ICICI Prudential Life Insurance Copmay on Tuesday reported a 17 percent decline in consolidated net profit at Rs 340.26 crore for the January-March quarter of 2017-18. The ICICI Bank subsidiary had reported a net profit of Rs 408.24 crore in the same quarter of 2016-17.
For the full year, net profit declined to Rs 1,619.17 crore in 2017-18 from Rs 1,681.66 crore in 2016-17.
Total income (consolidated) plunged by over 49 percent to Rs 7,136.87 crore in the last quarter of 2017-18, from Rs 14,117.14 crore in year ago same period.
The total Income of the life insurer, however, grew to Rs 38,217.43 crore in 2017-18 from Rs 37,193.04 crore in the preceding fiscal.
The life insurance company had collected new business premiums of Rs 7,356.19 crore for the financial year 2017-18 (FY18), posting a growth of 16 percent over the previous fiscal.
The life insurer's total asset under management was at around Rs1,340 trillion at the end of FY 2017-18, which make it one of the largest fund manager in India.The company has a debt-equity mix of 53pc :47pc The solvency ratio of the company was 252 pc against regulatpory requirement of 150 pc.
Analysts point out the decline in the profit is due to on account of higher strain from new business as the premium paid at the commencement of a contract is not sufficient to cover the initial expenses including acquisition costs.
The private life insurance company's value of new business (VNB) rose 93.1 percent to Rs 1,286 crore in Q4FY18 as compared to Rs 666 crore a year ago. VNB is the present value of all future profits to shareholders measured at the time of writing of the new business contract.
There was a loss of Rs 1,613.38 crore in the income from investments (net of amortisation, and provision for diminution in value of investments) in Q4FY18 as compared to a gain of Rs 6,576.34 crore a year ago.The loss was on account of a change in the mark-to-market in the unit-linked insurance book.
Persistency or the quality of renewals across all the different brackets saw an improvement. The 13th month persistency stood at 85.7 percent (by premium) as of Q4FY18 compared to 84.3 percent a year ago.
The annualised premium equivalent (APE) stood at Rs 7,792 crore for FY18, up by 17.6 percent from FY17.
The life insurer’s retail renewal premium increased by 23.1 pc from Rs 142.19 billion in FY2017 to Rs 174.97 billion in FY2018 while its retail new business premium increased by 18.9pc from Rs 70.66 billion in FY2017 to Rs 84.02 billion in FY2018. The company’s group premium increased from Rs 10.69 billion in FY2017 to Rs 11.70 billion in FY2018.
The company’s total investment income for FY2018 comprised Rs 87.30 billion (FY2017: Rs 129.68 billion) under the unit-linked portfolio and Rs 32.66 billion (FY2017: Rs 26.67 billion) under the non-unit funds. The investment income under unit-linked portfolio is directly offset by a change in valuation of policyholder liabilities. Non unit investment income of the company increased by 22.5 pc from Rs 26.67 billion in FY2017 to Rs 32.66 billion in FY2018 primarily on account of increase in interest income corresponding to an increase in interest earning assets and increase in net realized gains.
ICICI Pru’s total expenses (including commission) increased by 12.9 pc from Rs 35.76 billion in FY2017 to Rs 40.40 billion in FY2018 while the commission expense increased by 84.9 pc from Rs 7.59 billion in FY2017 to Rs 14.03 billion in FY2018.
Claims and benefit payouts by the ICICI Pru Life Insurance increased by 15.2 pc from Rs 149.98 billion in FY2017 to Rs 172.81 billion in FY2018 primarily on account of increase in surrender claims by Rs 9.67 billion in FY2018 and increase in maturity claims by Rs 10.75 billion from Rs 22.83 billion in FY2017 to Rs 33.58 billion in FY2018.
The company’s net worth was Rs 68.84 billion as at March 31, 2018. The solvency ratio was 252 pc against regulatory requirement of 150 pc.
Commenting on the performance, Sandeep Batra, the Executive Director ICICI Prudential Life, said, "The company registered a robust and well-rounded performance on all parameters."
The board of directors declared an interim dividend of Rs 3.40 per share, including a special dividend of Rs 1.10 per share.
"Further, the board of directors has recommended a final dividend of Rs 3.30 per equity, including special dividend of Rs 1.10 for the year ended March 31, 2018. The declaration and payment of final dividend is subject to requisite approvals," ICICI Prudential Life said.
Among other key metrices, the company said the profitability of new business written, as measured in the value of new business (VNB) increased 93.1 percent to Rs 1,286 crore in 2017-18 from Rs 666 crore in 2016-17.
"This robust growth is attributable to the growth in both savings and protection APE (annulised premium equivalent) as well as the improvements in persistency and cost efficiency," the company said.APE is a measure of new business written by a life insurance company.
Embedded value (EV) rose by 16.1 percent to Rs 18,788 crore as on March 31, 2018, from Rs 16,184 crore at end of March 2017.EV is the current net worth of the company plus the present value of all future profits to shareholders from the existing book of the Company (including new business written in the year).
Shares of the company closed 7.09 percent higher at Rs 415.95 apiece on BSE.