/** blogpostTitle: "LIC FY26: Margin gains, digital push, and a sharper mix" blogpostSlug: "lic-fy26" blogpostShortTitle: "LIC FY26 margins rise, digital scale" blogpostCoverImageDescription: "Ultra-realistic corporate finance visual: a clean desk scene with a laptop showing a neutral, unlabeled dashboard of line and bar charts. The charts depict year-on-year growth in three metrics: total premium income rising from about 4.88 to 5.36 (in lakh-crore scale), profit after tax rising from about 48 to 57 (crore scale), and VNB margin increasing from about 17.6% to 21.2%. A separate small chart shows solvency ratio increasing from about 2.11 to 2.35. The aesthetic is minimal, professional, with muted colors, no logos, no text labels, and a subtle Indian office backdrop." */

LIC FY26: Margin gains, digital push, and a sharper mix

Life Insurance Corporation of India ended FY26 with a clear message to investors: profitability is improving, and the operating model is being modernised without losing scale. The year was marked by higher margins, lower expense ratios, and growing contribution from non-participating products and alternate channels.

On the financial front, LIC reported a standalone profit after tax of INR 57,418.55 crore for the year ended March 31, 2026, up 19.25% from INR 48,151.17 crore in FY25. Total premium income rose 9.80% to INR 5,35,984.22 crore. Assets under management increased to INR 57,29,396 crore, and the solvency ratio improved to 2.35 from 2.11.

The year also stood out on new business profitability. Net value of new business increased 41.63% to INR 14,179 crore, while net VNB margin expanded by 360 basis points to 21.2%. Management framed this as the strongest VNB performance since listing.

Business momentum: premium growth led by group, steady individual renewals

LIC’s premium growth was supported by both individual and group business, though the pace differed across lines. Total group business premium rose 16.26% to INR 1,96,609 crore. Management highlighted that group new business premium accounted for INR 1,92,912 crore out of this total.

Individual business remained large and stable. Individual new business premium increased 8.29% to INR 1,67,676 crore. Renewal premium from individual business rose 5.91% to INR 2,71,699 crore, reinforcing LIC’s dependence on a sizeable in-force base.

Market share remained industry-leading but softened marginally. Market share in premium moved to 56.66% from 57.05%, and market share in policies moved to 65.16% from 65.83%, based on Life Insurance Council data.

Financial summary (FY26 vs FY25)

Product mix and VNB: Non-par scales up, savings and ULIP traction visible

A central theme in FY26 was the deliberate increase in non-participating business within individual APE. Total APE rose 17.83% to INR 66,961 crore, comprising individual APE of INR 43,335 crore and group APE of INR 23,626 crore.

Within individual APE, par business contributed INR 28,121 crore and non-par INR 15,214 crore. This implies a non-par share of 35.11% in FY26. Management contrasted this with 27.69% in FY25 and said the company focused on consolidating non-par gains after the stronger early-year momentum.

In the earnings call, management attributed non-par savings growth to Jeevan Utsav, noting its relatively higher ticket size. On the par side, Jeevan Labh was called out as a major contributor.

The profitability mix was also discussed by the appointed actuary. In the call, management stated that par individual business contributed about 28% of VNB while representing about 42% of APE, whereas individual non-par contributed about 53% of VNB while representing about 22.7% of APE. These disclosures were provided for the full year.

Distribution and digital execution: Alternate channels scale, apps push self-service

LIC’s distribution continues to be agency-led. As of March 31, 2026, the number of individual agents was 14,57,045, down from 14,86,851 a year earlier. Management noted that 98.42% of policies in FY26 were sold by the agency force, and 91.75% of individual new business premium came from the agency channel.

At the same time, bancassurance and alternate channels showed faster growth off a smaller base. New business premium from these channels grew 45.19% to INR 5,076 crore from INR 3,496 crore. Management described crossing INR 5,000 crore as an ambition since listing.

Digital initiatives were positioned as a key driver of operational efficiency and customer experience.

The agent-assisted ANANDA platform showed tangible scale-up. Management stated that policies completed through ANANDA increased to 23,00,983 in FY26 from 14,74,208 in FY25, a 56.08% rise. The investor presentation also reported that ANANDA’s share of total individual policies rose to 12.48% from 8.49%.

Beyond ANANDA, LIC is rolling out the Digital Innovation and Value Enhancement Initiative (DIVE). Management said the DIVE project is being rolled out in phases for customers and distributors. It also launched a new customer app named MyLIC and an intermediary app called Super Sales Saathi on April 15, 2026.

Actuarial lens: Embedded value grows, but economic variances remain meaningful

Indian embedded value (IEV) increased to INR 7,89,185 crore as of March 31, 2026 from INR 7,76,876 crore in March 2025, a 1.58% increase.

The IEV walk highlights the nature of embedded value volatility. Operating earnings (EVOP) were presented at INR 92,639 crore, supported by expected return on in-force business of INR 74,748 crore and a VoNB contribution of INR 14,179 crore. However, economic assumptions changes and variances were a large negative at INR 72,740 crore.

In the call, the appointed actuary explained that reference rate changes and mark-to-market movement contributed to this line item. Management cited an equity MTM fall of INR 53,698 crore and a debt MTM fall of INR 46,853 crore in that context.

This is important for investors because it reinforces that even with improving operating metrics, reported embedded value and related movements can still be sensitive to market volatility.

Costs, claims and persistency: Efficiency improves, but some cohorts soften

LIC’s cost metrics improved during the year. Overall expense ratio declined to 11.91% from 12.42%, and commission ratio reduced to 4.55% from 5.18%.

Claims outgo remained substantial due to LIC’s scale. FY26 maturity claims paid were INR 2,79,951 crore versus INR 2,37,313 crore in FY25, up 17.97%. Death claims paid were INR 24,885 crore versus INR 24,420 crore, up 1.91%. Claim settlement ratio for death claims stood at 99.44%.

Persistency was mixed. On premium basis, the 37th and 49th month improved, but the 13th and 25th month showed slight declines and the 61st month fell to 59.31% from 63.12%. On policy basis, the 37th and 49th month improved, but the 25th and 61st month declined.

Management acknowledged the softness in certain cohorts and said it is focusing on improving persistency where it has declined. It also linked future improvement to a higher ticket-size strategy, noting that minimum sum assured was increased in October 2024 and that the effect on persistency will be visible over time.

What to track next

FY26 confirms that LIC’s post-listing strategy is centred on three levers: improving new business profitability, widening distribution beyond agency without losing its core strength, and driving operational efficiency through digital platforms.

The year’s strongest positives were the VNB step-up, the lower expense ratio, and the scaling of bancassurance and alternate channels in premium terms. At the same time, investors will likely monitor market share drift, persistency in weaker cohorts, and the sensitivity of embedded value to market moves.

Management also indicated caution on capital returns due to potential regulatory shifts, including the possible introduction of risk-based capital. For FY26, the board recommended a final dividend of INR 10 per equity share of face value INR 10 each, which management described as equivalent to INR 20 per share on a pre-bonus issue basis, subject to shareholder approval.

Overall, FY26 looks like a year where LIC improved profitability and execution while staying anchored to scale. The next test will be whether the company can sustain margin discipline and persistency improvements as product mix consolidates and the external rate and market environment evolves.