ICICI Prudential Life Insurance Company Ltd Q2 FY24 Earnings Conference Call Insights

Key highlights from ICICI Prudential Life Insurance Company Ltd (ICICIPRULI) Q2 FY24 Earnings Concall

• Business Performance And Strategy
  • ICICIPRULI’s Value of New Business (VNB) for 1H24 was INR10.15 billion with 28.8% margin.
  • Focus on absolute VNB growth through 4P strategy – premium growth, protection growth, persistency improvement, productivity enhancement.
  • Annualized Premium Equivalent (APE) grew 12.9% for retail business excluding ICICI Bank in 2Q24.
  • Growing agency channel by adding 18,000+ agents in H1 and investing in capacity.
  • Retail protection APE grew 73.7% YoY in 1H24 to INR2.38 billion
• Financial Performance
  • PAT grew 27% YoY from INR3.55 billion in 1H23 to INR4.51 billion in 1H24.
  • Adjusted net worth grew 21.8% YoY to INR95.66 billion.
  • Assets under management stood at INR2.7 trillion, solvency ratio at 199.4%.
• Distribution Channel Highlights
  • Agency channel grew 4.2% YoY in Q2 2024 after investments.
  • Partnership distribution increased 25.1% YoY in Q2 2024.
  • Direct channel delivered 19.3% YoY growth in Q2 2024.
  • Bancassurance grew share amid constrained market for greater than INR5 lakh tickets.
• Product Mix Trends
  • Shift from non-par products to par and unit-linked for greater than INR 5 lakh tickets.
  • New GIFT Pro product gaining traction and is 40% of non-par sales.
  • Launched innovative products like GIFT Pro, iShield, Protect N Gain, and a new fund.
• Group Term Insurance Dynamics
  • Renewals at lower pricing due to favorable COVID experience.
  • APE drop despite closing more deals as average deal size fell 40-50%.
  • Seeking to defend current business with sound underwriting.
• Growth Trends Across Key Channels
  • ICICI Bank seeing growth in protection business but de-growth in overall APE.
  • Agency and new partnership enablement are key focus areas for capacity building.
• Commissions And Opex
  • Seeing commission rates increase across industry.
  • Opex increased due to higher employee costs, capacity creation investments, advertising and sales costs.
  • Managing costs across lines to keep overall expenses stable. Cost increases need to be compensated through opex management.
• Product Mix Affecting Margins
  • Shift in margins largely due to change in product mix. No major change in segment level margins.
  • Focus on building absolute VNB while managing margins through product mix and cost controls.
• Growth in ULIPs and Agency Channel Development
  • ULIP sales were strong in 2Q and its sales could drive product mix and impact margins in FY24.
  • ICICI Bank is prioritizing protection and annuity sales with the insurer, leading to 45% growth in protection policies through the bank.
  • ICICI Securities is also now focused on protection and annuity.
  • Agency channel is at an inflection point as the company builds capacity to better train and retain agents.
  • This should improve agent productivity and accelerate growth.
• Guidance and Outlook
  • Focus is on granular analytics to grow diverse distribution channels in a sustainable manner.
  • Absence of any single large partner gives confidence to continue building a diversified portfolio.