being made in Bancassurance and Alternate Channels (BAC), which recorded an impressive 98.23% growth in New Business Premium year-on-year. Digitally, the Agent-assisted ANANDA app processed 3.47 lakh policies, a 39.38% year-on-year increase. Key initiatives like the DIVE and Jeevan Samarth projects are progressing, with sales and customer apps currently undergoing testing for a pan-India rollout. LIC aims for complete digital engagement across the customer journey, from policy onboarding to claims settlement, and plans to integrate AI and Machine Learning for improved underwriting and risk assessment.

LIC’s Q1 FY’26 results underscore its commitment to strategic evolution. By focusing on high-margin product growth, advancing digital capabilities, and optimizing operational efficiency, the company is well-positioned for sustainable performance. These proactive measures are expected to drive robust financial outcomes and reinforce stakeholder confidence in the years ahead.

Read more