ICICI Prudential Life Insurance posts strong performance for H1-FY2023

ICICI Prudential Life Insurance posted strong growth of 25.1% in the Value of New Business (VNB) in H1-FY2023. VNB margin, a key measure of profitability, expanded to 31.0% and absolute VNB, stood at Rs. 10.92 billion in H1-FY2023.

Annualised Premium Equivalent (APE) grew sequentially by 32% for Q2-FY2023 ending H1-FY2023 with an APE of Rs. 35.19 billion and New Business Premium of Rs. 73.59 billion. In H1-FY2023, the Protection business segment APE grew by 29.1% year-on-year, resulting in a protection mix of 20.2% of overall APE. APE from the Annuity business segment, which is a key focus area, grew by 68.8% year-on-year. Due to underpenetration, both these segments offer significant growth opportunities. The diversification of product and distribution mix has enabled the Company to manage the impact of external developments and respond to changing consumer preferences in an agile manner.

The Company's New Business Sum Assured was Rs. 4.8 trillion in H1-FY2023, a growth of 42.3% year-on-year, enabling it to maintain its private market leadership position with a market share of 15.7%.

Persistency ratios have improved across all cohorts. The 13th month ratio, which is representative of the quality of business, stood at 85.9% for H1-FY2023, an improvement of 80 bps over H1-FY2022.

Mr. N S Kannan, MD & CEO, ICICI Prudential Life Insurance said, "We achieved a robust year-on-year growth of 25.1% in the Value of New Business (VNB), ending H1-FY2023 at Rs. 10.92 billion, emphasising our ability to navigate rapidly-evolving situations successfully. This was driven by growth in APE as well as margin expansion to industry leading levels of 31%. On the back of this strong VNB growth and with a favourable premium base for the coming months, we believe we are on track to achieve our objective of doubling our FY2019 VNB by the end of this fiscal year.

Our two focus areas of annuity and protection, which represent underserved needs of the country, have also done well in the period. The annuity segment has delivered an impressive performance of 69% year-on-year growth in H1-FY2023 and the protection segment contributed to 20% of APE in the period. With a solvency ratio of over 200%, which is well above the regulatory requirement, we are well positioned to capitalise on this opportunity.

The strong performance has also enabled us to maintain our position as the private sector market leader on New Business Sum Assured basis, which grew by 42.3% yearon-year, with a market share of 15.7%."

Profitability

Value of New Business (VNB) for H1-FY2023 was Rs. 10.92 billion, a growth of 25.1% over H1-FY2022. With an APE of Rs. 35.19 billion for H1-FY2023, VNB margin was 31.0% for H1-FY2023 as compared to 28.0% for FY2022. The increase in VNB margin is primarily on account of shift in the underlying product mix.

The Company's profit after tax was Rs. 3.55 billion for H1-FY2023, as compared to Rs. 2.59 billion for H1-FY2022 primarily due to lower COVID-19 claims and provisions.

Embedded Value

Our Embedded Value at September 30, 2022 was Rs. 326.48 billion compared to Rs. 302.03 billion at September 30, 2021, a growth of 8.1%. The value of inforce business grew by 16.4% from Rs. 212.96 billion at September 30, 2021 to Rs. 247.97 billion at September 30, 2022.

New business growth

APE was Rs. 35.19 billion for H1-FY2023, a growth of 10.1% as compared to Rs. 31.96 billion for H1-FY2022. New business premium was Rs. 73.59 billion for H1-FY2023, a growth of 13.9% as compared to Rs. 64.61 billion for H1-FY2022.

Product mix

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.

Annuity APE grew from Rs. 1.38 billion in H1-FY2022 to Rs. 2.33 billion in H1-FY2023, registering a robust growth of 68.8%.

Protection APE grew from Rs. 5.50 billion in H1-FY2022 to Rs. 7.10 billion in H1-FY2023. As a result, New Business Sum Assured was Rs. 4,800.05 billion for H1-FY2023, a growth of 42.3% as compared to Rs. 3,374.16 billion for H1-FY2022, resulting in private market leadership with a market share of 15.7%.

Persistency

Persistency ratios have significantly improved across all cohorts, reflective of the Company's strong focus on improving the quality of business. Our 13th month persistency improved from 85.1% in 5M-FY2022 to 85.9% in 5M-FY2023. The 49th month persistency ratio also improved from 64.6% in 5M-FY2022 to 65.4% in 5M-FY2023.

Cost efficiency

In H1-FY2023, the cost to total weighted received premium (TWRP) ratio for the savings business and the overall cost to TWRP ratio stood at 14.4% and 21.6% respectively. In the current financial year, the Company has been investing in building for sustainable future growth.

