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Results
24-Apr-24
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Analysis
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ICICI Prudential Life Insurance Company
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APE rises 10%, VNB and margin declines in Q4FY24
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ICICI Prudential Life Insurance Company has posted 26% dip in the
net profit of Rs 173.76 crore in the quarter ended March 2024 (Q4FY2024). The Company
registered healthy 17% growth in net premium income to Rs 14788.46 crore in Q4FY2024,
while the investment income rebounded to Rs 7265.30 crore against loss of Rs
1905.31 crore in Q4FY2023. The commission expenses jumped 108% and operating
expense declined 37%. Benefits paid surged 43% in Q4FY2024.
Value
of New Business (VNB) declined 26% to Rs 776 crore for Q4FY2024 over Q4FY2023. VNB margin declined to 24.6% in FY24 from 32%
in FY23. APE rose 10% to Rs 3616 crore for Q4FY2024. New business
premium moved up 16% to Rs 6554 crore for Q4FY2024.
The Company
offers a wide range of products across various segments such as savings (linked
and non-linked), annuity and protection to meet the specific needs of the
customers. The Company has a well-diversified product mix with FY2024 APE
contribution from linked, non-linked, protection, annuity, and group funds at
43.2%, 25.8%, 16.9%, 10.5% and 3.5% respectively.
Savings
business APE including annuity grew by 5.4% yoy from Rs 7136 crore in FY2023 to Rs 7521 crore in FY2024. Protection APE stood at
Rs 1525 crore in FY2024. Retail
protection business APE registered a growth of 46.6% yoy from Rs 326 crore in FY2023 to Rs 478 crore in FY2024. Credit life business APE
grew by 25.2% yoy from Rs 481
crore in FY2023 to Rs 602 crore
in FY2024.
As a result,
retail new business sum assured grew by 38.3% yoy from Rs 175467 crore in FY2023 to Rs 242751 crore in FY2024. The total in-force
sum assured grew by 15.6% yoy from Rs 29.51 trillion end March 2023 to Rs 34.11 trillion end March 2024.
Persistency
ratios have significantly improved across most of the cohorts, reflective of
the Company’s strong focus on improving the quality of business. The 13th month
persistency improved from 86.6% in FY2023 to 89.0% in FY2024. The 49th month
persistency ratio improved from 64.2% in FY2023 to 68.5% in FY2024.
In FY2024,
the cost to total weighted received premium (TWRP) ratio for the savings
business and the overall cost to TWRP ratio stood at 15.8% and 24.0%
respectively. In the current financial year, the re-design of commission
structure pursuant to the flexibility provided in IRDAI (Payment of Commission)
Regulations has led to an increase in commission expenses. Additionally, the
Company has continued its investments towards sustainable future growth.
The assets
under management of the Company grew by 17.1% yoy from Rs 251191 crore end March 2023 to Rs 294140 crore end March 2024. The Company had
a debt-equity mix of 53:47 end March 2024 and 95.9% of the fixed income
investments were in sovereign or AAA rated instruments.
The
Company’s net worth was Rs
11009 crore end March 2024. The
solvency ratio was 191.8% against the regulatory requirement of 150%.
The Embedded
Value grew by 18.8% yoy from Rs 35634 crore
end March 2023 to Rs 42337 crore
end March 2024. The value of inforce business grew by 14.5% from Rs 26852 crore end March 2023 to Rs 30756 crore end March 2024. The return on
embedded value (RoEV) was 14.1% in FY2024. EV operating profit stood at Rs
5017 crore in FY2024.
The Embedded Value per share stood at Rs 293.9 end March 2024.
Anup Bagchi,
MD & CEO, ICICI Prudential Life Insurance said, “We have been strengthening
our well-diversified distribution network, designing innovative products and
processes and leveraging data analytics and other technology solutions to
simplify the business. These are aimed at enriching the customer and
distributor experience. We believe simplification is the key to expanding the
market and is in line with our objective to become the most customer and
distributor friendly life insurer. We are the first life insurer in the country
to offer an annuity product which provides customers the option to receive a
100% refund of premiums paid. In addition, we offer a long-term savings product
which provides customers the flexibility to make partial withdrawals enabling
them to meet liquidity requirements without disrupting the savings goal.
