Capitaline

Results 21-Apr-23

Analysis

ICICI Prudential Life Insurance Company

Strong VNB growth and margins improvement

ICICI Prudential Life Insurance Company has posted 27% jump in the net profit of Rs 234.87 crore in the quarter ended March 2023 (Q4FY2023) compared with net profit of Rs 184.67 crore in Q4FY2022.

The Company registered 11% growth in net premium income in Q4FY2023. The commission expenses jumped 35% and operating expense increased 21%. Benefits paid moved up 9% in Q4FY2023.

Value of New Business (VNB) improved 36% to Rs 1055 crore for Q4FY2023 over Q4FY2022. VNB margin increased from 28.0% in FY2022 to 32.0% in FY2023, supported by change in product mix. APE increased 27% to Rs 3300 crore for Q4FY2023. New business premium increased 18% to Rs 5635 crore for Q4FY2023 from Rs 4788 crore for Q4FY2022.

The Company offers a range of products across annuity, savings, and protection solutions to meet the specific needs of customers. Annuity APE grew 102% to Rs 170 crore in Q4FY23 and Protection APE fell 1% to Rs 454 crore, while Savings APE jumped 29% to Rs 2675 crore in Q4FY23.

Persistency ratios have improved across all cohorts in the last one year, reflective of the Company’s strong focus on improving the quality of business. The 13th month persistency ratio improved from 85.7% in 11M-FY2022 to 86.6% in 11M-FY2023. The 49th month persistency ratio also improved from 63.7% in 11M-FY2022 to 64.2% in 11M-FY2023.

In FY2023, the cost to total weighted received premium (TWRP) ratio for the savings business and the overall cost to TWRP ratio stood at 14.2% and 21.5% respectively.

The assets under management of the Company stood at Rs 251191 crore end March 2023. The Company had a debt-equity mix of 55:45 end March 2023 and 97.3% of the fixed income investments were in sovereign or AAA rated instruments.

The Company’s net worth was Rs 10092 crore end March 2023. The solvency ratio was 208.9% against the regulatory minimum requirement of 150%.

The Embedded Value increased from Rs 31625 crore end March 2022 to Rs 35634 crore end March 2023 with a yoy growth of 12.7%.

The return on embedded value (RoEV) was 17.4% in FY2023 as compared to 11.0% in FY2022. EV operating profit was Rs 5488 crore, a yoy growth of 71.9%.

Embedded value per share stood at Rs 247.7 end March 2023.

N S Kannan, MD & CEO, ICICI Prudential Life Insurance said “In April 2019 we had articulated our aspiration to double the FY2019 VNB in four years. It gives me immense pleasure to state that we have successfully delivered this with a VNB of Rs 2765 crore and industry leading margin of 32.0%. This VNB was delivered along with strong quality of business as can be seen from the sharp improvements in our persistency ratios across all cohorts.

Our strategy of pursuing a diversified distribution and a well diversified product mix has enabled us to deliver 26.5% yoy growth in APE (APE) in Q4-FY2023. Our focus on protection and annuity products is reflected in the growth in these segments. These products together now contribute nearly half of the new business received premium for FY2023.

We believe that we have built a resilient business with well-diversified product & channel mix, industry leading quality parameters, and strong risk & capital metrics. With this, we are well poised to take advantage of the insurance opportunity in the coming years.”

Financial Performance FY2023

The net profit increased to Rs 811 crore in FY2023 from Rs 754 crore in FY2022, a yoy growth of 7.6%. Profit before tax increased from Rs 790 crore in FY2022 to Rs 897 crore in FY2023, a yoy growth of 13.5%.

Value of New Business (VNB) increased from Rs 2163 crore in FY2022 to Rs 2765 crore in FY2023, a yoy growth of 27.8%. With an APE of Rs 8640 crore for FY2023, VNB margin improved from 28.0% in FY2022 to 32.0% in FY2023 primarily on account of shift in the underlying product mix. The Company has doubled the FY2019 value of new business in FY2023 with a four-year CAGR of 20.1%, in line with the aspiration articulated in April 2019.

New business premium grew from Rs 15036 crore in FY2022 to Rs 16922 crore in FY2023, a yoy growth of 12.5%. APE grew from Rs 7733 crore in FY2022 to Rs 8640 crore in FY2023 with a yoy growth of 11.7%.

Annuity APE grew from Rs 300 crore in FY2022 to Rs 507 crore in FY2023, registering a strong yoy growth of 69.0%. Protection APE grew from Rs 1313 crore in FY2022 to Rs 1504 crore in FY2023, registering a year-on- year growth of 14.5%. Retail protection business registered a strong yoy growth of 27.7% in Q4-FY2023. As a result, new business sum assured increased from Rs 773146 crore in FY2022 to Rs 1041392 crore in FY2023 with a yoy growth of 34.7%.

Net premium earned (gross premium less reinsurance premium) increased by 6.2% from Rs 36321 crore in FY2022 to Rs 38560 crore in FY2023. Total investment income decreased from Rs 25830 crore in FY2022 to Rs 10694 crore in FY2023.

