Goldman Sachs has maintained a ‘Neutral’ stance on Life Insurance Corporation of India (LIC) with a target price of ₹880, following the company’s weak fourth quarter performance for FY25. The insurer reported a 9% YoY decline in new business premium to ₹70,019 crore, while total Annualized Premium Equivalent (APE) fell 3% YoY to ₹18,853 crore. Retail APE declined 9% to ₹13,606 crore.
Value of New Business (VNB) also dropped 14% YoY to ₹3,534 crore. However, the VNB margin improved to 18.75% versus Goldman’s estimate of 17.98%, indicating a 77bps positive surprise. The company’s topline miss was attributed to a 12% drop in the individual participating (Par) business and a 16% decline in group premiums, both impacted by the introduction of new products from October 1.
Despite the volume weakness, Goldman Sachs noted margin expansion of 154bps YoY, helped by a favorable product mix that included higher contributions from non-par segments such as annuity and ULIPs, as well as larger ticket-size par products. These gains offset negatives like lower risk-free rates, negative operating leverage, and new surrender payouts.
Looking ahead, Goldman expects LIC’s focus on non-par products to persist, which could lead to medium-term margin expansion even as premium growth stabilizes.
