Amidst a flurry of financial victories, the Government of India revels in a bonanza season, with LIC's historic dividend announcement adding to its recent windfall from the RBI, fortifying its fiscal coffers with a staggering Rs 3,362 crore infusion.
LIC Ventures into Health Insurance
India’s leading insurer, Life Insurance Corporation of India (LIC), is gearing up to enter the health insurance market. This strategic move aligns with a recent parliamentary panel proposal to introduce composite insurance companies, which aims to reduce costs and simplify compliance for insurers.
Presently, life insurance companies like LIC are limited to offering long-term health benefits. For LIC to provide comprehensive hospitalization and indemnity coverage, amendments to the Insurance Act are required. India’s insurance sector is still under-penetrated, with fewer than 2.3 crore health insurance policies covering 55 crore individuals by the end of the 2022-23 fiscal year.
Of these, nearly 30 crore are under government-sponsored programs, and around 20 crore through group insurance. The government and regulatory bodies are keen on expanding health coverage, and LIC’s entry into the health insurance sector is expected to significantly bolster this initiative.
Government Reaps Dividend Gains
LIC has proposed a record-breaking final dividend of Rs 6 per share for the fiscal year 2023-24, with the payout record date set for July 19. This dividend is the highest in LIC’s history, doubling last year’s Rs 3 per share.
The Government of India, which holds a 96.5% stake in LIC, stands to receive a substantial dividend of Rs 3,662 crore. This announcement follows closely on the heels of another significant dividend received from the Reserve Bank of India, signaling robust financial returns for the government from its key financial institutions.
Robust Financial Performance
In the fiscal year 2023-24, LIC reported a 2% year-on-year increase in net profit, reaching Rs 13,763 crore for the fourth quarter ending March 31, 2024. The insurer's total income for the quarter surged to Rs 2,50,923 crore.
Additionally, LIC experienced a 10.7% rise in its annual premium equivalent, totaling Rs 21,180 crore for the fourth quarter. These figures underscore LIC’s strong financial health and its capacity to generate consistent growth.
Dominance in the Insurance Market
LIC continues to dominate the Indian life insurance market, holding a commanding market share of 58.87% in First Year Premium Income as per the Insurance Regulatory and Development Authority of India.
For the fiscal year ending March 31, 2024, LIC's market share was 38.44% in the individual business segment and a staggering 72.30% in the group business segment. This market dominance highlights LIC's influential position and its extensive reach across different insurance segments.
Yearly Financial Growth
Over the entire fiscal year ending March 31, 2024, LIC’s net profit soared to Rs 40,676 crore, a significant increase from Rs 36,397 crore in the previous fiscal year. This impressive financial growth reflects LIC's effective strategies and robust business operations, ensuring sustained profitability.
Stock Market Performance
LIC's stock price has experienced a remarkable increase, jumping by almost 21% this year and delivering a return of over 71% over the past year. On January 17, 2024, LIC's stock exceeded its listing day price of Rs 904 for the first time. This surge in stock price comes after the government sold a 3.5% stake in the company in mid-May 2022, raising over Rs 21,000 crore. The strong stock market performance underscores investor confidence in LIC’s growth trajectory and financial stability.
As India's fiscal landscape blossoms with record dividends from LIC and the RBI, the government finds itself in a buoyant position, reaping the rewards of prudent investments and strategic financial management.
With inputs from agencies
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