Currently, the government holds a 96.5% stake in LIC. Market regulator SEBI has directed the insurer to increase its public shareholding from 3.5% to 10% by May 16, 2027. The Centre’s broader disinvestment target for FY26 stands at Rs 47,000 crore, and the LIC stake sale is expected to be a key contributor to this goal.
LIC’s Q1 performance
Earlier in August, LIC reported a 5% year-on-year increase in its net profit for the first quarter, driven by growth in policy renewal premiums. Profit after tax rose to Rs 10,987 crore in April–June 2025, up from Rs 10,461 crore in the same period last year.
Net premium income grew by almost 5% to Rs 1.19 lakh crore, supported by a 6% rise in renewal premiums. The value of new business (VNB)—a key metric indicating expected profits from new policies—surged 20.75% year-on-year. The VNB margin also improved to 15.4%, compared with 13.9% a year earlier.
Annualised premium equivalent (APE) sales increased 9.45%, boosted by a 16% jump in group APE. LIC’s solvency ratio, reflecting its ability to meet long-term financial obligations, rose to 2.17 during the quarter from 1.99 in the year-ago period and 2.11 in the previous quarter.
LIC’s foray into bond FRA market
In another significant development, LIC has entered the forward rate agreements (FRA) segment for bonds, executing deals with more than 10 major lenders, including both domestic and foreign banks. Market experts believe LIC’s participation could stimulate demand for long-term government securities (G-Secs). However, they also caution that increased activity might narrow forward spreads, potentially affecting profit margins for other participants.
The insurer has also indicated plans to start trading in bond forwards soon. Bond FRAs enable insurance companies to lock in future interest rates on government bonds, providing a hedge against falling rates that could put pressure on their long-term liabilities, especially for non-participating insurance policies.
With its robust quarterly performance, expansion into new market segments, and the upcoming stake sale, LIC remains at the centre of the government’s fiscal and market strategy for the current financial year.