Capitaline

Results 18-Jul-23

Analysis

ICICI Prudential Life Insurance Company

Stable performance, moderate premium collection growth

ICICI Prudential Life Insurance Company has posted 33% jump in the net profit of Rs 206.91 crore in the quarter ended June 2023 (Q1FY2024). The Company registered 2% growth in net premium income in Q1FY2024. The commission expenses jumped 25% and operating expense increased 21%. Benefits paid moved up 44% in Q1FY2024.

Value of New Business (VNB) declined 7% to Rs 438 crore for Q1FY2024 over Q4FY2022. VNB margin eased to 30% in Q1FY24 from 32% in FY2023 and 31% in Q1FY23. APE fell 4% to Rs 1461 crore for Q1FY2024. New business premium declined 4% to Rs 3051 crore for Q1FY2024.

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. Protection APE grew by 4.2% year-on-year from Rs 330 crore in Q1FY2023 to Rs 344 crore in Q1FY2024. Retail protection business APE registered a strong growth of 61.8% year-on-year from Rs 68 crore in Q1FY2023 to Rs 110 crore for Q1FY2024.

As a result, new business sum assured increased by 8.8% year-on-year from Rs 220935 crore in Q1FY2023 to Rs 240304 crore in Q1FY2024. Retail New Business Sum Assured grew by 39.3% year-on-year from Rs 34979 crore in Q1FY2023 to Rs 48712 crore in Q1FY2024.

Persistency ratios have improved across all cohorts, reflective of the Company’s strong focus on improving the quality of business. The 13th month persistency ratio improved from 85.5% in 2MFY2023 to 86.4% in 2MFY2024. The 49th month persistency ratio also improved from 63.3% in 2MFY2023 to 64.7% in 2MFY2024.

In Q1FY2024, the cost to total weighted received premium (TWRP) ratio for the savings business and the overall cost to TWRP ratio stood at 18.8% and 27.7% respectively.

The assets under management of the Company grew by 15.8% from Rs 230072 crore at June 30, 2022 to Rs 266420 crore at June 30, 2023. The Company had a debt-equity mix of 54:46 at June 30, 2023 and 97.1% of the fixed income investments were in sovereign or AAA rated instruments.

The Company’s net worth was Rs 10520 crore end June 2023. The solvency ratio was 203.4% against the regulatory minimum requirement of 150%.

The calculated Embedded Value per share stood at Rs 252.1 end June 2023.

Anup Bagchi, MD & CEO, ICICI Prudential Life Insurance said, “Our very purpose of existence is to provide financial security to our customers and their families. We believe we are trustees of the life savings entrusted to us by our customers to achieve their protection, retirement, health and long-term savings goals.

In Q1FY2024, the VNB stood at Rs 438 crore, with a margin of 30%, while PAT grew 33% year-on-year to Rs 207 crore. With customer-centricity at the core, we will continue to focus on growing the absolute VNB, through the 4P strategy comprising Premium growth, Protection focus, Persistency improvement and Productivity enhancement. Through Q1FY2024, we have observed an improving trend in business, with double digit growth in APE for the month of June 2023. Our efforts towards expanding the protection business are visible in the 62% year-on-year growth in the retail protection segment and this has led to the overall protection business contributing nearly a quarter of the total APE. Further, our well-diversified distribution network has ensured we have minimal concentration risk from any single distributor. Our persistency across cohorts has further improved, reflecting our need-based selling approach, with the 13th month persistency at 86.4%.

To improve our performance across the 4P strategic elements, we have institutionalized a 4D framework comprising Data analytics, Diversified propositions, Digitalisation and Depth in Partnerships, with a focus on developing a quality business in a risk-calibrated manner. This framework will ensure products are aligned with customer needs, are designed to meet those needs effectively, are developed with the highest quality standards, and are delivered through the most appropriate channels. Also, this framework will help us provide simplified and hassle-free processes to our customers across the product life cycle.”

Financial performance Q1FY2024

Net premium earned (gross premium less reinsurance premium) increased by 2.0% from Rs 6884 crore in Q1FY2023 to Rs 7020 crore in Q1FY2024. Total investment income increased from a loss of Rs 8496 crore in Q1FY2023 to a gain of Rs 16327 crore in Q1FY2024.

Investment income under unit-linked increased from a loss of Rs 9888 crore in Q1FY2023 to a gain of Rs 14159 crore in Q1FY2024, primarily due to increase in the market value of the securities held coupled with increase in profits on sale of investments. Investment income under unit-linked is directly offset by change in valuation of policyholder liabilities.

