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.