LIC CEO Optimistic About Growth Despite GST and Regulatory Challenges

R Doraiswamy, Chief Executive Officer and Managing Director of Life Insurance Corporation of India (LIC), has expressed optimism about the continued growth in the company's Value of New Business (VNB). This expansion is anticipated to be driven by strong top-line performance and ongoing cost rationalisation efforts.

Doraiswamy noted that the first half of the financial year 2025-26 (FY26) saw performance fall short of expectations, primarily due to regulatory changes. A new master circular issued on October 1 required LIC to modify its existing products, including increasing the minimum ticket size for popular offerings. This resulted in fewer policies being sold, especially in the ₹1 lakh to ₹2 lakh range.

Furthermore, the introduction of GST reforms in early September caused a temporary slowdown as potential customers delayed purchases, anticipating lower costs. The loss of input tax credit under the new GST exemption for life insurance also adds cost pressure, although the company aims to minimise its impact.

Despite these challenges, Doraiswamy confirmed that LIC has begun to witness improved business momentum since October. He is confident that the second half of the year will show better performance. LIC, with a market capitalisation of ₹5.84 lakh crore, has experienced a slight dip of about 0.52% in its share price over the last year.

**Impact** This news offers valuable insights into LIC's operational hurdles and its strategy for recovery. It can significantly influence investor sentiment towards LIC and potentially affect other life insurance companies operating within similar regulatory frameworks. The company's success in navigating these challenges will be a key determinant of its future stock performance. Rating: 7/10.

**Difficult Terms** * **Value of New Business (VNB)**: A metric used in the insurance industry to assess the profitability of new policies sold in a given period. It represents the present value of future profits expected from these new policies. * **Top-line Expansion**: An increase in a company's gross revenue or sales. * **Cost Rationalisation**: Measures taken by a company to reduce its operational expenses without compromising on the quality or volume of its products or services. * **Input Tax Credit**: A credit available to taxpayers for GST paid on inputs used in the production of goods or services. Losing this credit increases the tax burden and costs for the insurer. * **Master Circular**: A comprehensive directive issued by a regulatory authority that consolidates and updates previous rules and guidelines on a specific topic. * **Ticket Size**: The average value of a transaction or policy. In this context, it refers to the minimum monetary value required for a life insurance policy.