LIC Q2 FY27 Earnings Call: VNB Margin Expands 470 bps, PAT Rises 21.52% YoY (LICI)

Life Insurance Corporation of India held its Q2 FY27 earnings call on November 05, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Profitability Delivery; Premium Growth Broad-Based

• PAT of Rs.25,568 Cr in H1 FY 2026-2027 — up 21.52% YoY vs Rs.21,040 Cr in H1 FY 2025-2026.
• Net VNB rose 33.95% YoY to Rs.6,846 Cr — VNB margin expanded 470 bps YoY to 22.3% (vs 17.6% in H1 FY 2025-2026).
• Total premium income of Rs.2,74,269 Cr (+11.64% YoY) — individual new business Rs.32,725 Cr (+14.86%), renewals Rs.1,27,950 Cr (+4.68%), group new business Rs.1,11,685 Cr (+20.63%).
• Total APE of Rs.30,696 Cr (+5.72% YoY) — individual APE Rs.17,224 Cr (56.11% share), group Rs.13,472 Cr (43.89%); protection APE grew 58.59% YoY.
• AUM of Rs.59,60,941 Cr (+4.16% YoY) — Indian embedded value Rs.7,97,378 Cr as of 30 September 2026, -1.95% YoY but +1.04% vs Rs.7,89,185 Cr at 31 March 2026.
• Market share by first year premium at 58.77% — down from 59.41% in H1 FY 2025-2026; individual 37.51%, group 70.45%; leadership retained in both segments.
• Expense ratio improved to 10.41% — down 87 bps YoY from 11.28%.

Mix and Assumptions Drove the 470 bps Expansion; RFR Drove the QoQ Dip

• Business mix contributed +3.3% YoY to VNB margin — driven by high ticket-size focus, non-par savings APE growth of 35% (non-par share up from 10.7% to 13%) and significant term business growth.
• Assumptions added +2.8% — mainly RFR movements (up ~100 bps Q1-on-Q1, 40-50 bps positive Q2-on-Q2) plus minor CR/HR/personnel cost adjustments; expense realignment done in March FY 2025-2026 dragged margins by -1.54%.
• VNB margin dipped QoQ from 22.9% (Q1 FY 2026-2027) to 22.3% — solely due to a ~40 bps RFR decline contributing ~-1.2%; management described the RFR impact as industry-wide and outside LIC's control.
• JP Morgan's Madhukar Lakhar challenged the RFR attribution — noting yield curves as of 30 September 2026, 30 June 2026 and 30 September 2025 appear to have gone up; management clarified the impact depends on where LIC's maximum liabilities sit on the curve (long-end for annuity, short-end for short-term business); the analyst to take reconciliation offline.
• VNB margin has improved from ~11-12% at IPO — per Appointed Actuary A.K. Srivastava, now almost at the industry level as of Q2 FY 2026-2027, aided by mix shift toward non-par savings and term.
• Management declined to share a segment-wise VNB split for H1 FY 2026-2027 — but agreed to share the par/non-par/group breakup as disclosed in prior quarters (Q1 FY 2026-2027: par 19.4%, non-par 49.3%, group 29.4%).

IRDAI Distribution Paper, RBC Submissions and the Deferred Capital Call

• Management is "very comfortable" with IRDAI's proposed distribution caps — CEO R. Doraiswamy argued peers cutting only distribution costs would still need to bring overall expense ratios under the caps, and LIC sees itself in a "distinctly advantageous position" with its expense ratio including administrative expenses "quite under control."
• LIC has not endorsed the proposal directly — it consolidated views from all intermediaries including agent associations, added its own views, submitted recommendations to the regulator, and expects the regulator to take a final call only after examining all market feedback.
• Two pro forma RBC submissions made to the regulator — per MD Ratnakar Pattnaik, aimed at understanding pain points, with feedback taken from the entire industry; whether any capital requirement arises "is going to depend much on how this final RBC guidelines are going to come."
• Capital decisions effectively deferred — management will take a final call on distribution of profits or engaging capital more profitably once RBC and IFRS reforms are rolled out; no explicit timeline provided.
• On RBC product-mix impact over the next 12 to 18 months (asked by Goldman Sachs' Dipanjan Ghosh), management said it can "continue to optimize on the product mix" toward margin-accretive lines; no specific category defocus was flagged.
• Management is optimistic on IRDAI's September 2026 consultation paper — believing most changes are in the best interest of customers and will lead to further accelerated growth of the Indian life insurance industry.

