The state-run insurer said it was prioritising higher-margin conventional life insurance products as falling equity markets dampened appetite for market-linked policies called Unit-Linked Insurance Plans (ULIPs).
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"When the markets are not that conducive, we are not trying to push ULIP sales ... We are shifting focus heavily on protection," R. Doraiswamy, CEO and managing director, said.
LIC's total Annualized Premium Equivalent (APE), a key measure of insurance sales, grew 3.8% year-on-year to 170.04 billion rupees, according to a Reuters calculation, down from 8.22% growth in the preceding quarter.
Analysts had expected growth to pick up, benefiting from a lower base last year due to regulatory changes and delayed purchases ahead of a tax exemption.
Group business APE jumped 16.5%, while individual business APE fell 4.1%.
The insurer expects the retail business to pick up in the second half of the financial year, driven by new products and improving stock market sentiment.
LIC's Value of New Business (VNB), which measures the expected profit from new policies, rose 17% year-on-year to 37.10 billion rupees ($392.56 million), a Reuters calculation showed.
Its net VNB margin expanded roughly 250 basis points to 21.8%, though it contracted from 22.9% reported three months earlier.
Net profit rose 20% to 120.76 billion rupees.
Rising costs in one of the fastest-growing insurance markets had prompted the regulator to propose capping commissions and linking them to product complexity.
LIC on Thursday said it expects the regulator to consider a few points it has raised on the proposal.
($1 = 94.5075 Indian rupees)
Reporting by Nishit Navin in Bengaluru, additional reporting by Ashwin Manikandan; Editing by Nivedita Bhattacharjee and Sahal Muhammed
