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Results
16-Jul-22
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Analysis
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ICICI Prudential Life Insurance Company
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Continues strong VNB margins improvement
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ICICI Prudential Life Insurance Company has posted the net profit of
Rs 155.69 crore in the quarter ended June 2022 (Q1FY2023) compared with net loss
of Rs 185.73 crore in Q1FY2022.
The
Company registered 4% growth in net premium income in Q1FY2023. The commission
expenses increased 13% and operating expense jumped 20%. Benefits paid declined
3% in Q1FY2023.
Value
of New Business (VNB) improved 32% to Rs 471 crore for Q1FY2023 over Q1FY2022. VNB
margin has improved to 31.0% in Q1FY2023 from 28.0% in FY2022. APE increased 25%
to Rs 1520 crore for Q1FY2023. New business premium jumped 24% to Rs 3184 crore
for Q1FY2023 from Rs 2559 crore for Q1FY2022.
The
Company offers a range of products across annuity, savings, and protection
solutions to meet the specific needs of customers. Annuity APE grew 69% to Rs
98 crore in Q1FY23, Savings APE 22% to Rs 1092 crore and Protection APE 22% to
Rs 330 crore in Q1FY23.
New
Business Sum Assured increased 25% to Rs 220935 crore for Q1FY23, resulting in
market leadership with a market share of 15.8%.
Persistency
ratios have improved across all cohorts, reflective of the Company’s strong
focus on improving the quality of business. 13th month persistency improved
from 84.6% in FY2022 to 85.5% in 2M-FY2023. The 49th month persistency ratio
also improved from 63.4% in FY2022 to 65.0% in 2M-FY2023.
In
Q1FY23, the cost to total weighted received premium (TWRP) ratio for the
savings business and the overall cost to TWRP ratio stood at 16.9% and 23.8%
respectively. The growth in APE is ahead of the growth in expenses.
The
assets under management of the Company stood at Rs 230072 crore end June 2022,
which makes it one of the largest fund managers in India. The Company had a
debt-equity mix of 54:46 end June 2022 and 98% of the debt investments were in
AAA rated and government bonds.
The
Company’s net worth was Rs 9053 crore end June 2022. The solvency ratio was
203.6% against the regulatory requirement of 150%.
Embedded
value
per share stood at Rs 224.4 end June 2022.
Net premium earned (gross premium less
reinsurance premium) increased 4% from Rs 6602 crore in Q1FY22 to Rs 6884 crore
in Q1FY23. Total investment income declined from Rs 96.09 crore in Q1FY22 to
loss of Rs 8496 crore in Q1FY23.
Investment income comprised of
investment income under unit-linked showing dip from Rs 7751 crore in Q1FY22 to
loss of Rs 9888 crore in Q1FY23. Investment income under unit-linked is
directly offset by change in valuation of policyholder liabilities. Decrease in
investment income is primarily on account of decrease in market value of the
securities held.
Income
under other than unit-linked decreased from Rs 1858 crore in Q1FY22 to Rs 1392
crore in Q1FY23 primarily on account of decrease in profit on sale of
investments offset in part by an increase in interest income.
Other
income increased from Rs 25 crore in Q1FY22 to Rs 34 crore Q1FY23.
Total
expenses (including commission) increased 16% from Rs 1215 crore in Q1FY22 to
Rs 1411 crore in Q1FY23.
Commission
expense (including rewards) increased by 13% from Rs 271 crore in Q1FY22 to Rs
306 crore in Q1FY23. New business commission (including single premium) has
increased from Rs 183 crore in Q1FY22 to Rs 217 crore in Q1FY23.
Renewal
commission has decreased from Rs 75 crore in Q1FY22 to Rs 71 crore in Q1FY23.
Operating
expense increased 17% from Rs 924 crore in Q1FY22 to Rs 1085 crore in Q1FY23.
Operating expenses comprised of unit fund expenses (including goods and service
tax on linked charges) amounting to Rs 156 crore (Q1FY22: Rs 163 crore) under
the unit-linked portfolio. The unit fund expenses under unit-linked portfolio
are directly offset by a change in valuation of policyholder liabilities.
