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    ICICI Pru Life

    ICICIPRULI
    Financial Services·28 Jan 2025
    Management Summary

    ICICI Pru Life reported strong growth in 9M-FY2025, with RWRP up 31.4% and APE up 27.2% to ₹69.05 billion. VNB increased 8.5% to ₹15.75 billion, and PAT grew 18.3% to ₹8.03 billion, supported by a robust solvency ratio of 211.8%. While linked business and key protection/annuity segments performed well, non-linked savings declined, and credit life faced headwinds from the MFI sector.

    Highlights

    5
    • RWRP growth of 31.4% year-on-year in 9M-FY2025, outperforming both the private and overall industry.

    • APE grew by 27.2% to ₹69.05 billion in 9M-FY2025, with retail APE growing 28.5% to ₹57.53 billion.

    • Annuity APE grew by 81.7% and Retail Protection APE grew by 24.2% year-on-year respectively in 9M-FY2025.

    • PAT for 9M-FY2025 grew by 18.3% to ₹8.03 billion, with Q3 PAT growing 43.6% to ₹3.26 billion.

    • Solvency continued to be strong at 211.8% at December 31, 2024, aided by a ₹14 billion sub debt fund raise.

    Concerns

    3
    • Non-linked savings business (excluding annuity) declined 17.4% year-on-year in 9M-FY2025.

    • Credit Life business witnessed some slowdown due to ongoing challenges in the MFI industry, impacting Q3.

    • Group Term business continues to be impacted due to increased competition.

    What Changed2

    vs Q4 FY25

    Guidance items5 → 3 (-2)Risks discussed5 → 3 (-2)
    Key financials

    Metrics

    10

    Periods

    3

    Headline

    8
    • RWRP Growth
      31.4%
    • APE
      $69.05B
      YoY+27.2%
    • VNB
      $15.75B
      YoY+8.5%
    • VNB Margin
      22.8%
    • Assets Under Management
      3.1 trillion

    Q3-FY2025

    1
    • PAT
      $3.26B
      YoY+43.6%

    9M-FY2025

    1
    • PAT
      $8.03B
      YoY+18.3%

    Segment breakdown

    Retail APE
    57.53 billion APE28.5% Growth
    Linked Business
    49.8% Growth50.8% Contribution to APE
    Non-linked Savings (ex-annuity)
    -17.4% Decline17.5% Contribution to APE
    Group Funds Business
    102.5% Growth6% Contribution to APE
    Protection APE
    6.9% Growth16.9% Contribution to APE
    Retail Protection Business
    40% Growth (Q3-FY2025)24.2% Growth (9M-FY2025)
    Annuity Business
    50% Growth (Q3-FY2025)81% Growth (9M-FY2025)8.9% Contribution to APE
    Agency Business APE
    41.3% Growth30.2% Contribution to Overall APE36.2% Contribution to Retail APE
    Direct Business APE
    31.6% Growth15.3% Contribution to Overall APE18.4% Contribution to Retail APE
    Bancassurance Business APE
    26.3% Growth27.7% Contribution to APE Mix
    Partnership Distribution Business
    2% Growth10.1% Contribution
    Group Business
    20.9% Growth16.7% Contribution to APE Mix
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    M&A

    Bima Sugam India Federation

    Other · announced · Consideration ₹NaN (cash)

    Guidance & targets

    3
    CategoryTargetPriority
    Profitability
    VNB Growth
    mid-teens
    Medium
    Efficiency
    Cost Efficiency in Savings Business
    efficiency
    Medium
    Business Growth
    Alpha on Business Growth
    continuously create alpha
    Medium

    Credit Life Business Recovery

    next couple of quarters
    CurrentSlowdown due to MFI industry challenges
    TargetPositive momentum and recovery

    Why it matters

    Recovery in the MFI sector and credit life business is crucial for overall protection segment growth.

    Hopefully, with the outlook expected to get positive over the next couple of quarters, we are well present across all our MFI partners to come back to the original share of credit life once the business reverses.

