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Results
18-Oct-23
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Analysis
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ICICI Prudential Life Insurance Company
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VNB and margins eases
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ICICI Prudential Life Insurance Company has posted 22% jump in the
net profit of Rs 244.25 crore in the quarter ended September 2023 (Q2FY2024).
The
Company registered 5% growth in net premium income in Q2FY2024. The commission
expenses jumped 87% and operating expense increased 9%. Benefits paid moved up 18%
in Q2FY2024.
Value
of New Business (VNB) declined 7% to Rs 577 crore for Q2FY2024 over Q2FY2023. VNB margin eased to 28.8% in H1FY24 from 31% in
H1FY23. APE rose 3% to Rs 2062 crore for Q2FY2024. New business premium moved
up 4% to Rs 4359 crore for Q2FY2024.
The Company
has a well-diversified product mix with H1FY2024 APE contribution from linked,
non-linked, protection, annuity and group funds at 42.4%, 26.6%, 20.8%, 6.2%
and 4.1% respectively.
Protection
APE grew by 3.4% year-on-year from Rs 710
crore in H1FY2023 to Rs 734
crore in H1 FY2024. Retail protection business APE registered a strong growth
of 73.7% year-on-year from Rs 137
crore in H1FY2023 to Rs 238
crore in H1FY2024. As a result, retail new business sum assured grew by 52.0%
year-on-year from Rs 73343 crore
in H1FY2023 to Rs 111447 crore
in H1FY2024. The overall new business sum assured increased by 2.4%
year-on-year from Rs 480005
crore in H1FY2023 to Rs 491383
crore in H1FY2024.
Persistency
ratios have improved across cohorts, reflective of the Company’s strong focus
on improving the quality of business. The 13th month persistency ratio improved
from 85.9% in 5M-FY2023 to 86.9% in 5M-FY2024. The 49th month persistency ratio
also improved from 63.6% in 5M-FY2023 to 65.8% in 5M-FY2024. To further improve
persistency, the Company has deployed advanced machine learning models which act
as an early warning system enabling the Company to introduce timely
interventions and resolve customer challenges.
In H1FY2024,
the cost to total weighted received premium (TWRP) ratio for the savings
business and the overall cost to TWRP ratio stood at 17.2% and 26.2%
respectively.
The assets
under management of the Company grew by 11.3% from Rs 244279 crore end September 2022 to Rs 271903 crore end September 2023. The Company
had a debt-equity mix of 54:46 end September 2023 and 96.4% of the fixed income
investments were in sovereign or AAA rated instruments. The Company’s robust
risk management framework has enabled it to have a record of zero
Non-Performing Assets since inception.
The
Company’s net worth was Rs
10720 crore end September 2023. The solvency
ratio was 199.4% against the regulatory minimum requirement of 150%.
Embedded
Value grew by 18.0% year-on-year from Rs 32648 crore end September 2022 to Rs 38529 crore end September 2023. The value of
inforce business grew by 16.8% from Rs 24797 crore end September 2022 to Rs 28963 crore end September 2023.
The Embedded Value per share stood at Rs 267.6 end September 2023.
Anup Bagchi,
MD & CEO, ICICI Prudential Life Insurance said, “We serve a crucial
societal need of providing financial security to millions of families by
helping them achieve their protection, retirement, health and long-term savings
goals. In H1FY2024, our VNB stood at Rs 1015
crore, with a margin of 28.8%, while PAT grew 27% year-on-year to Rs 451 crore. We are focused on growing the
absolute VNB with the help of our 4D framework comprising Data analytics,
Diversified propositions, Digitalisation and Depth in Partnerships, to develop
quality business in a risk-calibrated manner.
Retail
protection business, which faced supply side challenges in the past has come
back on track. The retail protection APE registered a strong year-on-year
growth of 73.7%, resulting in total protection APE of Rs 734 crore in H1FY2024. We believe protection,
given the under-penetration in the country presents a significant growth
opportunity for us.
Persistency
is the most effective indicator of the quality of sales and customer
experience. Our 13th and 49th month persistency ratios at September improved by
100 bps to 86.9% and 220 bps to 65.8% respectively. The customer’s continued
trust in us is reflected in the improvement in persistency ratios across all
cohorts. We recently launched the first-of-its-kind ‘ICICI Pru Stack’, a set of
platform capabilities encompassing digital tools and analytical abilities. We
believe, the key to market expansion is in getting the customer-product-channel
equation correct – right product to the right customer at the right price
through the right channel. The ICICI Pru Stack has facilitated customer
segmentation, enabling us to extend ‘Term By Invite’ and ‘Insurance By Invite’
offers to customers, besides providing them with an end-to-end digital
fulfilment journey from buying to claim settlement. The Stack has enabled the
Company to issue ~20% of the policies on the same day for the savings line of
business.”
Financial Performance H1FY2024
The
Company’s Profit After Tax (PAT) grew by 27.0% year-on-year from Rs 355 crore
H1FY2023 to Rs 451 crore in H1FY2024. Value of New Business (VNB) for H1FY2024
was Rs 1015 crore. With an APE of Rs 3523 crore for the H1FY2024, VNB margin
for H1FY2024 stood at 28.8%.
New business
premium was Rs
7410 crore for H1FY2024. APE stood at Rs
3523 crore for H1FY2024 as compared to Rs
3519 crore for H1FY2023.
Net premium
earned (gross premium less reinsurance premium) increased by 3.5% from Rs 16466 crore in H1FY2023 to Rs 17042 crore in H1FY2024.
Total
investment income increased from Rs 4526
crore in H1FY2023 to Rs 23689
crore in H1FY2024. Investment income comprised of:
Investment
income under unit-linked increased from Rs 1377
crore in H1FY2023 to Rs 18858
crore in H1FY2024, 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 3149 crore in H1FY2023 to Rs 4831 crore in H1FY2024 primarily on account
of increase in profit on sale of investments and interest income.
