Profits Rise But Miss Estimates

ICICI Prudential Life Insurance Co.’s first-quarter profit rose year-on-year; however, they missed estimates.

The private insurer reported a profit of Rs 156.6 crore in the quarter ended June as against an after-tax loss of Rs 185.3 in June quarter last year, according to an exchange filing. That compares with the Rs 290.2-crore consensus estimate of analysts tracked by Bloomberg. Sequentially, the bottom line fell 16%.

The company earned a net premium of Rs 6884.2 crore, a 4% increase over a year earlier. The renewal premiums were around 54% of the gross premiums and reported a decline over last June quarter.

ICICI Life Q1 FY23 Highlights (YoY)

  • Value of new business—present value of the future profits associated with new business written during the period—grew 32%.

  • VNB margin expanded to 31% against 29.4%.

  • Revenue slumped as the company reported a negative revenue of Rs 1461.2 crore as against a revenue of Rs 16,724.1 crore last year. That compares to the estimated Rs 8,525.6 crore.

  • The negative revenue was on account of a huge loss of Rs 8,670.8 reported under the net income from investments and despite an increase in net premium.

  • The 13th and 61st month persistency ratios—or customer retention—by premium improved to 83.6% and 56.7%, respectively.

  • Solvency ratio—that measures the extent to which assets cover commitments for future liabilities—improved to 203.6% from 193.7%. Still, it’s above the minimum requirement of 150%.

The company’s overall cost ratio remained elevated; while improving to 19.9% from 23.8%.

N S Kannan, managing director and chief executive officer, ICICI Prudential Life Insurance said in the exchange filing that the VNB for the quarter was Rs 471 crore, a growth of 31.6%. This was driven by a robust 24.7% growth in annualised premium equivalent, he noted.

“Guided by the elements of our 4P strategy of premium growth, protection focus, persistency improvement and productivity enhancement, we believe we are on track to achieve our aspiration of doubling the FY2019 VNB in this fiscal.”

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