ICICI Prudential Life Insurance Company Ltd Q4 FY22 Earnings Conference Call Summary

Key highlights from ICICI Prudential Life Insurance Company Ltd (ICICIPRULI) Q4 FY22 Earnings Concall

 Q&A Highlights:

• Arav Sangai from VT Capital asked about the increase in sensitivity on interest rates. Satyan Jambunathan CFO said the increase in sensitivity on interest rates is a consequence of the increase in the nonlinked, non-par savings in the product mix that the company has. The sensitivity changes on reference rate are predominantly coming from product mix changes.

• Nischint Chawathe of Kotak Securities enquired about the confidence behind guidance for doubling of VNB in 2023. N. S. Kannan, MD replied that on the growth several of the areas have bottomed out. On the annuity side, the company has introduced a regular premium annuity product, which becomes an additional lever for the company to market to its customers.

• Nischint Chawathe with Kotak Securities also asked about margin on protection business coming down in FY22. N. S. Kannan, MD replied that that’s essentially because of the mix [inter-say] of group and retail within protection. In both cases, including the term return of premium product, the company is very confident that as a portfolio in protection, it should be able to hold the margins.

• Nischint Chawathe from Kotak Securities asked when does the unwinding rate of 7.2% start going up given the fact that there is a rise in interest rates. Satyan Jambunathan CFO answered that it will show up in FY23. Also, FY23 unwind should start off at a higher level than FY22.

• Deepika Mundra with JPMorgan asked that on the rising interest rate environment, how the company is tweaking its product offering to customers. N. S. Kannan, MD said that the company has all the product lines available to sell to the customers. The company is not going to put any artificial limits on how much to sell and how much not to sell.

• Nidhesh Jain of Investec asked about margin expansion seen in nonlinked savings which has seen a doubling of margins on a YoY basis. Satyan Jambunathan CFO said this is pretty much driven by product mix, par and non-par, within that segment; there is nothing else underlying.

• Nidhesh Jain from Investec also asked whether the impact of expense seen in margins in FY22, can it reverse in FY23 if there’s lower expense growth. Satyan Jambunathan CFO answered it will continue to improve. The company added that it’s only choosing to look at ’22 as a continuation of ’20 as opposed to ’22 being a continuation of ’21.

• Shyam Srinivasan with Goldman Sachs enquired about the number at which ULIP will remain, which has come down below 50%. N. S. Kannan, MD said that it doesn’t matter if ULIP mix goes up or the mix goes down. What is imperative is that the ULIP product opportunity and the customer opportunity is different from the nonlinked opportunity.

• Sanketh Godha from Spark Capital asked about the sustainability of VNB margins of non-linked being closer to 33%. Satyan Jambunathan  CFO  said it will depend on the mix. If the linked, nonlinked mix continues at the current level, this is what it will be. If the non-par, par mix changes, then the margin may very well change.