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    ICICI Pru Life

    ICICIPRULI
    Financial Services·22 Apr 2025
    Management Summary

    ICICI Prudential Life Insurance reported a strong FY2025 with APE growth of 15.0% to ₹104.07 billion and PAT growth of 39.6% to ₹11.89 billion. The company saw an improvement in cost ratios and robust retail new business sum assured growth. However, VNB growth was more modest at 6.4% with a margin of 22.8%, impacted by a shift in product mix towards lower-margin linked products and negative operating assumption changes related to mortality. Challenges in the MFI segment and a decline in partnership distribution business were also noted.

    Highlights

    7

    • APE grew 15.0% year-on-year to ₹104.07 billion in FY2025, demonstrating strong business growth.

    • Total premium grew by 13.2% year-on-year to ₹489.51 billion in FY2025.

    • PAT grew by 39.6% year-on-year to ₹11.89 billion in FY2025.

    • Embedded value grew by 13.3% year-on-year to ₹479.51 billion on March 31, 2025, with RoEV at 13.1% for FY2025.

    • Cost/premium ratio improved from 18.2% last year to 18.1% in FY2025, and Cost/TWRP for savings improved from 15.8% to 15.4%.

    • Retail new business sum assured grew by 37.0% year-on-year to ₹3,324.49 billion.

    • 13th month persistency stood at 89.1%, and 49th month persistency at 69.5%.

    Concerns

    4

    • VNB grew by 6.4% year-on-year to ₹23.70 billion in FY2025, with a margin of 22.8%, indicating slower VNB growth compared to APE.

    • Annuity business declined 57.8% year-on-year in Q4 FY2025 due to a high base from the previous year.

    • Partnership distribution business declined by 3.2% year-on-year, attributed to lack of tailwind from ULIP sales and surrender guideline adjustments.

    • Negative operating assumption changes of ₹2.54 billion were recorded due to strengthening of mortality assumptions, primarily from the group business.

    What Changed1

    vs Q2 FY26

    Guidance items4 → 5 (+1)

    Key financials

    Single quarter

    08 metrics
    1. 01APE$104.07B+15%YoY
    2. 02Total Premium$489.51B+13.2%YoY
    3. 03VNB$23.7B+6.4%YoY
    4. 04VNB Margin22.8%
    5. 05PAT$11.89B+39.6%YoY

    Segment breakdown

    Contribution to APEGrowth
    Linked Business (APE)48.3%28.5%
    Non-linked Savings Business (APE)21.2%-5.6%
    Annuity Business (APE)8%—
    Overall Protection APE15.7%7.4%
    Group Funds (APE)6.4%100%
    Agency Business (APE)28.9%14.2%
    Direct Business (APE)14.4%17%
    Bancassurance Business (APE)29.4%18.2%
    Partnership Distribution Business (APE)10.9%-3.2%
    Group Business (APE)16.4%24.6%
    Heatmap· 2 shared metrics

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    The company's solvency ratio stood strong at 212.2% as on March 31, 2025. The company raised ₹14 billion in sub-debt in Q3, which contributed about 18-20% to solvency, in anticipation of the call option for a previous ₹12 billion sub-debt in November 2025 and potential RBC implementation.

    Guidance & targets

    5
    CategoryTargetPriority
    VNB Growth
    VNB growth relative to APE
    grow VNB ahead of APE
    		Medium
    APE Growth
    APE growth
    13-15%
    		Medium
    Protection Margins
    Protection VNB margins
    improve
    		Medium
    Cost Management
    Cost structure
    align with product mix
    		Medium
    MFI Segment Performance
    MFI segment pressure
    continue
    		Medium

    MFI segment recovery

    couple of quarters down the line
    CurrentUnder pressure
    TargetFollowing the trend of recovery

    Why it matters

    The MFI segment has been a drag on credit life business; its recovery is crucial for overall protection growth.

    It's only the non-MFI part, which is 40% of our credit life, which has got impacted, which we believe that couple of quarters down the line.