Investment income under other than unit-linked increased from Rs 1392 crore in Q1FY2023 to Rs 2167 crore in Q1FY2024 primarily on account of an increase in profit on sale of investments and interest income.

Total expenses (including commission) increased by 18.4% from Rs 1411 crore in Q1FY2023 to Rs 1670 crore in Q1FY2024.

Commission expenses increased by 25.2% from Rs 306 crore in Q1FY2023 to Rs 383 crore in Q1FY2024. New business commission (including single premium commission) increased from Rs 217 crore in Q1FY2023 to Rs 292 crore in Q1FY2024. The renewal commission increased from Rs 71 crore in Q1FY2023 to Rs 75 crore in Q1FY2024. The increase in new business commission is primarily on account of changes in the commission structure in line with the new guidelines issued by the IRDAI on March 31, 2023.

Operating expenses increased by 16.8% from Rs 1085 crore in Q1FY2023 to Rs 1267 crore in Q1FY2024. Operating expenses comprised of unit fund expenses (including goods and service tax on linked charges) amounting to Rs 157 crore (Q1FY2023: Rs 156 crore) under the unit-linked 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 19.5% from Rs 929 crore in Q1FY2023 to Rs 1110 crore in Q1FY2024, primarily on account of continued investment in capacity creation to support future growth. The increase in operating expenses is primarily on account of higher advertisement and sales related cost and employee remuneration.

Claims and benefit payouts (net of reinsurance) increased by 44.2% from Rs 5512 crore in Q1FY2023 to Rs 7946 crore in Q1FY2024, 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 (8701) crore in Q1FY2023 to Rs 13559 crore in Q1FY2024. Change in fund reserve, which represents the change in liability carried on account of units held by unit-linked policyholders, increased from Rs (12015) crore in Q1FY2023 to Rs 10128 crore in Q1FY2024. The increase in change in fund reserves is primarily on account of higher investment income in the unit linked portfolio. Non-unit reserve increased from Rs 3215 crore in Q1FY2023 to Rs 3610 crore in Q1FY2024.

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%.

ICICI Prudential Life Insurance: Results Standalone Policyholders Account
	2306 (3)	2206 (3)	Var %	2303 (12)	2203 (12)	Var %
Premium earned (net)	7020.03	6884.20	2	38559.53	36321.27	6
Income from Investments	16030.89	-8670.84	LP	9964.58	24969.54	-60
Other income	44.65	33.33	34	151.59	112.59	35
Contribution from the Shareholders` account	445.64	292.12	53	1802.43	2161.11	-17
Total Income	23541.21	-1461.19	LP	50478.13	63564.51	-21
Commission	383.46	305.91	25	1863.89	1672.91	11
Op. expenses related to Insurance business	1111.23	918.37	21	4583.23	3672.95	25
Others	153.23	162.86	-6	723.53	719.53	1
Benefits paid (Net)	7945.81	5512.49	44	31004.16	29358.84	6
Change in valuation of policy liabilities	13737.96	-8799.87	PL	9816.96	25783.76	-62
Provision for taxation	8.84	44.10	-80	184.23	166.15	11
Total Expense	23340.53	-1856.14	PL	48176.00	61374.14	-22
PAT	200.68	394.95	-49	2302.13	2190.37	5
Transfer to Shareholders` account	379.60	296.00	28	2016.18	2160.22	-7

ICICI Prudential Life Insurance: Results Standalone Shareholders Account
	2306 (3)	2206 (3)	Var %	2303 (12)	2203 (12)	Var %
Amounts transferred from Policyholders` account	379.60	296.00	28	2016.18	2160.22	-7
Income from investments	333.55	175.06	91	877.37	1013.62	-13
Total Income	713.15	471.06	51	2893.55	3173.84	-9
Expenses (apart from Insurance)	23.16	23.25	0	102.17	102.43	0
Contribution to policyholders account	445.64	292.12	53	1802.43	2161.11	-17
Others	35.87	0.00	-	92.05	119.75	-23
Total Expenses	504.67	315.37	60	1996.65	2383.29	-16
PBT	208.48	155.69	34	896.90	790.55	13
Tax	1.57	0.00	-	86.23	36.42	137
PAT	206.91	155.69	33	810.67	754.13	7
EPS (Rs)*	5.8	4.3		5.6	5.2
Embedded Valued (Rs)	252.1	224.4		247.7	220.0
* on current equity of Rs 1438.86 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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