No deal signed for health insurance yet, says LIC CEO R Doraiswamy

R Doraiswamy, CEO and MD, LIC

Amid speculation that Life Insurance Corporation of India (LIC) may acquire a stake in a health insurance firm, the newly appointed LIC CEO and Managing Director R Doraiswamy clarified that no final decision has been taken yet.

Addressing his first post-earnings interaction after taking charge, the CEO said LIC is still exploring various options and no deal has been signed. “We are looking for the right option and waiting for regulatory changes such as the introduction of composite licensing under the Insurance Act,” he said.

He added that LIC has been evaluating multiple possibilities and is awaiting clarity on changes to insurance regulations and statutes, which have been delayed. “The changes to the Insurance Act are in the offing and we are closer to seeing what is expected. That will be one of the key triggers,” he said, respond to Moneycontrol’s query.

The Chairman also pointed to the evolving landscape of the health insurance sector, stating that LIC is observing the market closely before making any definitive move. “The health insurance market is undergoing significant changes during difficult times. We would like to wait and watch before taking a final call. We are also expanding our options in terms of identifying a potential target.”

He reiterated that LIC is not currently planning to become a standalone health insurance player, but may consider marketing its own health products if composite insurance is allowed in the future. “If the concept of composite insurance becomes a reality and if LIC decides to adopt that model, we can look at launching our own products. Until then, a strategic stake is the option on the table.”

On the financial front, LIC reported a 5 percent growth in net profit for the quarter, down from 10 percent growth in the previous quarter. The Chairman attributed the muted growth to market conditions, especially lower capital gains.

“The growth in operating profit has been encouraging. However, market conditions haven’t been as favourable for capital gains, which explains the lower net profit growth. We continue to focus on improving profitability quarter-on-quarter, even though we do not provide forward-looking guidance,” he said.

Addressing concerns over persistency, a key industry issue this quarter, he noted a mixed performance. While the 61st-month persistency ratio improved, the 13th-month persistency declined. The dip was attributed to revised surrender value norms introduced in October last year, which have led to increased policy surrenders. “With higher surrender value, more people are exiting early, which explains the fall,” he said. However, this has also led to a 23 percent rise in average premium ticket size.

On bond strategies, LIC is currently deepening its exposure through bond forwards and bond forwards. “We are doing bond forwards with more than 10 banks, including Indian banks. We plan to move to bond forwards soon once the CCIL platform is fully operational,” Doraiswamy said.

On the product mix strategy, Doraiswamy said its directional shift towards non-participating (non-PAR) products. “At the time of our IPO, our portfolio was heavily tilted toward PAR products. Since then, we have consciously moved toward non-PAR, which now accounts for about 30 percent of our annualized premium,” he said.

However, LIC is also planning to expand its participating (PAR) product offerings to maintain a healthy balance. “There is still some room to grow non-PAR further, but we aim to achieve a stable PAR–non-PAR ratio going forward. We’re also developing more PAR products to serve diverse customer needs,” said Dinesh Pant, Executive Director.

He added that LIC hasn’t launched new participating products since the IPO and the focus has been on guaranteed non-PAR products, which have worked well. “In coming times, we’ll work on enhancing the participating portfolio too, targeting a 5–10 percent growth in that segment, while continuing high growth in non-PAR,” he said.