Assets under management (AUM)

The assets under management of the Company stood at Rs. 2,442.79 billion at September 30, 2022, which makes it one of the largest fund managers in India. Equity constituted 47% of this AUM. 97.5% of the fixed income investments were in sovereign or AAA rated instruments.

Net worth and capital position

The Company's net worth was Rs. 96.30 billion at September 30, 2022. The solvency ratio was 200.7% against the regulatory requirement of 150%.

Profit after tax has increased from Rs. 2.59 billion in H1-FY2022 to Rs. 3.55 billion in H1-FY2023.

The performance highlights for H1-FY2023 are as given below:

Net premium earned (gross premium less reinsurance premium) increased by 3.6% from Rs. 158.88 billion in H1-FY2022 to Rs. 164.66 billion in H1-FY2023.

Total investment income decreased from Rs. 234.83 billion in H1-FY2022 to Rs. 45.26 billion in H1-FY2023. Investment income comprised of:

- Investment income under unit-linked decreased from Rs. 199.87 billion in H1-FY2022 to Rs. 13.77 billion in H1-FY2023. Investment income under unit-linked is directly offset by change in valuation of policyholder liabilities. Decrease in investment income is primarily on account of decrease in market value of the securities held.

- Investment income under other than unit-linked decreased from Rs. 34.96 billion in H1-FY2022 to Rs. 31.49 billion in H1-FY2023 primarily on account of decrease in profit on sale of investments offset in part by an increase in interest income.

- Other income increased from Rs. 0.53 billion in H1-FY2022 to Rs. 0.72 billion H1-FY2023.

Total expenses (including commission) increased by 17.5% from Rs. 26.10 billion in H1-FY2022 to Rs. 30.66 billion in H1-FY2023.

- Commission expense increased by 3.4% from Rs. 6.96 billion in H1-FY2022 to Rs. 7.19 billion in H1-FY2023. New business commission (including single premium commission) has increased from Rs. 4.83 billion in H1-FY2022 to Rs. 4.91 billion in H1-FY2023. Renewal commission has increased from Rs. 1.76 billion in H1-FY2022 to Rs. 1.79 billion in H1-FY2023.

- Operating expense increased by 23.1% from Rs. 18.73 billion in H1-FY2022 to Rs. 23.06 billion in H1-FY2023. Operating expenses comprised of unit fund expenses (including goods and service tax on linked charges) amounting to Rs. 3.25 billion (H1-FY2022: Rs. 3.43 billion) under the unit-linked portfolio. The unit fund expenses under unit-linked portfolio is directly offset by a change in valuation of policyholder liabilities. Operating expenses of other than unitlinked portfolio increased by 29.5% from Rs. 15.30 billion in H1-FY2022 to Rs. 19.81 billion in H1-FY2023 primarily on account of increase in expenses relating to advertisement and publicity, employee remuneration and welfare benefits, legal and professional charges and information technology related expenses.

- Claims and benefit payouts (net of reinsurance) decreased by 1.1% from Rs. 136.90 billion in H1-FY2022 to Rs. 135.34 billion in H1-FY2023 primarily on account of decrease in death claims offset in part by increase in surrender/withdrawal. The death claims, net of amount ceded in reinsurance, decreased by 48.4% from Rs. 22.36 billion in H1-FY2022 to Rs. 11.53 billion in H1-FY2023 primarily on account of decline in COVID-19 related death claims. The Company had COVID-19 related death claims (net of reinsurance) of Rs. 0.27 billion in H1-FY2023 (Rs. 8.62 billion in H1-FY2022).

- Change in actuarial liability, including funds for future appropriation, decreased from Rs. 228.39 billion in H1-FY2022 to Rs. 40.22 billion in H1-FY2023. Change in fund reserve, which represents change in liability carried on account of units held by unit-linked policyholders, decreased from Rs. 165.00 billion in H1-FY2022 to Rs. (32.17) billion in H1-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. 64.31 billion in H1-FY2022 to Rs. 71.03 billion in H1-FY2023.

Shares of ICICI Prudential Life Insurance Company Limited was last trading in BSE at Rs. 513.40 as compared to the previous close of Rs. 501.05. The total number of shares traded during the day was 35682 in over 2403 trades.

The stock hit an intraday high of Rs. 519.55 and intraday low of 502.00. The net turnover during the day was Rs. 18256240.00.

Source : Equity Bulls

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ICICIPrudentialLifeInsuranceCompany INE726G01019 Q2FY23 H1FY23 ResultUpdate