New Product-Led Growth; Banca Diversification Reduces IDBI Dependence

• 5 new non-par individual products launched in H1 FY 2026-2027 — including Jeevan Raksha (entry into term insurance); 3 more launched on 19 October 2026, taking the suite to 63 products.
• Term assurance product has collected more than 100,000 policies — as of Q2 FY 2026-2027; a closed-ended product tied to LIC's 70th-anniversary celebrations ends 31 March 2027 (end of FY 2026-2027).
• Two new health products (not available in FY 2025-2026) and Jeevan Dhara deferred annuity — underpin management's "very confident" stance on healthy APE growth for full FY 2026-2027; the 2-pay/3-pay annuity options are positioned as premium qualifiers to help agents qualify for MDRT recognition.
• Banca NBPI of Rs.2,458 Cr (+21.44% YoY) — now 7.53% of individual NBPI (vs 7.12%); Yes Bank and RBL Bank partnerships added (reported in Q1 FY 2026-2027), with more partners possible.
• IDBI dependence moderated to ~30% of bank-driven and ~20% of total bancassurance — from ~50% and ~40% respectively; management does not foresee much depletion post the likely stake sale, saying IDBI "may continue to deliver value."
• Banker channel returned to growth in Q2 FY 2026-2027 — after ~8% policy-count degrowth in Q1 FY 2026-2027; a deliberate shift to a premium-oriented approach away from login-day-driven volumes.
• Bima Saki: 3.04 lakh women micro-agents generated Rs.1,548.80 Cr NBPI — from 10.64 lakh policies in H1 FY 2026-2027; 66% of 2,44,524 gram panchayats covered as of Q2 FY 2026-2027.

ULIP APE Degrowth Masks Underlying Momentum; Premium Persistency Lags

• ULIP APE degrew more than 40% in FY 2026-2027 — APE counts monthly premiums at 12x, straining monthly-mode ULIPs; non-par savings and protection growth could not compensate.
• Monthly-mode (ENASH) ULIP share fell from ~24% to ~14% — a deliberate push for agents to sell ULIPs at higher ticket sizes to improve persistency and margins; the effort continues in H2 FY 2026-2027.
• ULIP revival hinges on re-activating ~30% of agents — already positioned and strongly interested in selling ULIPs; management is confident of a comeback from H2 FY 2026-2027 and over the next 2-3 years (FY 2027-2028–FY 2029-2030), contingent on market movement and upcoming regulatory issues.
• ULIPs had grown almost 68% in H1 FY 2025-2026 — after LIC repositioned the product; in FY 2026-2027 LIC prioritized protection (growing at more than 50%, off a small base), temporarily deprioritizing ULIPs.
• Premium-basis persistency declined — 13th month 74.69% (vs 75.29%), 25th 69.62% (vs 71.37%), 61st 61.03% (vs 63.81%); policy-count persistency improved at 13th/37th/49th months but sits in lower sum-assured and lower premium cohorts; management expects better premium persistency in coming months of FY 2026-2027.
• WRP and first-year premium income grew commensurately at 14.5-15% — as of 30 September 2026; Q3-Q4 have historically been LIC's strongest quarters.

Margin Guidance, Group Mix and Hedging Discipline

• CEO R. Doraiswamy guided a "very positive outlook on margin for 2027-28" — driven by continued product-mix optimization toward margin-accretive lines and expense optimization; he cautioned on the RFR advantage: "only time will say" whether it persists.
• Margins expected to move closer to other listed players — via favorable product mix (non-par savings, pure protection), higher ticket sizes across all cohorts, and operational efficiency from digital adoption, centralization and process reimagination.
• Group margins "likely to improve" — as focus shifts to group annuity and group term assurance (GTIS), where margins are higher than the fund-based products that dominate group sales; group APE grew 13.5% in H1 FY 2026-2027 while group market share declined ~230 bps on rate competition, with group NBP up ~20%.
• Office rationalization rollout expected over the next few quarters from Q3 FY 2026-2027 — pursued alongside digital adoption and process re-engineering, with some expense optimization anticipated.
• Hedging program continues as usual — CIO Arindam Dasgupta said LIC hedges around 80% of premium and has already hedged the majority up to the 8-year point at very good rates; analyst Sankesh Koda flagged that if IRRs are not revised quickly, the RFR benefit could soften in subsequent quarters of FY 2026-2027, putting margins at risk.
• Agent commission protection is an active engagement — LIC is engaging with the regulator to protect current agent commission rates against the analyst-flagged possibility of another round of cuts from April 2027 (FY 2027-2028), while enhancing agent earnings via productivity and training.