ICICI Prudential’s net premium grows on higher renewals. (Photographer: Akio Kon/Bloomberg)

ICICI Prudential’s Q4 Premiums Rise 14% On Higher Renewals

India’s second largest private life insurer by market share, ICICI Prudential Life Insurance Company Ltd.’s net premium grew 14 percent due to higher renewals.

The net premium rose to Rs 8,656 crore for the quarter ended March, the life insurer said in an exchange filing. Even as renewal premium income grew 22 percent to Rs 6,148 crore on a year-on-year basis, net premium earned was partially offset by a 4 percent drop in new business premium which stood at Rs 2,021 crore.

“This is not a major fluctuation, the important number to look at is the value of new business for the fiscal ended March 2018, which grew 93 percent to Rs 1,286 crore, compared to last year,” Sandeep Batra, executive director of the company told BloombergQuint.

For the year ended March, new business grew as the company sold more unit-linked (savings) and protection policies, resulting in a nearly 18 percent increase in the annualised premium equivalent, which is used to assess life insurance revenues.

The total income, however, nearly halved to Rs 7,314 crore as the company faced a loss worth Rs 1,613 crore on its investments. “That is largely a function of the current market movements and it [the loss] transfers to the policyholders’ accounts. As the market changes, it will come back,” said Batra.

Management expenses rose 10 percent to Rs 1,051 crore on year-on-year basis, led by a 78 percent spike in the commissions paid in the quarter ended March. This, according to the exchange notification, was due to a change in the product mix and growth in premium. Besides, increased employee cost and service tax expenses also pushed up overall expenses of the company.

The higher expenses coupled with a reduction in the total income in policyholders’ account resulted in a 16 percent yearly decline in net profit.

The company’s 13th and 49th month persistency by premiums improved to 85.7 percent and 62.8 percent from 84.3 percent and 55.5 percent respectively.

The solvency margin of the insurer also declined year-on-year to 252 percent from 280 percent. “We have been growing significantly over the last few years, that is why there is a steady decline in our solvency ratio,” said Batra. The company’s solvency margin is above the required regulatory margin of 150 percent.

Other Highlights

  • Value of new business increased 93.1 percent year-on-year to Rs 1,286 crore
  • Value of new business margin improved to 16.5 percent from 10.1 percent.
  • Annualised premium equivalent improved 17.6 percent to Rs 7,792 crore.
  • Adjusted net worth improved 4 percent to Rs 7,024 crore.
  • Assets under management increased 13.5 percent to Rs 1,39,532 crore.