Investment income under unit-linked decreased from Rs 19782 crore in FY2022 to Rs 4203 crore in FY2023, primarily due to decrease in the market value of the securities held and a decrease 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 6048 crore in FY2022 to Rs 6491 crore in FY2023 primarily on account of an increase in interest income offset in part by decrease in profit on sale of investments.

Total expenses (including commission) increased by 17.6% from Rs 6137 crore in FY2022 to Rs 7219 crore in FY2023.

Commission expense increased by 11.4% from Rs 1673 crore in FY2022 to Rs 1864 crore in FY2023. New business commission (including single premium commission) increased from Rs 1179 crore in FY2022 to Rs 1324 crore in FY2023 in line with growth in new business premium. The renewal commission increased from Rs 412 crore in FY2022 to Rs 428 crore in FY2023.

Operating expense increased by 20.3% from Rs 4382 crore in FY2022 to Rs 5273 crore in FY2023. Operating expenses comprised unit fund expenses (including goods and service tax on linked charges) amounting to Rs 671 crore (FY2022: Rs 700 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 increased by 25.0% from Rs 3682 crore in FY2022 to Rs 4602 crore in FY2023, primarily on account of increase in expenses relating to advertisement and publicity and employee remuneration.

Claims and benefit payouts (net of reinsurance) increased by 5.6% from Rs 29359 crore in FY2022 to Rs 31004 crore in FY2023, primarily on account of increase in surrenders/withdrawals offset in part by a decrease in death claims. The death claims, net of amount ceded in reinsurance, decreased by 35.1% from Rs 3601 crore in FY2022 to Rs 2337 crore in FY2023 primarily on account of a decline in COVID-19 related death claims. The Company had COVID-19 related death claims (net of reinsurance) of Rs 41 crore in FY2023 (Rs 1017 crore in FY2022).

Change in actuarial liability, including funds for future appropriation and fund reserve, decreased from Rs 25814 crore in FY2022 to Rs 10103 crore in FY2023. Change in fund reserve, which represents the change in liability carried on account of units held by unit-linked policyholders, decreased from Rs 12317 crore in FY2022 to Rs (6808) crore in FY2023. The decrease in change in fund reserves is primarily due to lower investment income in the unit linked portfolio. Non-unit reserve increased from Rs 13467 crore in FY2022 to Rs 16625 crore in FY2023.

ICICI Prudential Life Insurance: Results Standalone Policyholders Account
	2303 (3)	2203 (3)	Var %	2303 (12)	2203 (12)	Var %
Premium earned (net)	12629.11	11358.91	11	38559.53	36321.27	6
Income from Investments	-1905.31	1476.48	PL	9964.58	24969.54	-60
Other income	43.63	32.76	33	151.59	112.59	35
Contribution from the Shareholders` account	732.41	977.58	-25	1802.43	2161.11	-17
Total Income	11499.84	13845.73	-17	50478.13	63564.51	-21
Commission	753.51	556.43	35	1863.89	1672.91	11
Op. expenses related to Insurance business	1566.84	1298.64	21	4583.23	3672.95	25
Others	205.47	203.76	1	723.53	719.53	1
Benefits paid (Net)	8760.67	8003.79	9	31004.16	29358.84	6
Change in valuation of policy liabilities	-693.02	2546.35	LP	9816.96	25783.76	-62
Provision for taxation	47.07	92.67	-49	184.23	166.15	11
Total Expense	10640.54	12701.64	-16	48176.00	61374.14	-22
PAT	859.30	1144.09	-25	2302.13	2190.37	5
Transfer to Shareholders` account	822.27	1068.11	-23	2016.18	2160.22	-7

ICICI Prudential Life Insurance: Results Standalone Shareholders Account
	2303 (3)	2203 (3)	Var %	2303 (12)	2203 (12)	Var %
Amounts transferred from Policyholders` account	822.27	1068.11	-23	2016.18	2160.22	-7
Income from investments	259.46	166.34	56	877.37	1013.62	-13
Total Income	1081.73	1234.45	-12	2893.55	3173.84	-9
Expenses (apart from Insurance)	28.39	28.87	-2	102.17	102.43	0
Contribution to policyholders account	732.41	977.58	-25	1802.43	2161.11	-17
Others	4.12	6.91	-40	92.05	119.75	-23
Total Expenses	764.92	1013.36	-25	1996.65	2383.29	-16
PBT	316.81	221.09	43	896.90	790.55	13
Tax	81.94	36.42	125	86.23	36.42	137
PAT	234.87	184.67	27	810.67	754.13	7
EPS (Rs)*	6.5	5.1		5.6	5.2
Embedded Valued (Rs)	247.7	220.0		247.7	220.0
* on current equity of Rs 1438.57 crore of face value of Rs 10 each, PL: Profit to Loss, LP: Loss to Profit,
Figures in crore, Source: Capitaline Corporate Database

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