    How to verify

    key_financials.segment_breakdown[name='Overall Protection APE'].metrics[label='Growth']

    Risks & concerns

    5
    RiskSeverity

    MFI segment challenges

    The MFI segment of credit life business was impacted due to continued challenges in the MFI industry, with pressure expected to continue in coming quarters. — Management acknowledged

    medium

    Increased competition in group term business

    The group term business was impacted due to increased competition, leading to a focus on underwriting strategy to meet defined risk-reward expectations. — Management acknowledged

    medium

    Market volatility impacting ULIPs and product mix shift

    Market volatility in Q4 led to customer preference shifting away from ULIP products, impacting proprietary channels and creating expense affordability stress due to lower-margin linked products. — Management acknowledged

    medium

    Negative operating assumption changes (mortality)

    The company strengthened its operating assumptions, leading to a negative movement of ₹2.54 billion, primarily due to aligning long-term mortality assumptions after observing negative variances. — Management acknowledged

    high

    Persistency decline in longer-term cohorts

    Some minor drops in persistency were observed, particularly in longer-term cohorts (61st month), partly due to cover continuance options in unit-linked products. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “If you recall last year, we had seen a large negative variance in mortality. That is one of the components that has gone into this operating assumption changes at this point. You see our philosophy has been that if you start to see some variances and there are negative variances, then we would like to correct them as quickly as we can.”

    Analyst questioned the negative impact of operating assumption changes on VNB margin and EV, and management clarified it was primarily due to strengthening mortality assumptions after monitoring last year's negative variance.

    asked by Avinash Singh

    2 min read6 chapters

    Detailed Narrative

    01

    Q4 FY25 and Full Year Performance Highlights

    ICICI Prudential Life Insurance reported a robust FY2025, with Annualized Premium Equivalent (APE) growing by 15.0% year-on-year to ₹104.07 billion. Total premium for the year increased by 13.2% to ₹489.51 billion. The company achieved a Profit After Tax (PAT) of ₹11.89 billion, marking a significant 39.6% year-on-year growth. Retail new business sum assured also saw strong growth of 37.0% year-on-year, reaching ₹3,324.49 billion, while the 13th and 49th month persistency stood at 89.1% and 69.5% respectively.

    02

    Value of New Business (VNB) and Embedded Value (EV) Dynamics

    VNB for FY2025 grew by 6.4% year-on-year to ₹23.70 billion, resulting in a VNB margin of 22.8%. The Embedded Value (EV) increased by 13.3% year-on-year to ₹479.51 billion as of March 31, 2025, with a Return on Embedded Value (RoEV) of 13.1% for FY2025. Operating assumption changes, particularly the strengthening of mortality assumptions, led to a negative movement of ₹2.54 billion in EVOP, reflecting the company's proactive approach to risk management.

    03

    Product Strategy and Innovation

    Product innovation remains a core focus, with the introduction of 'ICICI Pru GIFT Select', a non-par guaranteed income product, in Q4. This product, designed to offer guaranteed returns and quasi-inflation hedge features, gained strong traction and helped offset the impact of market volatility🌐 on linked business. The company also emphasized increasing the proportion of linked products that offer goal protection and high sum assured, making them less susceptible to market fluctuations.

    04

    Channel Performance and Mix Shift

    Bancassurance business APE grew by 18.2% year-on-year, contributing 29.4% to the overall APE. Agency and Direct channels, comprising proprietary channels, collectively contributed over 50% of retail APE, with growth rates of 14.2% and 17.0% respectively. Partnership distribution, however, declined by 3.2% year-on-year, primarily due to its non-linked focus missing the ULIP market tailwind and adjustments post-surrender value regulations. Group business grew by 24.6% year-on-year, contributing 16.4% to APE.

    05

    Cost Management and Efficiency

    The company demonstrated improved cost efficiency, with the cost/premium ratio improving from 18.2% last year to 18.1% in FY2025. For the savings line of business, the Cost/TWRP improved from 15.8% to 15.4%. Management highlighted continuous efforts to align the cost structure with the product mix and control overall expenses, even while making strategic investments in IT digitization and channel expansion.

    06

    ESG Initiatives and Recognition

    ICICI Prudential Life Insurance maintained its highest ranking in the Indian insurance industry for ESG performance by two leading rating agencies. The company received the 'Platinum Award' for its 2024 ESG report. Key initiatives include adopting green energy across branches, achieving LEED Platinum Certification for its headquarters, and committing to responsible investing as a signatory to the UN Principles for Responsible Investment. Gender diversity improved from 27% to 30% of women employees, and 73.7 million lives were covered through micro-insurance products.

    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.