Total
expenses (including commission) increased by 23.5% from Rs 3066 crore in H1FY2023 to Rs 3788 crore in H1FY2024.
Commission
expense increased by 60.5% from Rs 719
crore in H1FY2023 to Rs 1154
crore in H1FY2024. New business commission (including single premium
commission) increased from Rs 491
crore in H1FY2023 to Rs 824
crore in H1FY2024. The renewal commission increased from Rs 179 crore in H1FY2023 to Rs 187 crore in H1FY2024. The increase in new
business commission is attributed to the redesign of our commission structure
pursuant to the flexibility provided in IRDAI (Payment of Commission)
Regulations, 2023 issued on 31 March 2023.
Operating
expense increased by 12.4% from Rs 2306
crore in H1FY2023 to Rs 2593
crore in H1FY2024. Operating expenses comprised of unit fund expenses
(including goods and service tax on linked charges) amounting to Rs 330 crore (H1FY2023: Rs 325 crore) under the unit linked portfolio.
The unit fund expenses are directly offset by a change in valuation of
policyholder liabilities. Operating expenses of other than unit-linked
portfolio increased by 14.2% from Rs 1981 crore in H1FY2023 to Rs 2263 crore in H1FY2024, 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 28.6% from Rs 13534 crore in H1 FY2023 to Rs 17410 crore in H1FY2024 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, increased from Rs 4022 crore in H1FY2023 to Rs 19136 crore in H1FY2024. Change in fund
reserve, which represents change in liability carried on account of units held
by unit-linked policyholders, increased from Rs (3217) crore in H1FY2023 to Rs 10861 crore in H1FY2024. 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 7103 crore in H1FY2023 to Rs 8518 crore in H1FY2024.
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ICICI Prudential Life
Insurance: Results Standalone Policyholders Account
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2309 (3)
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2209 (3)
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Var %
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2309 (6)
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2209 (6)
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Var %
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2303 (12)
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2203 (12)
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Var %
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Premium earned (net)
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10022.42
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9581.72
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5
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17042.44
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16465.92
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4
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38559.53
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36321.27
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6
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Income from
Investments
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6938.94
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12818.89
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-46
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22969.83
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4148.05
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454
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9964.58
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24969.54
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-60
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Other income
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51.76
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38.04
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36
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96.42
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71.37
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35
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151.59
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112.59
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35
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Contribution from the
Shareholders` account
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513.73
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465.70
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10
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959.37
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757.82
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27
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1802.43
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2161.11
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-17
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Total Income
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17526.85
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22904.35
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-23
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41068.06
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21443.16
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92
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50478.13
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63564.51
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-21
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Commission
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770.90
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413.08
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87
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1154.35
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718.99
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61
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1863.89
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1672.91
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11
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Op. expenses related
to Insurance business
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1152.19
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1053.53
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9
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2263.42
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1971.90
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15
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4583.23
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3672.95
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25
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Others
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169.17
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164.18
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3
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322.39
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327.04
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-1
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723.53
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719.53
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1
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Benefits paid (Net)
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9464.32
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8021.89
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18
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17410.13
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13534.37
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29
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31004.16
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29358.84
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6
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Change in valuation of
policy liabilities
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5640.75
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12685.97
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-56
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19378.71
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3886.10
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399
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9816.96
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25783.76
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-62
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Provision for taxation
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28.68
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42.55
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-33
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37.53
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86.66
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-57
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184.23
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166.15
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11
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Total Expense
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17226.01
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22381.20
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-23
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40566.53
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20525.06
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98
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48176.00
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61374.14
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-22
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PAT
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300.84
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523.15
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-42
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501.53
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918.10
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-45
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2302.13
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2190.37
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5
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Transfer to
Shareholders` account
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364.66
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486.07
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-25
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744.27
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782.07
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-5
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2016.18
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2160.22
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-7
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ICICI Prudential Life
Insurance: Results Standalone Shareholders Account
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2309 (3)
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2209 (3)
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Var %
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2309 (6)
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2209 (6)
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Var %
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2303 (12)
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2203 (12)
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Var %
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Amounts transferred
from Policyholders` account
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364.66
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486.07
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-25
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744.27
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782.07
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-5
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2016.18
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2160.22
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-7
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Income from
investments
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426.13
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203.59
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109
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759.67
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378.65
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101
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877.37
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1013.62
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-13
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Total Income
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790.79
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689.66
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15
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1503.94
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1160.72
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30
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2893.55
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3173.84
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-9
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Expenses (apart from
Insurance)
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28.75
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24.48
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17
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51.91
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47.73
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9
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102.17
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102.43
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0
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Contribution to
policyholders account
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513.73
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465.70
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10
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959.37
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757.82
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27
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1802.43
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2161.11
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-17
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Others
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0.00
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0.00
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-
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35.87
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0.00
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-
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92.05
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119.75
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-23
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Total Expenses
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542.48
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490.18
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11
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1047.15
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805.55
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30
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1996.65
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2383.29
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-16
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PBT
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248.31
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199.48
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24
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456.79
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355.17
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29
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896.90
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790.55
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13
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Tax
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4.06
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0.00
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-
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5.63
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0.00
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-
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86.23
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36.42
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137
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PAT
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244.25
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199.48
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22
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451.16
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355.17
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27
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810.67
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754.13
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7
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EPS (Rs)*
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6.8
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5.5
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6.3
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4.9
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5.6
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5.2
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Embedded Valued (Rs)
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267.6
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227.0
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267.6
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227.0
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267.6
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227.0
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* on current equity of
Rs 1439.62 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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