Life Insurance Corporation’s (LIC) net profit surged to Rs 234.91 crore in Q3FY22, owing to the change in surplus distribution model, wherein shareholders will now get a larger share of the surplus than earlier. In the same last financial year, LIC’s net profit totalled Rs 0.91 crore. For the nine months ended in FY22 (April – December), the insurer’s net profit stood at Rs 1,642.78.

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LIC had a single ‘life fund’ before Section 24 of the LIC Act was amended by the government to bring its surplus distribution mechanism at par with private life insurers. The life fund has been segregated into two funds – participating policyholders fund and non-participating policyholders’ fund. Consequently, the surplus distribution in the participating policyholders’ fund has been modified to 90:10 in a phased manner, wherein 90 per cent will go to policyholders and 10 per cent to shareholders. Further, 100 per cent of the surplus generated from the non-participating business will be available for distribution to all shareholders.