    How to verify

    key_financials.segment_breakdown[name='Credit Life business'].metrics[label='Growth']

    Risks & concerns

    3
    RiskSeverity

    MFI Industry Challenges impacting Credit Life Business

    Slowdown in Credit Life business due to lower disbursements in the MFI industry, impacting Q3 performance.Management acknowledged

    medium

    Increased Competition in Group Term Business

    Group Term business continues to be impacted by heightened competition in the market.Management acknowledged

    medium

    Product Mix Shift to Lower Margin ULIPs

    The shift in product mix towards unit-linked products, which have lower margins, is influencing the overall VNB margin.Management acknowledged

    medium

    Q&A highlights

    8

    “Yes, we had a spike in group fund numbers in this quarter. Group fund is typically lumpy in nature and it's a good business, we do make money off it and we're happy to pick it up.”

    Clarifies the nature of the spike in group fund numbers, indicating it's a lumpy but profitable segment for the company.

    asked by Pankita Srivastava

    3 min read7 chapters

    Detailed Narrative

    01

    Strong Business Growth and Market Outperformance

    ICICI Prudential Life Insurance Company Limited demonstrated robust performance in 9M-FY2025, with its Retail Weighted Received Premium (RWRP) growing by 31.4% year-on-year, outperforming both the private and overall industry. Annualized Premium Equivalent (APE) increased by 27.2% to ₹69.05 billion, and the number of policies grew by 14.4% year-on-year, surpassing the private industry's growth of 8.7%. This growth underscores the company's continuous effort to create alpha on business growth.

    02

    Profitability and Capital Strength

    The Value of New Business (VNB) for 9M-FY2025 grew by 8.5% year-on-year, reaching ₹15.75 billion, with a VNB margin of 22.8%. The company's Profit After Tax (PAT) for Q3-FY2025 saw a significant increase of 43.6% year-on-year to ₹3.26 billion, contributing to a 9M-FY2025 PAT of ₹8.03 billion, up 18.3%. The balance sheet remains strong, with Assets Under Management (AUM) at ₹3.1 trillion and a healthy solvency ratio of 211.8% as of December 31, 2024, further strengthened by a ₹14 billion subordinated debt raise.

    03

    Evolving Product Mix and Segment Performance

    The product mix saw a notable shift, with linked business growing by 49.8% year-on-year and increasing its contribution to overall APE from 43.1% to 50.8% in 9M-FY2025, driven by market buoyancy. Conversely, non-linked savings business (excluding annuity) declined by 17.4%, reducing its APE contribution from 26.8% to 17.5%. Annuity APE and Retail Protection APE, key focus segments, grew significantly by 81.7% and 24.2% respectively in 9M-FY2025, with Annuity's contribution to APE rising from 6.2% to 8.9%.

    04

    Diversified Distribution Channels and Digital Initiatives

    ICICI Pru Life maintains a well-diversified distribution mix. Agency business APE grew by 41.3% year-on-year, contributing 30.2% to overall APE, while Direct business APE grew by 31.6%, contributing 15.3%. Bancassurance business APE also increased by 26.3%, making up 27.7% of the APE mix. The company's digital enablement efforts, including the 'IPru Edge' app, have led to a 37% productivity enhancement for value advisors, contributing to an overall 10-12% productivity increase for the entire agency base.

    05

    Challenges in Credit Life and Group Term Segments

    The Credit Life business experienced a slowdown, growing by 8% and contributing approximately 38% to the overall protection business, primarily due to ongoing challenges and lower disbursements in the MFI industry. Similarly, the Group Term business continued to be impacted by increased competition. Despite these headwinds, the company is focused on expanding market coverage and selecting businesses that meet its defined risk-reward expectations.

    06

    New Product Launches and Customer-Centric Strategy

    Customer-focused innovation remains central to the business strategy. During the quarter, ICICI Pru Life launched 'ICICI Pru Wish', an industry-first women's health plan offering fixed lump sums for critical illnesses and surgeries. Additionally, an increasing annuity variant of GPP Flexi was introduced to safeguard retirement income against inflation, and 'ICICI Pru Signature Assure' was launched for goal-based savings. These initiatives aim to cater to evolving customer needs and enhance value propositions.

    07

    Cost Management and Operating Leverage Outlook

    The company's cost/premium ratio stood at 19.8% and cost/TWRP at 27.8% for 9M-FY2025. While expenses for 9M-FY2025 increased by 19.8% year-on-year, management noted a sequential downward movement in costs from Q2 to Q3. This indicates ongoing efforts to improve efficiency and leverage investments in people, technology, and processes, with the expectation of delivering operating leverage in the coming years and bringing efficiency to the savings line of business.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.