Highlights:

With this uncertain environment, the company saw consumers unwilling to commit to a longer term savings product as well as preferring traditional products to unit linked products. The initial focus area for the company was to ensure the resilience of the business and operations.

The company saw Annualised Premium Equivalent (APE) decline by 44% in Q1.

The company focused on creating a base for future growth by diversifying distribution through new agents and new partnerships and enhancing product suite by introducing new products including deferred annuity. This help the company to post APE growth of 27% in Q4 from 44% decline in Q1FY2021.

The company intends to carry this momentum forward, while also being cognisant of the recent surge in COVID-19 infections in the country.

4P strategic elements i.e. Premium growth, Protection business growth, Persistency improvement and Productivity improvement continue to guide the company towards objective of growing the absolute Value of New Business (VNB).

13th month persistency for non-linked savings has reached 94% at March 2021.

Claim settlement ratio stands at 98%. The average time taken for settlement of claims was just 1.4 days in FY2021, a further improvement from 1.6 days in FY2020.

New business premium for FY2021 grew by 6% year on year to Rs 13032 crore. The share for linked product has been reducing sharply from 82% in FY2018 with the focus on broadening of customer base through a combination of distribution build up and product propositionsto less than half of top-line with 31% being contributed by the non-linked savings products and 16% by protection products.

With this, the company believes it has diversified product mix adequately, enabling the company to manage the impact of external developments in much better manner as the company moves forward.

In Union budget 2021, high ticket unit linked products were subjected to capital gains tax since 1 February 2021. Despite this, new business premium based on retail weighted received premium grew 48% year on year since then.

With higher contribution by some of the recent partnerships, the company have further diversified distribution mix in FY2021.

Despite these challenges, through focus on the group segment, specifically on group term products, protection mix further increased to 16.2% in FY2021.

New business sum assured market share significantly increased from 11.8% in FY2020 to 13.0% as of February 2021.

The company saw significant improvements in 13th month and 61st month persistency ratios.

The cost to total weighted received premium (TWRP) ratio was 14.8% for FY2021 as compared to 15.9% last year. Cost ratios are one of the best in the industry and the company continue to leverage technology to improve further.

VNB margin increased from 21.7% for FY2020 to 25.1% for FY2021 primarily on account of growth in non-linked savings business and increase in protection mix.

Along with the diversification of VNB, the company continued to maintain a resilient Balance Sheet.

On insurance risks, the company continues to hold additional reserves of Rs 332 crore towards potential COVID-19 claims.

The company continues to maintain objective of doubling FY2019 VNB by FY2023, which requires a compounded annual growth rate of 28% over the next two years.

With diversified product mix in place and an enhanced distribution network with significant addition of new partners during the year, the company expects to deliver higher growth.

The strong focus will continue on protection business driven by opportunities in the group term segment.

The company would endeavour to further improve the persistency ratios across the cohorts, thereby increasing the segment level margins.

On the cost ratios, the company targets a positive operating leverage given the growth in new business premium.

As part of agenda of delivering long term sustainable growth, the company has been systematically working on broadening customer base. To achieve this, the company is using three pronged strategy 1) Product propositions 2) Distribution build up and 3) Customer retention.

The company enhanced product suite and launched newer products to capitalize on opportunities in the emerging environment, without compromising on risk management approach.

The wholly owned subsidiary, ICICI Prudential Pension Fund Management Company (PFM), distributes products under the National Pension System and is registered as a pension fund manager. This business is synergistic to annuity offerings and is expected to support growth of the annuity business in future. The AUM managed by the PFM has increased by 74% to Rs 7559 crore at March 2021 as compared to Rs 4353 crore at March 2020.

In terms of new subscriber additions, the PFM's market share increased to 18.4% in FY2021 as compared to 14.8% in FY2020. Further, with the renewal of a certificate of registration to the PFM, and given that the AUM size is less than Rs 10000 crore, 9 basis points can be charged as investment management fees from 1 April 2021 as compared to 1 basis point earlier.

Within the bancassurance channel, the company announced multiple partnerships during the year and have a total of 23 bank partnerships. With these partnerships the company has broadened reach to 162 million bank customers with a branch footprint of about 12,000 branches.

On partnership distribution, the company added 110 partnerships during the year and have about 600 partnerships across traditional and non-traditional distributors such as web aggregators, payment banks, small finance banks and insurance marketing firms.

For the direct channel which comprise sales through website and employees on payroll, the strategy has been of upsell to the existing customers with the help of analytics.

The company is well positioned to continue the growth trajectory seen in Q4FY2021.

Keeping in mind the current surge of infections & deaths and looking at the age specific death rates the company has experienced on account of COVID-19, the company feel it is prudent to increase the provision for future COVID-19 claims to Rs 332 crore, as compared to Rs 100 crore end December 2020.