ICICI Prudential Life Insurance Company Q2 FY26 earnings call

For the half year ended September 30, 2025, ICICI Prudential Life Insurance reported a total premium growth of 9.2% year-on-year, reaching ₹212.51 billion. However, APE for H1-FY2026 saw a decline of 4.1% year-on-year to ₹42.86 billion, primarily due to a high base from the previous year. Despite this, Profit After Tax (PAT) surged by 26% year-on-year to ₹606.01 billion, driven by higher investment income. The Value of New Business (VNB) stood at ₹10.49 billion with a VNB margin of 24.5%, an improvement from the 22.8% recorded in FY25. The company's Embedded Value grew by 9.7% year-on-year to ₹505.01 billion, and Assets Under Management (AUM) reached ₹3.21 trillion as of September 30, 2025.

The Government's landmark GST reforms, which exempt life insurance from GST, are expected to make policies more affordable and accessible, supporting deeper insurance penetration. Management believes these reforms will usher in growth and be value accretive for all stakeholders. The company has ensured that the benefit of GST exemption is passed on to customers. Early signs of increased traction from customers, including leads and conversions, have been observed since the new regime came into effect, particularly in retail protection where products are now 18% cheaper.

Non-linked savings business demonstrated strong growth of 15.6% in H1 FY26, as customers favored non-par products in a declining interest rate scenario. Conversely, linked business declined by 10.7% year-on-year in H1, against a high base of 54.5% growth in the prior year. Annuity business also saw a significant decline of 50.1% year-on-year in H1. Proprietary channels experienced an 18% year-on-year decline, while bancassurance remained almost flat. Partnership distribution, however, grew by 14.9% and group business by 19.8% in H1 FY26.

The company's focus on cost optimization led to a reduction in the cost-to-premium ratio by 280 basis points to 19.2% for H1-FY2026, with the savings line seeing a similar reduction to 12.7%. This improvement, coupled with a higher mix of protection and non-par business, increased sum assured multiples, longer tenure policies, and rider attachments, contributed to the positive movement in the VNB margin to 24.5%. Management emphasized that cost reduction efforts are ongoing and involve reallocation of resources, digitalization, and strategic spending.

ICICI Prudential Life maintains a strong solvency ratio of 213.2%, well above the regulatory threshold of 150%. The company plans to exercise the first call option for its ₹12 billion subordinated debt in November 2025, which was raised five years prior. The Board has also approved re-raising this ₹12 billion through new sub-debt, ensuring continued capital strength. The estimated impact of GST input tax credit disallowance on Embedded Value is approximately 1%, which has been factored into the H1 numbers.

Shri Ajay Seth has been appointed as the IRDAI Chairman effective September 1, 2025, with the company expecting continued collaboration to increase insurance penetration. Additionally, Mr. Samit Upadhyay and Mr. Naveen Tahilyani were appointed as Non-executive Additional Directors representing ICICI Bank and Prudential, respectively, effective September 13, 2025, bringing rich experience to the board.