Operating expenses of other than unitlinked portfolio increased 22% from Rs 761
crore in Q1FY22 to Rs 929 crore in Q1FY23 primarily on account of increase in
expenses relating to employee remuneration and welfare benefits and business
conferences expenses.
Claims
and benefit payouts (net of reinsurance) declined 3% from Rs 5668 crore in
Q1FY22 to Rs 5512 crore in Q1FY23 primarily on account of decrease in death
claims offset in part by increase in surrender/withdrawal. The death claims,
net of amount ceded in reinsurance, declined by 51% from Rs 1068 crore in
Q1FY22 to Rs 527 crore in Q1FY23 primarily on account of decline in COVID-19
related death claims. The Company had COVID-19 related death claims (net of
reinsurance) of Rs 17 crore in Q1FY23 (Rs 500 crore in Q1FY22).
Change
in actuarial liability, including funds for future appropriation, decreased
from Rs 9569 crore in Q1FY22 to negative Rs 8701 crore in Q1FY23. Fund reserve,
which represents liability carried on account of units held by unit-linked
policyholders, decreased from Rs 6536 crore in Q1FY22 to negative Rs 12015
crore in Q1FY23. The decrease in fund reserves is primarily due to lower
investment income in the unit linked portfolio. Non-unit reserve increased from
Rs 3167 crore in Q1FY22 to Rs 3215 crore in Q1FY23.
N S
Kannan, MD & CEO, ICICI Prudential Life Insurance said, “The VNB for the
quarter was Rs 471 crore, a strong year-on-year growth of 31.6%. This was
driven by a robust 24.7% growth in APE. Guided by the elements of our 4P
strategy of Premium growth, Protection focus, Persistency improvement and
Productivity enhancement, we believe we are on track to achieve our aspiration
of doubling the FY2019 VNB in this fiscal. Significantly, our efforts to reach
out to the underserved customer segments and expansion in the distribution
footprint have enabled us to maintain our position as market leader on New
Business Sum Assured, which grew by 25% year-on-year in Q1-FY2023, taking the
Company’s market share to 15.8% in Q1-FY2023. With a solvency ratio of 203.6%,
which is well above the regulatory requirement, we are well positioned to
capitalise on this opportunity.
With a
moderating trend in COVID-19 related claims, we expect the country to be in the
tail end of the pandemic. The pandemic was a trying time for all and it also
nudged us closer to our very purpose of existence - providing financial
security to our customers and their families. I can proudly say that we rose to
the occasion and stood by our customers in their hour of need.
The
path-breaking reforms introduced by the Regulator to increase penetration will
usher in a sustainable growth for the industry going forward.”
Financial Performance FY2022
Profit after tax decreased from Rs 960
crore in FY2021 to Rs 754 crore in FY2022. Net premium earned (gross premium
less reinsurance premium) increased by 3.85% from Rs 34973 crore in FY2021 to
Rs 36321 crore in FY2022.
Total investment income of Rs 25830
crore in FY2022 comprised income of Rs 19782 crore (Investment income FY2021:
Rs 42153 crore) under the unit-linked portfolio and an investment income of Rs
6048 crore (FY2021: Rs 6004 crore) under the non-unit funds. The investment
income under unit-linked portfolio is directly offset by a change in valuation
of policyholder liabilities. Unit linked portfolio investment income decreased
from Rs 42153 crore in FY2021 to Rs 19782 crore in FY2022 primarily on account
of decrease in market value of the securities held.
Other income increased from Rs 94
crore in FY2021 to Rs 115 crore in FY2022.
Total expenses (including commission)
increased by 24.8% from Rs 4916 crore in FY2021 to Rs 6137 crore in FY2022.
Commission expense (including rewards) increased by 11.5% from Rs 1500 crore in
FY2021 to Rs 1673 crore in FY2022. New business commission (including single
premium) has increased from Rs 1032 crore in FY2021 to Rs 1179 crore in FY2022.
