ICICI Prudential Life Insurance is on track to meet the target of doubling the value of new business this fiscal year from fiscal 2019 levels, as the largest private sector life insurer expects to continued the strong performance it had in fiscal 22 and increased the margin by 22 percent. hundred.
It had nearly tripled its net profit in the March quarter on strong margin growth from new sales.
The ICICI Group company had set a target for FY19 to double the value of its new business venture (VNB) by FY23 – from Rs 1,328 crore in FY19 to Rs 2,650 crore by FY23.
It closed FY2022 with a VNB of Rs 2,163 crore, a growth of 33.4% from FY21, and it expects to similarly grow at 22% this FY to meet the target. .
In life insurance parlance, VNB is the key profitability measure and the equivalent of net interest income for a bank.
In other words, VNB is the present value of all future earnings at the time of selling a new policy. It is also referred to as new trading profit recorded by an insurer on the sale of new premiums, the other being renewal premium income, which totaled Rs 15,036 crore in FY22, up 15% from Rs 13,032 crore in FY21.
Although H1 was hit hard by the second wave of the pandemic, H2 did much better to help us close the year with a VNB of 33.4% at Rs 2,163 crore. VNB margin increased to 28% from 25.1% in FY21.
Given that we are now out of the pandemic, we are very confident that we will easily achieve our goal of doubling VNB this FY, as we only need to grow it by 22% in FY22, which is easily achievable, NS Kannan, Managing Director and Managing Director of ICICI Prudential, told PTI in an interview on Monday.
Kannan, however, added that the insurer paid out five times as many COVID-19 claims at Rs 1,000 crore in FY22, net of reinsurance, most of it in the first half. In FY21, net pandemic related claims were only Rs 200 crore.
According to brokerage firm Emkay Global, between fiscal 2019 and 2022, the company saw 1.63x VNB growth, driven primarily by 64% growth in VNB margins – from 17 to 28%, even though its APE has decreased by 100 basis points.
He expects the company to slightly miss the VNB target at Rs 2,500 crore or 1.9x of FY19 VNB.
Emkay Global expects limited scope for further VNB margin expansion and the key to achieving the VNB growth target of 22% in FY23 will have to be led by APE growth.
Kannan said he hoped the pandemic was behind us and there was no fourth wave. Yet, we are maintaining Rs 25 crore in additional provision for any pandemic eventuality.
ICICI Prudential’s Chief Financial Officer, Satyan Jambunathan, attributed the best show of FY22 to the well-balanced product line in which 79% of its business came from savings (48% unit-linked savings). account, 31% traditional savings), which has increased overall. 19 percent to Rs 6,420 crore; 17% of the protection which increased by 26% to Rs 1,313 crore and the balance of 4% of the group.
The protection mix decreased from 16.2% of APE (annualized equivalent premium) in FY21 to 17% in FY22. The focus on premium growth and the expansion of protection business led new sum insured business to grow by 25% to Rs 7.73 lakh crore in FY22, lifting market share to 13.4% from 12.5 % in fiscal year 21.
Over the weekend, ICICI Prudential reported net income of Rs 185 crore for the fourth quarter, up from Rs 64 crore a year ago.
It reported net income of Rs 754 crore for FY22, down from Rs 960 crore for FY21.
Its VNB rose 33.4% to Rs 2,163 crore in FY21, on the back of a robust 25% growth in new sum assured business to Rs 7.73 crore and 20 % in annualized premium equivalent to Rs 7,733 crore.
The total outstanding sum insured stood at more than Rs 23.5 lakh crore, Jambunathan said, adding that the AUM stood at Rs 2,40,492 crore, up 12 percent and the solvency ratio at 204, 5%.
Its persistence rate at month 13 improved to 85.7% in FY22 from 84.8% in FY21, while embedded value increased by 9% to 31,625 crore rupees and the yield increased from 11% to 15.2%.
Welcoming the decision of new Irdai Chairman Debasish Panda to usher in a principal-based regulatory regime, Kannan said the move will allow insurers to make risk-based capital allocation which will be very good for the industry because it will allow them to allocate funds according to their risk exposure.
Regarding the upcoming LIC stock sale, Kannan said it would be very good for the industry, as it would lead to an improved industry profile and weighting in the indices, which would lead to greater allocation. funds for the insurance industry.
He also believes that allowing 74% of FDI in the sector will start to materialize from this fiscal year, but he dodged a question about whether Prudential is likely to increase stake in the company, saying that it is a call to promoter shareholders.
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