Notably, we
are also the first life insurer to pay out commissions on the same day to our
distributors. Innovative products and processes underscore the Company’s
strategy of providing the right product to the right customer at the right
price and through the right channel.
Our focus on
the distribution front has been to build capacity and enhance efficiency. In Q4FY2024,
the retail weighted received premium grew by 11.5%, outperforming the overall
industry and private life insurers. The contribution of the agency and direct
business channels to the retail APE stood at 51% for FY2024.
The ICICI
Pru Stack, a set of platform capabilities aids sharp customer segmentation and
enables better understanding of customer needs thereby facilitating best effort
adjusted outcomes for our distributors. We have also deployed Machine Learning
models which enable us to introduce appropriate interventions to address
customer requirements. Our 13th month persistency for the full year stood at
89.0%, reflecting the customer’s trust in the Company and our operational
efficiency.
Our industry
leading claim settlement ratio of 99.2% in FY2024, with an average turnaround
time of 1.3 days for non-investigated claims reflects our commitment to
fulfilling the promise made to our customers and their families.
Going
forward we will continue to leverage technology to simplify products and processes
and augment customer experience. We believe this will enable us to stay firmly
rooted to the sustainable growth path. This is aligned with our objective of
balancing growth, risk & prudence and profitability.”
Financial Performance FY2024
The
Company’s Profit After Tax (PAT) grew by 5.1% yoy from Rs 811 crore in FY2023 to Rs 852 crore in FY2024. Value of New Business
(VNB) for FY2024 was Rs 2227
crore down from Rs 2765 crore in FY2023. With an APE of Rs 9046 crore for the FY2024, VNB margin for
FY2024 stood at 24.6% down from 32% in FY2023. The decline in VNB margin is
primarily on account of the shift in underlying product mix towards unit linked
& par from non-par business, decline in group term business and higher
expense ratio for the current year.
New business
received premium grew by 6.8% yoy from Rs 16922
crore in FY2023 to Rs 18081
crore in FY2024. The total Annualised Premium Equivalent (APE) grew by 4.7% yoy
from Rs 8640 crore in FY2023 to Rs
9046 crore in FY2024. Retail APE grew
by 12.0% yoy from Rs 2859 crore
in Q4FY2023 to Rs 3201 crore in
Q4FY2024. The Company has delivered Retail Weighted Received Premium (RWRP)
growth of 11.5% in Q4FY2024, outperforming both the overall industry and private
life insurers.
Net premium
earned (gross premium less reinsurance premium) increased by 8.3% from Rs 38560 crore in FY2023 to Rs 41760 crore in FY2024. Total investment
income increased from Rs 10694
crore in FY2023 to Rs 47931
crore in FY2024. Investment income comprised of:
Investment
income under unit-linked increased from Rs 4203
crore in FY2023 to Rs 38203
crore in FY2024, primarily due to increase in the market value of the
securities held coupled with increase in profits on sale of investments. Investment
income under unitlinked is directly offset by change in valuation of
policyholder liabilities.
Investment
income under other than unit-linked increased from Rs 6491 crore in FY2023 to Rs 9729 crore in FY2024 primarily on account of
an increase in profit on sale of investments and interest income.
Other income
increased from Rs
153 crore in FY2023 to Rs 219 crore in FY2024.
Total
expenses (including commission and interest on sub debt) increased by 19.4%
from Rs 7219 crore in FY2023 to Rs 8616 crore in FY2024.
Commission
expenses increased by 99.7% from Rs 1864
crore in FY2023 to Rs 3722 crore
in FY2024. New business commission (including single premium commission and
rewards) increased from Rs 1436
crore in FY2023 to Rs 3257 crore
in FY2024 primarily on account of redesign of commission structure pursuant to
the IRDAI (Payment of Commission) Regulations, 2023 issued on March 31, 2023.
Renewal commission increased from Rs 428 crore in FY2023 to Rs 465
crore in FY2024.