Renewal commission has increased from Rs 398 crore in FY2021 to Rs 412 crore in
FY2022. Operating expenses of Rs 4464 crore in FY2022 (FY2021: Rs 3416 crore)
comprised of unit fund expenses (including goods and service tax on linked
charges) amounting to Rs 700 crore (FY2021: Rs 669 crore) under the unit-linked
portfolio. The unit fund expenses under unit-linked portfolio is directly
offset by a change in valuation of policyholder liabilities. Operating expenses
of other than unit linked portfolio increased by 37.0% from Rs 2747 crore in
FY2021 to Rs 3763 crore in FY2022 primarily on account of increase in expenses
relating to employee remuneration and welfare benefits, advertisement and
business conferences expenses.
Claims and benefit payouts increased
by 29.7% from Rs 22641 crore in FY2021 to Rs 29359 crore in FY2022 primarily on
account of increase in surrenders/withdrawals and death claims. The Company had
COVID-19 claims (net of reinsurance) of Rs 1017 crore.
Change in actuarial liability,
including funds for future appropriation, decreased from Rs 54445 crore in
FY2021 to Rs 25814 crore in FY2022. Fund reserve, which represents liability
carried on account of units held by unit linked policyholders, decreased from
Rs 41464 crore in FY2021 to Rs 12317 crore in FY2022. The decrease in fund
reserves is primarily due to lower investment income in the unit linked
portfolio. Non-unit reserve increased from Rs 12860 crore in FY2021 to Rs 13467
crore in FY2022.
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ICICI Prudential Life
Insurance: Results Standalone Policyholders Account
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2206 (3)
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2106 (3)
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Var %
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2203 (12)
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2103 (12)
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Var %
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Premium earned (net)
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6884.20
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6601.85
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4
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36321.27
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34973.37
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4
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Income from
Investments
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-8670.84
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9210.27
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PL
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24969.54
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47437.58
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-47
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Other income
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33.33
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24.34
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37
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112.59
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93.40
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21
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Contribution from the
Shareholders` account
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292.12
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887.59
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-67
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2161.11
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1574.78
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37
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Total Income
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-1461.19
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16724.05
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PL
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63564.51
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84079.13
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-24
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Commission
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305.91
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270.56
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13
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1672.91
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1500.22
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12
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Op. expenses related
to Insurance business
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918.37
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767.93
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20
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3672.95
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2688.26
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37
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Others
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162.86
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159.83
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2
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719.53
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678.42
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6
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Benefits paid (Net)
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5512.49
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5667.59
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-3
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29358.84
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22640.90
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30
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Change in valuation of
policy liabilities
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-8799.87
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9703.12
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LP
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25783.76
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54324.10
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-53
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Provision for taxation
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44.10
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0.00
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-
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166.15
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141.85
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17
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Total Expense
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-1856.14
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16569.03
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LP
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61374.14
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81973.75
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-25
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PAT
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394.95
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155.02
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155
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2190.37
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2105.38
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4
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Transfer to
Shareholders` account
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296.00
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289.27
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2
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2160.22
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1984.86
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9
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ICICI Prudential Life
Insurance: Results Standalone Shareholders Account
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2206 (3)
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2106 (3)
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Var %
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2203 (12)
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2103 (12)
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Var %
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Amounts transferred
from Policyholders` account
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296.00
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289.27
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2
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2160.22
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1984.86
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9
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Income from
investments
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175.06
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399.14
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-56
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1013.62
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768.96
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32
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Total Income
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471.06
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688.41
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-32
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3173.84
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2753.82
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15
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Expenses (apart from
Insurance)
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23.25
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24.56
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-5
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102.43
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61.15
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68
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Contribution to
policyholders account
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292.12
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887.59
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-67
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2161.11
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1574.78
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37
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Others
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0.00
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-7.91
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-
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119.75
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36.49
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228
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Total Expenses
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315.37
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904.24
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-65
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2383.29
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1672.42
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43
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PBT
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155.69
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-215.83
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LP
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790.55
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1081.40
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-27
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Tax
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0.00
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-30.10
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-
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36.42
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121.25
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-70
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PAT
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155.69
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-185.73
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LP
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754.13
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960.15
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-21
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EPS (Rs)*
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4.3
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-5.2
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5.2
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6.7
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* on current equity of
Rs 1437.48 crore of face value of Rs 10 each, PL: Profit to Loss, LP: Loss to
Profit,
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Figures in crore,
Source: Capitaline Corporate Database
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