Mumbai:
ICICI Prudential Life Insurance has seen its profit after tax falling by 6 per cent from Rs11.41 billion in FY2019 to Rs10.69 billion in FY2020 due to higher protection business and losses in investment portfolio on mark to market basis.
New business received premium of the company grew at 20 per cent from Rs 102.52 billion for FY2019 to Rs 123.48 billion for FY2020. Annuity new business premium registered a growth of 52 per cent from Rs 6.85 billion for FY2019 to Rs 10.43 billion for FY2020.
N S Kannan,MD & CEO, ICICI Prudential Life said, “We had set our aspiration in April 2019 to double our FY2019 Value of New Business(VNB) within four years. I am happy to report that in FY2020, VNB grew by 21 per cent from Rs 13.28 billion to Rs16.05 billion for FY2020, which is well within the growth range required to meet that aspiration.On the basis of the advise by the regulator IRDAI,we haven't announced any dividend for the full year. Earlier, we had announced a dividend of 20 per cent in H1.''
Kanan said his company has filed for a new term product with the IRDA where it would charge a higher premium.
“The reinsurance cost for the term product has gone up,'' he said.
Kanan further said his company has settled two death claims related to Covid-19 pandemic.
“We are creating special financial reserve to manage if any larger Covid-19 claims are are received by the company,'' he said..
Net premium earned (gross premium less reinsurance premium) earned by the life insurer increased by 7.5 per cent from Rs Rs 305.78 billion in FY2019 to Rs 328.79 billion in FY2020.
According to Kanan the company's protection annual premium equivalent(APE) registered a growth of 55 per cent from Rs 7.22 billion in FY2019 to Rs 11.16 billion in FY2020. The protection mix improved from 9.3% of APE in FY2019 to 15.1% of APE for FY2020.
APE is a measure used for comparison of life insurance revenue by normalising policy premiums into the equivalent of regular annual payments. This is particularly used when the sales contain both single premium and regular premium business,
The insurer's net profit declined 31 per cent in the reporting quarter to Rs 179 crore from Rs 261 crore.
The insurer’s net premium rose 4.16 per cent to Rs 10,475 core in quarter ending March (Q4FY20) compared to Rs10,056 crore in the same period last financial year. In FY 20, the total net premium including new premium and renewals earned by the company rose 7.52 per cent to Rs 32,879 crore compared to Rs 30,578 crore.
Retail renewal premium of the life insurance joint venture increased by 2.2 per cent from Rs 202.25 billion in FY2019 to Rs 206.64 billion in FY2020. However, the retail new business premium decreased by 3.2 per cent from Rs 81.40 billion in FY2019 to Rs 78.76 billion in FY2020. The life insurer's group premium increased by 90.7 per cent from Rs 25.65 billion in FY2019 to Rs 48.90 billion in FY2020 primarily on account of an increase in group gratuity & credit life business.
The 13th and 49th month persistency (excluding group and single premium policies) of the company stood at 83.2 per cent and 64.6 per cent respectively at March 31, 2020.
The company has recorded a total investment income loss of Rs 121.17 in FY2020 comprising loss of Rs 160.72 billion (against an Investment income/gain FY2019: Rs 72.52 billion) under the unit-linked portfolio and an investment income of Rs 39.55 billion (FY2019: Rs 36.04 billion) under the non-unit funds.
The investment income of the company under unit-linked portfolio is directly offset by a change in valuation of policyholder liabilities. Unit linked portfolio investment income decreased from Rs 72.52 billion in FY2019 to a loss of Rs 160.72 billion in FY2020 primarily on account of decrease in market value of the securities held.Other income of the company decreased from Rs 0.89 billion in FY2019 to Rs 0.81 billion FY2020.
Claims and benefit payouts of the life insurer increased by 35.9 per cent from Rs 142.59 billion in FY2019 to Rs 193.77 billion in FY2020 primarily on account of increase in surrender claims by Rs 43.68 billion from Rs 106.12 billion in FY2019 to Rs 149.79 billion in FY2020.
Total expenses (including commission) of the life insurer increased by 6.1 per cent from Rs 48.29 billion in FY2019 to Rs 51.25 billion in FY2020. Commission expense (including rewards) of the comoany decreased by 1.1 [per cent from Rs16.04 billion in FY2019 to Rs 15.86 billion in FY2020. Operating expenses of the company increased by 9.7 per cent from Rs 32.25 billion FY2019 to Rs 35.39 billion in FY2020 primarily on account of increased advertisement cost.
The total assets under management of the Company was Rs1,529.68 billion at March 31, 2020 which makes it one of the largest fund managers in India. The company had a debt-equity mix of 60% :40% at March 31, 2020. 93.9 per cent of the debt investments are in AAA rated and government bonds.
The embeded value of (EV) of the company stood at Rs 230.30 billion as on March 31, 2020 and the Return on EV was 15.2 per cent for FY2020.
Company’s net worth was Rs 70.47 billion at March 31, 2020 and its solvency ratio was 194.1% against regulatory requirement of 150 per cent.
Fund reserve, which represents liability carried on account of units held by unit linked policyholders, decreased from Rs 134.44 billion in FY2019 to to (Rs 138.60) billion in FY2020. The decrease in fund reserves is primarily due to higher claims and lower investment income in the unit linked portfolio. Non-unit reserve increased from Rs 75.59 billion in FY2019 to Rs 88.03 billion in FY2020.
In a forward guidance, the company has said it will encourage higher levels of digital adoption across channels and focus on contactless conversations through video conferencing given the current norm of social distancing. Moreover, they will focus more on protection products more given the fact that demand for unit linked savings will be weak and they will target small growth in non-linked savings.