Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ICICI Prudential Life Insurance Co Ltd (BOM:540133, Financial) reported a strong RWRP growth of 33.9% year-on-year in Q2 FY 2025 and 39.2% year-on-year in H1 2025, outperforming both the private and overall industry.
- The company gained 1.1% private sector market share on an RWRP basis, ending at 10.3% in H1 2025.
- The annuity and retail protection segments grew significantly by 99.5% and 17.2% year-on-year, respectively, while the linked business grew by 54.5% year-on-year in H1 2025.
- ICICI Prudential Life Insurance Co Ltd (BOM:540133) maintained a high claims settlement ratio of 99.3% in H1 2025, with an average turnaround time of 1.2 days for non-investigative individual claims.
- The company's embedded value grew by 19.4% year-on-year, reaching INR460.18 billion in H1 2025, indicating strong business growth and profitability.
Negative Points
- The non-linked savings contribution to overall APE declined from 26.6% last year H1 to 18.1% in H1 2025, indicating a shift in customer preference towards ULIP products.
- There has been a significant trend of price reduction in the group term business due to increased competition, impacting profitability.
- The company's renewal premium growth is lagging, growing at only about 3%, with continued outflows due to policy maturities and market conditions.
- The VNB margin saw a slight decline, primarily due to a shift in the product mix towards unit-linked products and a decline in nonparticipating business.
- The partnership distribution channel showed weak trends, attributed to prioritization of non-linked business and performance volatility among partners.
Q & A Highlights
Q: Can you explain the margin development in the first half and the factors driving it?
A: Dhiren Salian, CFO, explained that the margin movement is due to the underlying product mix, with participating products performing better than non-participating ones. Additionally, yield curve changes impacted margins as product rates couldn't be adjusted in line with market movements. However, the overall margin change is negligible.
Q: What challenges are you facing in the partnership distribution channel, and how is ICICI Bank's premium development?
A: Amit Palta, Chief Distribution Officer, noted that partnership distribution has seen temporary weakness due to prioritization of non-linked products. ICICI Bank's premium levels are consistent, focusing on protection and annuity, with a steady monthly premium of INR100-110 crores.
Q: How do you view the outlook for the annuity segment and group protection business?
A: Amit Palta highlighted that the annuity segment has grown due to the introduction of the benefit enhancer product. Group protection has seen pricing pressure, particularly in group term business, but credit life is performing well.
Q: What is driving the increase in net commission rates, and how do you see VNB margins evolving?
A: Dhiren Salian explained that the increase in commission rates is due to the implementation of new structures last year. The company focuses on absolute VNB growth rather than specific margin targets, allowing customer preferences to dictate product mix.
Q: How sustainable is the growth in agency and direct channels, and are you considering launching variable annuity products?
A: Amit Palta emphasized the investment in capacity and capability building in agency and direct channels, which supports sustainable growth. Dhiren Salian mentioned that while variable annuity is an opportunity, the company is still exploring product structures and hedging strategies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