Operating
expenses decreased by 8.7% from Rs 5273
crore in FY2023 to Rs 4812 crore
in FY2024. Operating expenses include unit fund expenses (including goods and
service tax on linked charges) amounting to Rs 695 crore (FY2023: Rs 671
crore) under the unitlinked portfolio. The unit fund expenses under the
unit-linked portfolio are directly offset by changes in the valuation of
policyholder liabilities. Operating expenses of other than unit-linked
portfolio decreased by 10.5% from Rs 4602 crore in FY2023 to Rs 4117
crore in FY2024.
Claims and
benefit payouts (net of reinsurance) increased by 29.0% from Rs 31004 crore in FY2023 to Rs 40006 crore in FY2024, primarily on account
of higher surrenders/ withdrawals in the unit-linked portfolio. The claims and
benefits under the unit-linked portfolio are directly offset by changes in the
valuation of policyholder liabilities.
Change in
actuarial liability, including funds for future appropriation and fund reserve,
increased from Rs
10103 crore in FY2023 to Rs 40256 crore in FY2024. Change in fund
reserve, which represents the change in liability carried on account of units
held by unitlinked policyholders, increased from Rs (6808) crore in FY2023 to Rs 20784 crore in FY2024. The increase in change
in fund reserves is primarily due to higher investment income in the unit
linked portfolio. Non-unit reserve increased from Rs 16625 crore in FY2023 to Rs 19855 crore in FY2024.
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ICICI Prudential Life
Insurance: Results Standalone Policyholders Account
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2403 (3)
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2303 (3)
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Var %
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2403 (12)
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2303 (12)
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Var %
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Premium earned (net)
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14788.46
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12629.11
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17
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41759.67
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38559.53
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8
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Income from
Investments
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7265.30
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-1905.31
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LP
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46550.33
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9964.58
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367
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Other income
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54.89
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43.63
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26
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204.65
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151.59
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35
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Contribution from the
Shareholders` account
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482.81
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732.41
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-34
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1792.64
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1802.43
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-1
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Total Income
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22591.46
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11499.84
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96
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90307.29
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50478.13
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79
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Commission
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1565.91
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753.51
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108
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3721.96
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1863.89
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100
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Op. expenses related
to Insurance business
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983.93
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1566.84
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-37
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4125.99
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4583.23
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-10
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Others
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126.64
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205.47
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-38
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617.29
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723.53
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-15
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Benefits paid (Net)
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12516.18
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8760.67
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43
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40005.99
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31004.16
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29
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Change in valuation of
policy liabilities
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7156.61
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-693.02
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PL
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40639.05
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9816.96
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314
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Provision for taxation
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36.29
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47.07
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-23
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107.82
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184.23
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-41
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Total Expense
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22385.56
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10640.54
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110
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89218.10
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48176.00
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85
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PAT
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205.90
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859.30
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-76
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1089.19
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2302.13
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-53
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Transfer to
Shareholders` account
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317.81
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822.27
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-61
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1471.88
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2016.18
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-27
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ICICI Prudential Life
Insurance: Results Standalone Shareholders Account
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2403 (3)
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2303 (3)
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Var %
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2403 (12)
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2303 (12)
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Var %
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Amounts transferred
from Policyholders` account
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317.81
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822.27
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-61
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1471.88
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2016.18
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-27
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Income from
investments
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427.38
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259.46
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65
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1383.52
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877.37
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58
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Total Income
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745.19
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1081.73
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-31
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2855.40
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2893.55
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-1
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Expenses (apart from
Insurance)
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28.04
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28.39
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-1
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103.66
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102.17
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1
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Contribution to
policyholders account
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482.81
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732.41
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-34
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1792.64
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1802.43
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-1
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Others
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0.00
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4.12
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-
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35.87
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92.05
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-61
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Total Expenses
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510.85
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764.92
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-33
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1932.17
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1996.65
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-3
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PBT
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234.34
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316.81
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-26
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923.23
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896.90
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3
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Tax
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60.58
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81.94
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-26
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70.84
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86.23
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-18
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PAT
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173.76
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234.87
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-26
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852.39
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810.67
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5
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EPS (Rs)*
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4.8
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6.5
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5.9
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5.6
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Embedded Valued (Rs)
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293.9
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247.7
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293.9
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247.7
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* annualised on current equity of
Rs 1440.62 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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