LIC Navigates Global Turmoil: Profit Jumps Amidst Persistency Challenges

By Our Business Correspondent | Mumbai, [Current Date]

On premium basis, the persistency was 75.3% and 61.1%, respectively and 75.6% and 63.9%, for the comparable period last year.

MUMBAI: India’s largest insurer, Life Insurance Corporation (LIC), has reported a significant surge in its first-quarter profit and value of new business. However, the company’s latest financial disclosures also reveal growing concerns over the impact of global economic and geopolitical uncertainty on household savings and long-term policy persistency, alongside a cautious approach to premium growth.

Following the announcement of the company’s results on Thursday, LIC MD & CEO R Doraiswamy highlighted the tangible effects of a volatile macro environment. He pointed out that these uncertainties could directly affect policyholders’ ability to maintain their renewal premium payments on schedule, signaling a potential shift in consumer financial behavior.

For the first quarter of fiscal year 2027 (Q1FY27), LIC recorded persistency ratios on a number of policies basis at 66.5% for the 13th month and 48.7% for the 61st month. These figures compare to 64.4% and 51.1% respectively, for the corresponding period ending June 30th, 2025. This indicates a notable decline in long-term policy retention.

When examined on a premium basis, the persistency ratios for the current period stood at 75.3% and 61.1%, compared to 75.6% and 63.9% in the previous year. This discrepancy between number of policies and premium-based persistency suggests that the majority of policy lapses are occurring among lower-value policies, potentially indicating financial strain on segments of the population.

“When macro environments present uncertainty, short-term pressure can affect policyholders’ ability to pay renewal premiums on time,” Doraiswamy stated, emphasizing the direct link between global instability and individual financial health.

The LIC chief attributed the observed decline in long-term persistency to a confluence of seasonal economic factors and tighter household savings. He assured stakeholders that LIC is proactively engaging with customers, actively following up to revive lapsed policies and mitigate the impact of these trends.

The broader caution stemming from the current economic climate is also evident in the pace of new business acquisition. LIC’s total premium income for the first quarter increased by 6.8% to an impressive Rs 1,27,250 crore. Concurrently, the annualised premium equivalent (APE) reached Rs 13,692 crore.

Despite these robust figures, Doraiswamy acknowledged that the premium and APE growth reflects a “somewhat cautious environment.” This cautious sentiment persists even as the company demonstrates a strong quarterly performance, underscoring the nuanced challenges faced by the insurance sector in an era of unpredictable global dynamics.

LIC’s performance highlights a dual narrative: strong financial growth metrics are being achieved even as the company grapples with the broader implications of economic uncertainty on its core customer base. The ability to navigate these pressures while sustaining profitability will be a key focus for the insurer in the coming quarters.